How Do Cryptocurrency Cards Compare to Traditional Credit Cards?

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Last updated on December 13, 2021

The cryptocurrency market is going gangbusters. Many Canadians are eager to get on the Bitcoin bandwagon, while some others are more interested in alternative cryptocurrencies like Ethereum and Litecoin.

Regardless of which coin you’re using, there’s still a major problem: cryptocurrencies are notoriously difficult to spend in the real world. The majority of merchants don’t accept crypto at the point-of-sale, and there are just under 900 Bitcoin ATMs across Canada. Going to a cryptocurrency exchange is also a hassle—it’s expensive, complicated and could take days before the cash is in-hand.

Enter cryptocurrency cards—payment cards that offer a viable alternative to traditional debit and credit cards. Dead easy to use, all you have to do is swipe or enter your “crypto card” at the point-of-sale and it will instantly convert cryptocurrency into a fiat (government-backed) currency. But, should you leap into the future and abandon your traditional credit cards for a crypto credit card? Maybe not quite yet.

Where Can I Buy Crypto in Canada?

First thing’s first. Where can you actually buy the cryptocurrency that you are going to be linking to your crypto credit card? The best and easiest places to purchase cryptocurrency are Crypto.com, Wealthsimple, CoinSmart, Bitbuy, Coinberry, NDAX and Binance. If you go with the latter, you can easily link your crypto to your Binance Visa Card.

What Are Cryptocurrency Debit Cards and How Do They Work?

A cryptocurrency card comes in a physical, virtual or prepaid form. It has some of the hallmarks of a traditional debit card or credit card, except the source is not a bank account or available credit—it’s the cardholder’s digital wallet where cryptocurrency is stored.

During a crypto debit card transaction, simply tap at a regular payment terminal and the transaction amount is withdrawn from a digital cryptocurrency wallet and automatically converted into the equivalent local currency at point-of-sale. For prepaid cards, a cryptocurrency amount is paid in advance, loaded directly onto the card and then deducted as fiat currency, one purchase at a time, until the card is empty. It’s sort of like a prepaid debit card. It’s important to note though that cryptocurrency cards aren’t the only way to use your coins. There are a few other ways to use it which we cover in our ultimate cryptocurrency guide.

Crypto cards offer a new kind of financial freedom. You can choose from a wide variety of cryptocurrencies as the source of the funds (Bitcoin, Ethereum, Litecoin, etc.) and then convert them into various fiat currencies (standard currencies like USD, EUR, GBP, etc.).

Crypto debit cards are accepted by either Visa or Mastercard. You can also withdraw converted fiat currency from either Visa or Mastercard ATMs.

Wondering what the best credit card is for crypto? Let’s look at a few cards that are either currently available or will be made available soon to Canadians:

Wirex (London, UK)

Wirex is a borderless payment platform that allows you to buy, store, exchange and spend your crypto and traditional currencies anytime, anywhere. The new multi-currency Wirex card lets you pay in traditional and cryptocurrencies with real-time conversion at point-of-sale and zero exchange fees. So whether you’re buying a coffee locally or splurging on souvenirs abroad, you can spend any of the many supported cryptos and traditional currencies “IRL.”

Stand-out feature: You earn Bitcoin rewards on all your spending.

Paycent (Singapore)

Paycent allows you to manage, transfer and pay using digital assets through the Paycent App or Paycent Card—both of which can be used globally. The Paycent Card supports a variety of different cryptocurrencies—including Bitcoin and Ethereum—and can be used to withdraw cash in local currency at ATMs and at offline merchants worldwide. There is a one-time charge for the card that includes FedEx/DHL/UPS delivery, and after that, there are no annual fees or hidden charges.

Stand-out feature: The fees are competitive, especially compared to using a debit card abroad.

Localcoin (Toronto, Ontario)

Localcoin is a Toronto-based company that seeks to simplify buying and selling digital currency while putting a priority on your privacy protection. The prepaid Visa card allows users to load Bitcoin via smartphone and use it wherever Visa is accepted, including withdrawals from Visa-branded ATMs.

Stand-out feature: Localcoin is Canada’s largest Bitcoin ATM network, offering cryptocurrency terminals across Canada and has plans to expand into the U.S market.

Why Use a Crypto Debit Card?

There are some good reasons to love crypto cards. Here are a few of the advantages:

Convenience

Like traditional credit cards or prepaid debit cards, crypto cards make purchasing at home or abroad easy and affordable. Swipe, tap or enter your crypto card, and in mere seconds, you can immediately pay for your purchases from your digital wallet.

Flexibility

Many crypto cards support multiple traditional and cryptocurrencies and allow you to choose to pay in the currency of your choice. That way, you can skip going to the currency exchange to load up on foreign cash.

Earn rewards

Like rewards or cash back credit cards, some crypto card issuers allow you to earn rewards for every card purchase and/or provide cash back for successful referrals.

Traditional credit cards may provide seemingly higher percentages in cash back, but remember that cryptocurrency is generally worth more than Canadian dollars. So with a crypto credit card, you may end up earning more in cash back and rewards even if the return percentage appears to be lower compared to a traditional credit card.

No Foreign Exchange Fees

With some banks, you may get a 2.5% charge on your credit card or debit card every time you make a purchase in a foreign currency. Those dollars add up! In contrast, many crypto cards do not charge a foreign transaction fee—saving you coin.

Do Cryptocurrency Debit Cards Save Money on Fees?

While some crypto debit cards have lower fees than others, traditional card fees are probably cheaper overall.

