Coinbase’s Crypto Debit Card: Is It as Good as It Sounds?

Cryptocurrency exchange Coinbase announced Wednesday the launch of its Visa-powered crypto debit cards for its UK-based customers.

We’re excited to announce Coinbase Card, a Visa debit card that lets UK customers spend crypto as effortlessly as the money in their bank. Available today in the UK, and in the EU in the coming months. We'll look to expand internationally later this year. https://t.co/Yf36PL57S8 pic.twitter.com/2LJRj49Y60 — Coinbase (@coinbase) April 11, 2019

Dubbed as Coinbase Card, the new payment service will allow Coinbase clients to use their crypto balances to pay in-store and online using bitcoin, ethereum, litecoin, and more. Atop that, the service will enable users to withdraw fiat funds from ATM kiosks around the world.

“Customers can use their card in millions of locations around the world, making payments through contactless, Chip and PIN, as well as cash withdrawals from ATMs,” wrote Coinbase UK CEO, Zeeshan Feroze. “When customers use their Coinbase Card, we instantly convert crypto to fiat currency, such as GBP, which is used to complete the purchase.”

Meanwhile, a specialized Coinbase Card application will enable users to manage their spend. Customers will be able to select which of their wallets will they use for making purchases, be it bitcoin, ethereum, litecoin, or others.

Are They Worth It?

Coinbase’s announcement followed years of skepticism regarding bitcoin’s use as money. The cryptocurrency, and many like it, continues to be a part of a volatile market, in which a $100 transaction could later equal a $200 bill, or even $50. Therefore, the money version of cryptocurrency makes spenders less a user and more a speculator. For instance, she would likely use bitcoins to purchase a product when she expects its value to drop. In the end, people cannot use cryptocurrencies as payments usually.

Coinbase Card enables a service that a majority of cryptocurrency users won’t choose. And volatility is not just their only excuse.

fees of 2.49% ! … too high ! make it lower for mass adoption. — The Clairvoyant (@The1Clairvoyant) April 11, 2019

Each domestic ATM withdrawal on Coinbase Card costs 1-percent in transaction fees. If a user conducts a sale outside the UK, she pays an additional 1-percent commission for it. The rates come into effect after a crypto-to-fiat conversion process worth 2.49-percent commission has already taken place. There is no clarity whether or not Coinbase’ exchange rate spreads are high, but it is wise to consider their role in making a crypto-based ATM withdrawal costlier than a regular GBP withdrawal.

At the same time, Coinbase allows UK users to withdraw up to £200 for free every month. At HSBC, the limit is up to £100.

UK ATMs are Free

In retrospective, there are two kinds of ATMs in the UK: free and pay-to-use. 97-percent of those kiosks are free. And the ones that are not free typically charge about £1.50 to £2 per transaction. A smart customer makes sure that she hires a banking service that is a part of the Global ATM Alliance. It ensures that her bank would not charge her withdrawal fees.

And banks are indeed competitive when it comes to reducing or completely removing debit card charges. Nevertheless, an additional layer service like Visa and MasterCard always offload the costs to customers. On a whole, Coinbase merely adds an additional expensive layer of its own – the process of converting crypto to fiat – which should not make spending cryptos a fun task for masses.