What Are Crypto Debit Cards?

Estimated reading time: 7 minutes

Do you want to get a cryptocurrency debit card? If that’s the case, you should ask yourself a few key questions like, what are crypto debit cards, and how do they work? 

The answers to these questions will assist you in determining which card you require and which best meets your needs.

Debit cards that accept cryptocurrency as payment are known as crypto debit cards. These cards resemble standard debit cards in appearance. Both operate similarly, but there is one significant distinction. Unlike standard debit cards, crypto debit cards use cryptocurrency as their primary currency.

The number of people using cryptocurrency has exploded in recent years. According to a survey published by Triple-A, a business website specializing in cryptocurrency and blockchain, users have topped 300 million.

Other crypto experts, on the other hand, predict that this number will have surpassed a billion by the end of the year.

SEE ALSO: 3 Things You Need To Start Your Crypto Journey

Meanwhile, as the number of cryptocurrency users grows, so does the number of cryptocurrency debit card users. Even better, as the number of crypto users grows, this number will continue to rise.

The convenience that crypto debit cards provide is one of the main reasons for their rising use. These cards make daily cryptocurrency spending a breeze.

Crypto exchange platforms are the primary issuers of crypto debit cards. Crypto payment processors and membership clubs like Club Swan are also issuers of these cards.

How does a crypto debit card works?

Crypto debit cards function similarly to standard debit cards, as previously indicated. Crypto debit cards, on the other hand, operate in different ways. In addition, the companies that sponsor these cards are different.

At first glance, crypto debit cards appear to be challenging to use. However, using these cards is much the same as utilizing ordinary debit cards.

Merchants receive money in fiat cash when paying with a crypto debit card. This is true independent of your crypto type or the time it takes your card to convert crypto.

Crypto debit cards can convert crypto to fiat manually or automatically, depending on the type of conversion.

You must go to the issuer’s app or portal to sell your cryptocurrency for manual funding. Your money is placed into your account when you successfully sell your coin. You can fund your crypto debit card with money from this account.

When you use an automatic crypto debit card, you start the conversion of crypto to fiat when you make a purchase.

Overall, make sure your card is fully funded before using it. In addition to categorizing crypto debit cards by the type of conversion, you can also categorize them by the transaction method.

The three varieties are listed below, depending on the conversion method.

1. Crypto-fiat

For crypto debit cards, this is the most prevalent transaction method. To get one of these crypto debit cards, you must first sell your cryptocurrency to a certain platform. You receive your fiat on your account after the trade is completed successfully.

The fiat from this account can then be credited to your debit account. The Club Swan card is an example of a crypto debit card in this category. On the platform, you can convert any crypto this issuer supports to money.

Even better, you can convert your cryptocurrency to any fiat currency you want using this card.

2. Crypto-stablecoin-fiat

You must sell your crypto to convert it to stablecoins for cards that fall under this category. After you’ve received your stablecoins, you can exchange them for money. When the need for funds arises, stablecoins can be converted to currency.

Some crypto debit cards, for example, allow you to trade your cryptocurrency for USDC. After that, if you need to make a purchase, you can convert these stable coins to fiat currency.

Stablecoins are blockchain assets immune to the volatility of the crypto market, unlike crypto.

3. Crypto-stablecoins

These crypto debit cards allow you to convert your cryptocurrency to stablecoins manually. Any further processes are handled automatically by the system.

When you use this card to pay for things, you could think you’re using stablecoins. During payment, however, the cards automatically convert the stablecoins to fiat in accordance with the pegged ratio.

What Are the Factors to Consider When Choosing a Crypto Debit Card?  

Now that you know crypto debit cards and how they work, you need to weigh some factors before choosing one.

These factors include:

1. Fees

Fees are undoubtedly one of the most important aspects of a bitcoin debit card to consider. Fees for

different types of crypto debit cards vary.

Almost all cryptocurrency debit cards do not impose a deposit fee. Almost the majority of them, however, levy a withdrawal fee.

Crypto debit cards levy annual fees, foreign conversion fees, and other costs.

So, when shopping for crypto debit cards, choose one that best fits your lifestyle in terms of fees. It’s worth noting that some of the cards contain various fees that make keeping a card pricey.

2. Crypto Supported

Currently, the crypto market has over 10,000 different coins. However, most crypto debit cards only support a few of these crypto coins. 

Fortunately, several can support a wide range of cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. The Club Swan card, for example, enables nine different cryptos, including the most popular ones.

So, while choosing a crypto debit card, be sure it supports the cryptos you want to use.

3. Availability

Even with cryptocurrency’s massive global acceptance, some crypto debit cards aren’t available everywhere. You can only access these cards under specific parameters. Another country has outright banned cryptocurrency, while others are considering it.

Fortunately, most crypto debit cards are accepted by Visa and MasterCard, two well-known payment processors. These companies allow you to make purchases or withdrawals anywhere in the world.

As a result, make sure the card you choose is available in your location.

SEE ALSO: 7 Ways Businesses Can Utilize Cryptocurrency To Increase Profit

4. Rewards

The majority of cryptocurrency debit cards provide rewards to their users. The rewards scheme, however, can differ from one card to the next.

Cashback is the most common incentive method among crypto debit cards. After making purchases using these cards, you’ll receive a cashback reward.

The referral program is another form of reward scheme. If you successfully suggest a new user to a crypto debit card in this category, you will receive a percentage of the joining fee. Others may even promote you to the next level without charge if you recommend a particular amount of people. Club Swan is an excellent example of this type of card.

Another excellent incentive method is crypto staking. Some crypto card providers will let you stake a set amount when obtaining a crypto debit card. If the volatility works in your favor, staking can be a profitable reward scheme.

5. Security

Security should be a priority for both the card issuer and the cardholder. This is related to the recent spike in cryptocurrency scam incidents. According to CNBC, a business news station, the estimated total value of crypto scams in 2021 was over $14 billion.

On the other hand, some crypto issuers have worked hard to strengthen the security of their cards. 2-factor authentication, biometrics, and passcodes are just a few of the advanced security features that these card issuers have implemented.

Some cards also allow you to control your crypto debit card from afar. Its security is also one of these functions.

In the event your card gets lost, you can, for example, freeze or alter the Pin. You can also file a claim for its loss on the app. 

Conclusion

Knowing how a crypto debit works is quite essential when planning to sign up for one. It requires you to take your time and research more about the cards. To narrow down to a single option, ensure you weigh what factors are crucial to you.