US-based cryptocurrency trading app Coinbase launched the Coinbase Card, a debit card that allows users to spend their Bitcoin, Ethereum, or Litecoin cryptos in-store, in the UK according to CNBC.
Coinbase is offering the card for free to the first 1,000 customers to sign up on the waitlist, and all cards will cost £4.95 ($6.50). UK-based processor Paysafe is issuing the card and Apto Payments, previously called Shift Payments, is providing technology and support.
The Coinbase Card was announced in tandem with Coinbase shuttering its US card.Coinbase and Apto Payments used to offer a similar Visa-branded debit card in the US called the Shift Card. Business Insider Intelligence previously reported on the companies’ February announcement to shutter the card.
Here’s what it means:The Coinbase Card is the first of its kind from a major crypto exchange in the UK.
- The Coinbase Card will function like a regular debit card. The Coinbase Card is a contactless Visa-branded debit card that will be accepted anywhere in the Visa network. There are no monthly maintenance fees to keep the card open and customers can withdraw up to £200 ($261) per month from ATMs using the card.
- But the card comes with transaction fees. Users will pay 2.49% in fees, which breaks down to 1.49% in conversion fees and 1% in transaction fees. There will be a 2.69% fee for transactions in other European countries and a 5.49% fee for transactions outside of Europe. Additionally, there will be a chargeback processing fee of £20 ($26).
- A standalone Coinbase Card app will convert currencies so retailers don’t receive payments in crypto. The Coinbase Card app will allow users to select which cryptocurrency account they want to withdraw from, and funds are then withdrawn automatically. The app will display both transactions and exchange rate details in real-time.
The bigger picture:The UK could serve as a testing ground for Coinbase to gauge demand for the card before launching in other markets.
- Limited places to spend cryptos and restrictions on purchasing them likely caused low demand for a crypto debit card in the US. The decision to shutter the US Shift Card and to instead pursue the UK and EU was likely influenced by a combination of factors, including US merchants’ aversion to accepting cryptos. And late last year, US merchant acceptance of Bitcoin seemed to be lowering. Further, major US banks made it difficult for consumers to buy crypto: Bank of America, Citi, Chase, and Wells Fargo have all prevented their customers from purchasing crypto with their credit cards.
- This card addresses a major risk for merchant acceptance: the volatility of crypto prices. Because the Coinbase Card converts cryptos into local currency, it offers merchants a layer of protection against fluctuations in crypto prices. Historically, merchants have been wary of accepting cryptos, as values can change even before a purchase clears. Coinbase’s card will effectively function just like a standard debit card. Still, it’s unclear whether merchants’ negative perceptions of crypto payments will persist and ultimately dampen their willingness to accept the Coinbase Card, even though it does alleviate a critical pain point with the format.
- Coinbase can leverage its established presence in the UK to drive card adoption. Though it remains to be seen if Coinbase will have more success in the UK, consumers in the UK have demonstrated receptiveness to new payment methods, which could hold promise for the new card. Coinbase plans to bring this offering to more markets: It has an e-money license in the UK that enables the Coinbase Card and is applying for a European e-money license to expand to other markets soon, following its recently opened Dublin office. And the UK could be a good first step in that strategy.
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