Many people see the introduction of crypto payment cards as a viable method of bringing crypto to the mainstream world of retail sales, but there are several problems that the these cards will have to overcome if they are to ever be used on a regular basis by those looking to obtain both goods and services with digital funds.
Crypto Payment Cards Must Be Improved Upon
Crypto payment cards are like credit or debit cards, only instead of being attached to a standard bank or financial institution, they are tied to the consumer’s crypto account. They can then use their bitcoin or whatever cryptocurrency they have in the account to pay for merchandise. The company could then transfer the money into fiat currency, thereby completing the transaction.
However, many companies do not see crypto as a valid form of payment given its vulnerability to price swings. Thus, they simply say “no” to crypto and insist on cash or credit payments, and to a degree, while we many not be in favor of turning crypto away, we need to see their sides of the story.
If you owned a business and someone paid with bitcoin or another type of digital asset, they could potentially be putting you in a situation in which you’ll lose money. If they purchase $50 worth of merchandise with BTC and tomorrow the price of BTC goes down, they’ll still own the products they bought, but granted you didn’t turn the crypto into fiat right away, you’ve likely taken a loss. While it may not be big at first, there’s a lot that companies need to think about before they say yes to digital currency payments.
And sadly, while there are ventures out there trying to bridge the gap between the world of crypto and retailers, they sometimes wind up on the wrong end of the spectrum. A classic example is Wirecard, a German fintech group that recently filed for insolvency after admitting that it owed more than 3 billion euros. EY – the company’s auditor for more than ten years – has labeled Wirecard an “elaborate and sophisticated” fraud.
The fact that many crypto ventures were utilizing the services of Wirecard doesn’t put the digital asset space in a positive light.
The Strength Is There
But some major credit card ventures see the potential that crypto presents and are now taking it upon themselves to push the notion of crypto-based products and cards in the right direction. Suman Hughes – director of communications at Mastercard – recently stated in an interview:
We see potential in cryptocurrency, especially in stable coins. We have observed how using a stable coin and tokenized fiat can improve settlement… We are working with governments to explore Central Bank Digital Currencies (CBDCs), which brings physical cash into the modern digital age. CBDCs can enable financial inclusion, increase the efficiency of payments infrastructure and reduce informal economies.