In April, bicoin wallet and storage firm Xapo, announced its intentions to launch a bitcoin debit card. Similar to other debit cards, the Xapo card allows user to purchase goods around the world using established point of sale card readers available at merchants.
Providing an update, Xapo announced that the pre-filled bitcoin debit cards are expected to be available and the end of this month:
The card will be accepted by all merchants who participate with Xapo’s bank and card issuing partner. It was rumored MasterCard would offer the plastic behind Xapo’s card venture, but those remained rumors and MasterCard has stated it is not currently partnering with any firms to issue a Bitcoin loaded debit card. The card issuing network and banks have yet to be disclosed by Xapo.
Xapo is targeting other potential card issuing networks besides the big 2, MasterCard and Visa. Networks such as Star, Pulse or MAC could allow for merchants to accept transactions from debit cards not affiliated with particular banks.
Xapo’s card would convert amounts from BTC to FIAT in order for merchants to charge the card. Given the transactions will be placed in conventional tender over a card network, interchange fees and rates will apply, eliminating the near-free fees and rates associated with the virtual currency.
Madeline Aufseeser, a senior analyst from Aite Group expressed her concerns on banks that are willing to issue Bitcoin loaded debit cards. While the notion is probable, the execution may prove to be more challenging than expected.
“Most non-financial institutions don’t realize the extent of due diligence and requirements of becoming a licensed issuer,” Aufseeser warned.
Given the cons related to debit cards, primarily fees and rates, a Bitcoin debit card could increase adoption given its more accessible nature. We will have to wait and see when Xapo releases its card to report on real world usage.