On February 19, Coinbase explained that it is a principal member of Visa. The firm can now issue a debit card without going through a third party. Before that, Coinbase had physical cards through intermediaries, which is what other cryptocurrency companies do.
Coinbase did not share its strategy. The development shows an important milestone for making payments with cryptocurrencies. The cards are similar to a conventional debit card. The main difference is that they let the user deposit and convert cryptocurrencies instead of fiat funds.
Cryptocurrency cards leverage the infrastructure already set up by Visa and Mastercard. Cardholders can pay in cryptocurrency for any product or service that can be purchased with such a card. This breaks down a big barrier to the widespread adoption of cryptocurrencies. Most merchants won't directly accept cryptocurrency.
A lot of exchanges only offer cryptocurrency to cryptocurrency trading. Converting them to fiat money is time-consuming and complicated. The debit cards offer a convenient middle ground for users and merchants. The cards convert assets in real time.
There could be some drawbacks to the cards. Fees are one of them. The fees with these cards are higher than the fees for traditional debit cards. Since 2014, the cryptocurrency card market has grown a lot. Before this Coinbase announcement, all cryptocurrency cards had been managed by BIN sponsors. These are middlemen charging the cryptocurrency firms for access to the networks set up by Visa and Mastercard.
The cryptocurrency card market has expanded a lot, but it hit a turbulent period in 2018. At that time, Visa ended its relationship with WaveCrest. This was a company registered in Gibraltar and a major BIN sponsor. A lot of the European-based cryptocurrency cards basically stopped working overnight. This happened only to the non-American based cards. The relationship ended because of non-compliance with the BIN operating rules.
The new working relationships should be watched closely. It is possible that other cryptocurrencies will seek to establish similar relationships with Visa or Mastercard in order to remain competitive with Coinbase. This field represents a potential for a lot of growth in cryptocurrency adoption.