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Crypto Debit Cards and How They Work?

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By , Updated On October 26, 2022

If you own cryptocurrencies, chances are that you have been wondering how to use them. You can either trade your crypto for government-issued money, or other types of digital currency or hold onto it by storing it in a secure digital wallet. However, if you want more flexibility and ease of use, consider getting yourself a cryptocurrency debit card.

This article will cover everything you need to know about the topic so that you can make an informed decision!

What is a Crypto Debit Card?

You might be wondering what exactly a crypto debit card is. 

Cryptocurrency debit cards are physical plastic cards that allow you to spend your digital currency like cash at any store in the world. They are not credit cards, so you can’t spend more money than you have in your wallet.

The best part is that they’re quite easy to set up and can be used just like any other debit card at the point of sale (POS).

The most popular crypto debit cards include Coinbase Card by Visa, Wirex Metal, and the ClubSwan HODL card.

The main purpose of a crypto debit card is to allow you to spend your cryptocurrency at any merchant that accepts Visa or MasterCard. This can be extremely useful if you’re traveling and need to exchange some money for local currency. Other than that, having one of these cards will make it easier for you to pay for things without needing to first convert your crypto into fiat currency.

How Do Crypto Debit Cards work?

  • Crypto Debit Cards are issued by a third party. The crypto debit card is linked to your crypto wallet and can be accepted at any POS (point of sale) terminal that accepts Visa or Mastercard.
  • You can use the card to withdraw cash from an ATM — anywhere in the world. The amount of money you can withdraw will depend on how much money is available in your cryptocurrency wallet and the limit set by the issuer.
  • You can also use your crypto debit card to make online purchases just like a traditional credit/debit card, except that you will be using fiat currency instead of USDT or other cryptocurrencies like Bitcoin (BTC).

A crypto debit card is one of the most convenient ways to spend your cryptocurrency. You can use it to pay for goods and services anywhere in the world, just like a traditional credit or debit card. It is also a solution that can facilitate you liquidating large amounts of crypto.

How Does Crypto Debit Card Issuance Works?

Before we get into the nitty-gritty of how these cards work, let’s talk about the KYC (Know Your Customer) process. Because this is a new area of finance, there are still many rules and regulations to be worked out by card issuers and payment processors.

The exact ways you go through the KYC process vary depending on who issues your card—it may be done by your bank or whoever makes your tokenized card. Either way, it will probably take 1-2 business days for them to complete all their checks before they can decide whether they want to issue you with one of these crypto debit cards.

It’s worth noting that some companies only allow KYC checks done online; others will only accept applications from people with existing accounts at their bank branch location; others still might give preference towards customers who live in specific geographic regions (for example, if a card issuer is based out of Australia).

As you can see, the process of getting one of these cards is not something that can be done overnight. It takes time, effort, and patience—and that’s before we even consider all the other things you might need to do, like open a bank account (if they require one) or get your identity verified by your local government authority.

Fees involved in Cryptocurrency Debit Cards

Fees vary by provider. Some companies offer cards with no fees, while others charge an annual or monthly service fee.

Cryptocurrency debit card fees are typically lower than traditional debit card fees (think: 2-3% of the total transaction amount). They’re also lower than credit card fees (interest rates can be as high as 30%). On top of that, some cryptocurrency debit cards don’t charge any currency conversion fee, which is usually what you would pay for converting your domestic currency into crypto and vice versa.

Example Fees

Some examples of the types of charges you might encounter with cryptocurrency debit cards include the following:

  • Monthly or annual membership dues for having a certain level of access to your funds;
  • Foreign exchange conversion rates when buying/selling cryptocurrencies with fiat money;
  • ATM withdrawal fees from ATMs in other countries; and/or
  • Transaction processing costs charged by payment processors like Visa and Mastercard

Types of Crypto Debit Cards: Virtual vs. Physical

When choosing a crypto debit card, you’ll notice that there are two main types of cards: virtual and physical.

Physical cards can be used to withdraw cash from ATMs and therefore require a robust infrastructure behind them. They also offer better customer support in case of any issues with your transactions or account.

Virtual cards are less expensive for the issuing bank because they don’t require all that infrastructure. In addition, if you have a virtual card, it will only work online or through apps—you won’t be able to use it at ATMs (though some providers will give you their own ATM access).

Categories of Cryptocurrency Debit Cards

There are two broad categories of cryptocurrency debit cards, physical and virtual. Physical cards have all the functionality of a regular bank-issued debit card but can be linked to your cryptocurrency wallet rather than your bank account. This means you can spend your digital currency anywhere that accepts major credit or debit cards.

Virtual cryptocurrency cards are essentially prepaid debit cards issued by a third party in exchange for fiat currency (local currency such as USD). These do not simply pull funds from one account and place them into another; rather, they operate like prepaid gift cards funded with cryptocurrency balances instead of traditional currencies such as USD or EURO. 

Most virtual crypto debit card providers do not issue their own physical card—instead opting for e-mail delivery upon approval or activation—which means there’s no need to worry about security risks associated with carrying around valuable private keys on an actual device!

Benefits of a Cryptocurrency Debit Card

  • Spend crypto anywhere.
  • No need to convert crypto to fiat.
  • No need to wait for verification or bank processing times, your digital assets are deposited instantly and ready for use.
  • Lower fees than traditional debit cards: Cryptocurrency debit cards cost less because there is no middleman (traditional banks) involved in the process of buying and selling cryptocurrencies like Bitcoin, Ethereum, and Litecoin on exchanges like Coinbase or Binance with your debit card.

A cryptocurrency debit card allows you to spend your crypto at any accepted POS worldwide.

With a crypto debit card, you can pay for goods and services with your digital currency. You can use it to buy things online or withdraw cash from ATMs that support cryptocurrencies.

Cryptocurrency debit cards are a convenient way to use your crypto. They allow you to spend your digital currency in stores and withdraw money from ATMs. The cards work just like regular debit cards but also have some added benefits.

For example, some cryptocurrency cards come with an insurance policy that covers your funds in case of a security breach. Other cards offer rewards for using the card.

Conclusion

This article has highlighted the benefits of having a cryptocurrency debit card and how it works. I hope this information will help you decide which option is best for your needs.