“Crypto debit card fees are usually higher, but this often varies by provider. There is usually an additional cost to process the crypto and convert it to fiat,” says Gavin Chan, public relations specialist for Localcoin.

Plus, most crypto cards aren’t based in Canada, so you’ll likely pay these fees in U.S. dollars or Euros, making it extra expensive for Canadians that don’t have a USD or Euro bank account.

Here’s a comparison of fees between Localcoin, a prepaid Canadian crypto card, and the Scotiabank Prepaid Reloadable Visa, a traditional prepaid card that’s known for its low fees .

 
Localcoin
Scotiabank Prepaid Reloadable Visa
Issuance$4.99$10.00
Monthly$2.90 N/A
AnnualN/A $10.00
Top-Up5% Free
Domestic Transaction Point of SaleFree Free
Foreign Transaction Point of Sale$1.00 Free
ATM WithdrawalDomestic $2.50, International: $3.50 Cannot withdraw cash
Foreign Exchange Conversion3% 2.5%
InactivityN/A $3.50 per month after 36 months
Replacement$10.00 $10.00
PIN Request/Change$1.50 N/A
Cash Advance$15.00 N/A
Card to Card Transfer$4.00 N/A

Are Cryptocurrency Cards Safe?

Mostly, yes. In some ways, crypto cards may be safer than regular credit cards. Since they reduce the number of entities that your credit card data is exposed to, it could help reduce the possibility of fraudulent charges. When you tap your regular credit card (or enter its information online), your card information is read by the merchant, the acquiring bank (merchant’s bank), the card network and the issuing bank. With cryptocurrency, the transaction happens instantly and passes between only buyer and merchant, so the potential of fraud is greatly reduced.

Not only that, but chargeback fraud—when a consumer forces a refund while keeping an item they bought online—is not possible with cryptocurrency since each transaction is pushed and the currency cannot be pulled back. Once cryptocurrency leaves your digital wallet, it’s gone. You cannot get it back or take it from the merchant.

However, it’s not all rainbows and unicorns: there have been some past shenanigans with cryptocurrency debit cards. But although “cryptojacking” is a thing and hackers have looted billions of dollars in coins from cryptocurrency exchanges, the biggest threat to crypto debit cardholders might be the card issuers themselves. For instance, Wirecard filed for insolvency in June 2020 after 1.9 billion Euros went MIA from its accounts (yikes!), leading to the arrest of the (now former) CEO.

In January 2018, Visa ordered card issuer WaveCrest Holdings to suspend Visa operations due to non-compliance, leading crypto debit card providers issuing WaveCrest cards to shut down. Most card providers refunded the cryptocurrency stored on their sites, while others, including Uquid—a leading crypto debit card issued to Canadians, stopped communicating with customers and hasn’t returned client funds stored on its system.

So while crypto debit card transactions and the currency behind them are largely safe, some companies behind crypto debit cards may be somewhat sketchy. The bottom line? Do your homework to find a reputable crypto card. Read reviews, look for media reports and read the fine print when you sign up. Just know what you’re getting into before you put your crypto savings on the line.

Do Cryptocurrency Debit Cards Affect Credit Scores?

“No. Prepaid crypto cards are not reported to any credit reporting agencies,” says Chan.

That goes for all crypto cards since you’re using your own money, rather than borrowing money as you would with a credit card. So, in short, don’t worry about a crypto card affecting your credit score.

Is Crypto Card Customer Service Reliable?

It’s difficult to generalize, as customer experiences vary.

Wirex is highly-rated for customer service on TrustPilot, and Localcoin has a customer service number from 9am to 9pm EST seven days a week—a rare industry feature.

Unlike with credit card issuers, it’s hard to find a phone number for most crypto card issuers. Most crypto customer service happens in-app, via community message boards, or through an email form, chatbot or FAQ page. Some users have reported slow responses and a lack of help until they complain on review sites.  And in contrast with traditional credit card providers, there’s usually no way to escalate complaints and there’s no governing body providing oversight. Our traditional credit and debit cards are overseen by the Financial Consumer Agency of Canada, which is responsible for enforcing the compliance of card issuers to consumer protection legislation, regulations and industry commitments.

It’s important to reiterate that crypto issuers are often here today and gone tomorrow. There’s always a risk your crypto debit card suddenly stops working with no way to insure losses.

Are Crypto Debit and Crypto Visa Cards the Same Thing?

Crypto Debit, Crypto Visa Debit, Cryptocom Visa card and Crypto Visa cards—do all of these terms mean the same thing? While crypto cards will look different from provider to provider (and provide slightly different crypto rewards, rates and incentives), this type of card is always prepaid. Meaning, the crypto card will always be prepaid with your own money but is accepted as a credit card.

So…Credit Card or Crypto Card?

Cryptocurrency debit cards are not ready for the mainstream. Crypto has become a lot more popular recently, but that doesn’t mean it’s about to replace money as we know it. While there’s freedom in being able to spend money off the grid, that grid provides safety, oversight and reliable service that cannot be matched by a cryptocurrency. Yet.

The people who should be interested in crypto debit cards right now are those who already have a sizable cryptocurrency bankroll and who aren’t afraid of the pioneering risks.

 

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Author Bio

Aaron Broverman
Aaron Broverman is a freelance writer based in Toronto. When he’s not writing about money for publications like Yahoo Canada and GreedyRates, you’re likely to find his nose in a comic book. He likes comics so much, he hosts a podcast called Speech Bubble where he interviews those involved in the comic industry. You can follow him on Twitter: @broverman

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