A Race To Dominate Crypto Debit Cards Has Begun
Halfway through this year, the Wirecard scandal shocked the world. What was once a tech darling, soon became a subject of controversy within financial circles. Before the news came to light, it appeared Wirecard could emerge as a dominant player in the crypto debit card space, but now, as Wirecard’s preliminary insolvency proceedings take place, the race to dominate the crypto card market has begun.
The dark past of crypto debit cards
In June, Wirecard filed for insolvency admitting 1.9 billion euros ($2.1 billion) absent from its accounts was non-existent. Former CEO Markus Braun was arrested and suspected of market manipulation. Wirecard was not the first, and it is unlikely to be the last to face regulatory scrutiny of its business practices in the crypto debit card space.
In 2018, WaveCrest, a worldwide digital payment solutions provider, was ordered by Visa V to close all Visa prepaid cards immediately they had issued. Visa’s demand led to the suspension of many customer’s prepaid cryptocurrency cards in Europe. Visa stated WaveCrest had not been following Visa’s membership regulations but did not offer specifics regarding non-compliance.
During the ICO craze of 2017, Central Tech promised the development of Centra Card, which allegedly could be used at Visa and Mastercard MA terminals to make payments tapping into the customer’s cryptocurrency holdings. The company employed celebrities such as boxer Floyd Mayweather and DJ Khaled to promote its ICO. Experiencing delays, Robert Farkas, co-founder of Centra Tech, pled guilty during this year for securities and wire fraud.
Enterprise lend credibility
In July 2020, Visa posted a blog titled, Advancing our approach to digital currency, in which the company described its vision for digital currency. With plans to partner with many blockchain companies, Visa intends to provide customers with a broad array of technologies:
- Work with licensed and regulated digital currency platforms such as Coinbase and Fold.
- Create a bridge between Visa’s network of 61 million global merchants and cryptocurrencies.
In an expansion of its current cryptocurrency program, Mastercard is making it easier for companies in the digital currency space to issue branded payment cards as seen recently in a deal with Wirex.
- Allows digital currency companies to issue cards on Mastercard’s network.
- Wirex became the first native cryptocurrency platform to gain principal membership.
PayPal PYPL has also entered the cryptocurrency market and partnered with Venmo. Soon, PayPal’s 265 million users will be able to buy bitcoin via the Venmo mobile payment app. According to Coindesk, PayPal could begin rolling out bitcoin payments within the next 3 months.
The cryptocurrency industry has also been making progress in the issuance of cards as well. For example, Binance announced recently that its payment card, Binance card, will be coming to Europe in the next year.
Inflation is expected to rise. Consequently, if people leave their money in the bank, then they’ll ultimately be losing money since the bank interest earned is less than the inflation rate. Ed Yardeni, the head of Yardeni Research told CNBC, “We believe that the Fed publicly would welcome inflation in a range of 2% up to 4% as a long overdue offset to inflation running below 2% for so long in the past.” If the Fed does indeed double the inflation; then, not only does this bode well for bitcoin—but blockchain DeFi products too.
Crypto card competition and trust
Whilst, crypto cards are an important financial tool for blockchain mainstream adoption, they still have a long way to go. From 2017-2020, scandals plagued the crypto card landscape. For that reason, it is likely that some consumer trust may have been eroded. With Wirecard out of the picture, Visa quickly jumped in to fill the void of the Wirecard-Crypto.com partnership and launched the MCO card via Crypto.com. Enterprise companies like Mastercard, Visa, and PayPal have shown a lot of interest in the crypto card/reward space. This is why the competition in the debit crypto card space will get fierce.