Why are crypto debit cards bad?
Crypto debit cards have become mandatory for many services in the industry. In the hope of reducing the risk of transaction blocking, companies again and again looked for the reason why their clients should use regular plastic cards. But a crypto card is a placebo that does not solve the problems of neither users nor financial companies; its only purpose is to bring profit to payment systems and intermediaries.Debit card technology has evolved rapidly in a very short period of time. It is a fundamental and connecting link for all relationships in retailing. According to the Nilson Report, there are currently more than 22 billion payment cards in circulation worldwide. With 1.7 billion people not using banking services at all, there are an average of 3.6 cards for each of the remaining 6 billion people.
All cards are supported by payment systems, which create a closed ecosystem of consumption:
- Banks and processing companies pay Visa, Mastercard, UnionPay, American Express and other international payment systems to issue cards
- Cardholders pay an annual fee or transaction fee to banks;
- Sellers transfer to banks on average 1–4% of the transaction amount for acquiring services;
- Different resellers, aggregators, API providers, etc. also charge a fee.
The main thing is that each fee payment between all participants includes the share of Visa, Mastercard or another payment system. If we are talking about transactions with cryptocurrency, the fee of payment systems will be higher, because the traditional financial industry considers these transactions as high-risk.
However, bank cards are practically irreplaceable for transactions up to $5000. This is the fastest and most convenient way to buy cryptocurrency from many wallets and/or exchanges. That is why it would be naive to think that financial companies can quickly get rid of the payment systems mediation and stop paying them for each transaction.
However, Visa and Mastercard can do a lot to make their own cards more crypto-friendly and become part of the solution, not part of the problem that Wirecard is trying to circumvent by making such changes inevitable.
Banks should work directly with cryptocurrencies
High-risk processors such as Wirecard or Wavecrest can be compared to microfinance institutions that issue loans at huge interest rates. Sometimes the money is needed urgently and the application at the bank is delayed; sometimes the bank’s point system does not take into account the place of work, marital status or gender of the person. There can be many reasons, but the result is one: the bank does not want to take risks, and people turn to less discerning financial intermediaries. Crypto services also have to do this.
A cryptocurrency debit card is a ridiculous, temporary and forced necessity that has arisen simply because banks and payment systems do not want to manage risks on their own. All the risks that Wirecard used to take when working with crypto companies are now easily eliminated.
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