The move by Coinbase and Visa is an important one for the overall position of digital currency as a legitimate alternative to traditional cash.
Coinbase, despite having a few issues along the way, has become one of the largest crypto exchanges in the world and having it able to issue Visa-branded debit cards was a huge step forward.
For years, finding support from Visa and MasterCard to allow their names to be tied to cryptocurrency was virtually impossible. Visa had a strict no-cryptocurrency policy and, although somewhat more flexible, MasterCard wasn’t willing to embrace the digital currency ecosystem completely, either. That has changed over the past year and Visa made a deal with cryptocurrency exchange Coinbase early in 2020 that set the stage for a huge shift in how cryptocurrency-backed debit cards were viewed. Jason Simon, a FinTech and cryptocurrency expert, provides insight into what that decision means for the future of digital currency.
At the end of 2019, Visa finally relented and recognized the growing importance and legitimacy cryptocurrency has on finance. It gave Coinbase the right to issue cryptocurrency-backed debit cards, even if it would be another two months before the arrangement would be made public. That reluctance to come forward was yet another example of how the digital currency space continued to be marginalized.
Coinbase didn’t begin issuing Visa debit cards right away; in fact, it wasn’t until October of last year before it had a program in place. The Coinbase Card system was launched that month in the US, after having only been available in Europe, opening up new possibilities and an avenue toward global acceptance of cryptocurrency alongside fiat as a payment mechanism. Says Simon, “The move by Coinbase and Visa is an important one for the overall position of digital currency as a legitimate alternative to traditional cash. Coinbase, despite having a few issues along the way, has become one of the largest crypto exchanges in the world and having it able to issue Visa-branded debit cards was a huge step forward.”
Bitcoin was initially created to be an alternative to fiat; a means for consumers to make purchases with a more reliable solution of which they had complete control. It was also a way to provide banking solutions to the millions of individuals who live in areas where banks aren’t available and has made it easier for money to be sent around the world at a fraction of the cost of, and much more quickly than, traditional bank-led wire transfers. As the price of Bitcoin continued to rise, it became the target of investors, not of consumers, but moves such as that of Coinbase and Visa are helping to bring back to the front the original design.
Coinbase’s Visa-backed card is designed to support more than 30 cryptocurrencies for US customers, but support differs for other areas. For example, when the card was rolled out in the UK, it initially only supported nine different digital currencies, and the card is now available in countries around the world. Adds Simon, “Coinbase began working with Visa in 2019 when it launched its Coinbase Card in the UK. The debit card allows users to spend cryptocurrency as if it were cash, as well as use the card anywhere Visa is accepted. It is available in 29 markets and, on an international level, ten cryptocurrencies are supported, including Bitcoin, Ethereum, and others. This gives millions of merchants the ability to receive digital currency for payments and the response has already been substantial.”
The credit card issuing industry was worth $107 billion in 2019 and has only continued to grow. It is a huge market that had the potential to see exponential growth through the acceptance of cryptocurrency payments, now made possible through deals like the one between Visa and Coinbase. As the underlying system that supports the digital currency improves and becomes more regulated, this trend is only going to continue and, within the next several years, seeing cryptocurrency-based debit cards will become the new standard.