The United States based giant cryptocurrency exchange platform, Coinbase, has rolled out its Credit Card in Italy, a Visa card which a customer can use to pay in stores by drawing on his or her online digital currency portfolio.
Some of the major problems to the widespread of payment systems based on Bitcoin or any other cryptocurrency, is the volatility of their price and the difficulty of converting them into legal tender currencies such as dollars.
Coinbase is trying to resolve this challenge by developing a Visa credit card with which a holder can pay at any point of sale (POS) and withdraw cash using an online portfolio.
The card can be used virtually via a dedicated application available for iPhone and Android devices, or it can also be got in a physical contactless version. When using the app, before each payment or withdrawal, a user is able to choose which cryptocurrency to convert into fiat currency, if the funds held online are spread among many various cryptomains.
Nevertheless, merchants or partners operating the ATM do not directly receive funds in cryptocurrencies: before the transaction, the exchange makes a prompt conversion to Euros or Sterling and transfers the total in fiat currency, and because of this, the cost of using the card is still higher than a normal credit card.
To convert from cryptocurrency to the traditional currency, Coinbase holds 2.49% of the transaction value. Payments through POS in any country where the card is issued are still free, while for the cross-border payments, a cost of 0.2% of the total transaction is charged in countries within the European Economic Area, or 3% in the nations from other parts of the world. Currently, all cash withdrawals are free up to €200 or £200, but if it exceeds this amount, a tax of 2% of the transaction is charged.
The Coinbase Card is an innovative initiative that will provide solutions and streamline Bitcoin and digital currency payment procedures, however, this is not new to the payment ecosystem – privacy-oriented options such as CryptoPay, Uquid or Bitwala, have been available for some good time. A mixture with traditional circuits will help in easing and enlarging access to these payment tools, and it does not conflict with the traditional principles of the digital currency scene, like openness, autonomy and decentralization.