Crypto debit cards: What is it? What’s the point? How does it work?

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“Yeah… that’s how I see it too… this blockchain thing is really exciting. But in the real world I can’t use it… I can’t pay anywhere with cryptos!” Have you heard statements like this before? Or is that your opinion too? I would say that you can pay with your crypto tokens (at least with selected tokens) almost anywhere in the world… via crypto debit cards. In this article, let’s take a closer look at what problem a crypto debit card solves and how it manages to bridge the gap between the virtual and the real world.

The problem: Deep acceptance of cryptos among retailers

Imagine you are the owner of a small shop somewhere in the beautiful crypto valley between Zurich and Zug in Switzerland and you have read that more and more people in your area are betting on cryptos. Of course you also want to take part and are now offering your customers Bitcoin as an additional means of payment. Your customers think it’s great and diligently pull out their crypto wallets when paying. That makes you happy… but what makes you less happy is when the value of the cryptos you receive falls by 25% the next day and your running costs are no longer covered. No wonder, then, that almost nobody accepts crypto currencies as a means of payment at the moment… (currently not even Tesla). In addition to the high volatility of Bitcoin and friends, there are other points that unsettle our shop operator:

  • And what about the regulatory status of these tokens? Am I allowed to accept these as a means of payment at all?
  • And how am I supposed to teach my accountant that I’m now having cryptos too?
  • And how are the cryptos to be taxed? I once heard from an American colleague that the crypto tax events were a nightmare.
  • And do I now need new payment hardware in my shop?
  • Etc.

So it’s no wonder that our shop operator says “Never change a winning horse!” after all these uncertainties and sticks to the conventional payment methods.

The solution: The crypto debit card

In principle, the crypto debit card works in a completely banal way: With most of these cards, you can pay with your crypto tokens wherever you can also pay with your “normal” VISA or Mastercard cards. So pretty much everywhere in the world. Every time you use your crypto debit card, the corresponding amount in Swiss Francs (or US Dollars or…) is deducted from your crypto balance and converted into the local fiat currency (e.g. Swiss Francs). This means that you pay with your crypto tokens and the shop operator receives Swiss Francs, for example. All parties involved are happy with this.

To use a crypto debit card, you typically have to go through the following three steps:

  • Step 1: Choose the right crypto depit card for you from the numerous providers. When onboarding you will have to go through the usual KYC (Know Your Customer) process.
  • Step 2: It is usually a prepaid card. Therefore, in the second step you have to charge your card via your wallet with cryptos. Alternatively, you can also buy cryptos directly from many card providers via their website and load them onto your card.
  • Step 3: You are already ready and can now pay with your cryptos.

Crypto debit cards are usually a bit different though…

In the DeFi world there is an approach called staking. In short, this works in such a way that a user acquires the native tokens of a DeFi service and holds them for a certain period of time. The user thus supports the DeFi service and his native token, and for this he is rewarded by the DeFi service with certain benefits (usually the distribution of further native tokens of this DeFi service). This is a common pattern in the DeFi space and we see it around crypto cards as well, e.g Depending on how many CRO tokens you hold – CRO tokens are’s native currency – you will receive between 1% and 8% of the paid amount in CRO tokens when you use your card. 8% Reward is quite a lot… but you also have to hold EUR 350’000 in tokens.

Image: Screenshot

Most crypto card providers also offer quite tempting conditions. Some completely waive transaction costs, FX costs, costs for ATM withdrawals up to a certain maximum amount, etc. You can find details on the websites of the respective providers.

It is interesting to see that the trend in crypto cards is now also towards credit cards. With NEXO, for example, you can deposit your cryptos as collateral and you can immediately withdraw up to 90% of the value of your deposited cryptos as credit via your card without a credit check (in the DeFi world there are no credit checks… instead all protocols rely on overcollateralization). So you have liquidity available in the simplest way without having to sell your tokens/investments… which will make every HODLer (HODL = Hold On for Dear Life) happy.



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