Coinbase Announces New Crypto-to-Fiat Debit Card For Customers In The U.K.
Coinbase has announced the launch of its own crypto-to-fiat debit card for use in the United Kingdom.
Notably, the move comes only a couple of months after Coinbase partner Shift announced that it would discontinue its debit card service for the U.K. market.
The new Coinbase Card, just like the Shift card, allows customers to instantly liquidate cryptocurrencies held in their accounts into GBP. Consumers can then use the fiat to pay for goods and services at millions of stores worldwide.
The cardholder can also get cash by withdrawing fiat at an ATM.
Online payments service PaySafe will issue the new Visa debit card and will connect to a customers’ Coinbase account. The U.S. firm has also launched a Coinbase Card app that allows customers to use any of the available cryptocurrencies to complete payments at in-stores.
A customer can also use the app to get instant receipts or access their transaction summaries among other features.
The use of the card is at the moment limited to Coinbase’s U.K. clients, although the exchange has noted that it will soon release support for more countries within Europe.
Using the debit card will see a consumer pay an additional fee not included in normal Visa transactions. Apart from the issuance cost of £4.95 (around $6.48), users will also pay a 2.49% fee on every purchase. The fee comprises a 1.49% charge for crypto conversion and a 1% fee for transactions.
Although users will not incur any maintenance fees, they will pay £20 (roughly $26.19) to reverse a transaction.
Coinbase has said the daily spending cap will be £10,000 ($13,092).
While the Coinbase Card is being rolled out to fill the void left by Shift, one major hurdle could be the lack of demand in the U.K. Unconfirmed reports indicate that Shift is exiting the market because of very low demand.
Pantera partner Paul Veradittakit noted that there may be very little “demand or usage” for the crypto debit card unless consumers got adequately incentivized.
And Lex Sokolin, an ex-exec at Autonomous Research, added that the industry still faces numerous challenges, especially concerning the use of crypto for completing small purchases like buying a sandwich.
He reiterated that leveraging the “open loop networks” provided by Visa or MasterCard offer an easier and faster approach to the challenge. Nonetheless, he doesn’t see it as “transformational” from the perspective of crypto industry economics.
But Coinbase’s experience as a player within the payment ecosystem may provide it with an edge as it looks to implement the card’s usage.
Other firms have found it a tad too challenging. For example, the London Block Exchange had in 2017 revealed plans for a prepaid Visa debit card that would convert cryptocurrencies to British pounds. The firm had planned to charge a £20 up-front fee.
Although the development reached the production stage, it never hit the market due to multiple complications related to supply. It means that Coinbase’s would be the first crypto debit card launched by a leading cryptocurrency exchange for the U.K. market.
Coinbase is trying to “create a more open financial system,” and as such, a product tailored to make it easier for customers to use and spend their cryptocurrencies is a fundamental step towards achieving that objective.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.