Bitcoin wallet and Cold Storage solution Xapo announced that the first BTC loaded debit card will be made available by the end of June 2014.
The card will be accepted by all merchants who participate with Xapo’s bank and card issuing partner. It was rumored MasterCard would offer the plastic behind Xapo’s card venture, but those remained rumors and MasterCard has stated it is not currently partnering with any firms to issue a Bitcoin loaded debit card. The card issuing network and banks have yet to be disclosed by Xapo.
"The Xapo debit card will be accepted by any business in the world that accepts debit or credit cards from our bank's card network partner," says Wences Casares, Xapo’s founder.
Xapo is targeting other potential card issuing networks besides the big 2, MasterCard and Visa. Networks such as Star, Pulse or MAC could allow for merchants to accept transactions from debit cards not affiliated with particular banks.
Xapo’s card would convert amounts from BTC to FIAT in order for merchants to charge the card. Given the transactions will be placed in conventional tender over a card network, interchange fees and rates will apply, eliminating the near-free fees and rates associated with the virtual currency.
"While some Bitcoin enthusiasts may want to see the cryptocurrency go mainstream, many others feel that routing Bitcoin transactions through a credit card network defeats the purpose of using Bitcoin," says retail banking analyst at the Aite Group, Nathalie Reinelt.
Madeline Aufseeser, a senior analyst from Aite Group also expressed her concerns on banks that are willing to issue Bitcoin loaded debit cards. While the notion is probable, the execution may prove to be more challenging than expected.
“Most non-financial institutions don’t realize the extent of due diligence and requirements of becoming a licensed issuer,” Aufseeser warned.
Given the cons related to debit cards, primarily fees and rates, a Bitcoin debit card could increase adoption given its more accessible nature. We will have to wait and see when Xapo releases its card to report on real world usage.
