BitPay extends payment services with VISA debit card

Founded in 2011, while Bitcoin was still in its infancy, BitPay was created with the intention of making it easy for businesses to accept bitcoin payments. NewEgg, Valve, and Microsoft, to name a few, use the service to extend the payment options displayed on their sites.

BitPay accepts bitcoin on a retailer’s behalf, and pays them the equivalent in fiat currency, typically U.S dollars. The company is currently the largest bitcoin payment processor in the world, serving more than 60,000 merchants on six continents.

The industry leader has now applied their skills to a different market, introducing their own Visa debit card on Tuesday. “The BitPay Card gives bitcoin users one of the fastest and easiest ways to get liquidity for bitcoin savings,” project lead Corey Glaze explained in the announcement. “You can withdraw up to $3,000 in cash daily from any ATM with the Visa logo.”

In spite of the card being widely described as a bitcoin debit card, the balance is exclusively held in dollars. Users send bitcoin to BitPay and the company quickly converts them into dollars, which can then be spent with the card.

“Since bitcoin deposits are credited to the BitPay Card’s dollar balance in seconds, there’s no waiting on exchange fund transfers to clear.”
— – Corey Glaze, BitPay Senior Engineer

This combination makes the card an attractive proposition for bitcoin holders, and more importantly, allows the card to be issued just like any other Visa card, in every state in the U.S.

Due in part to the mountains of paperwork and highly-restrictive fees required to obtain money transmitter licenses, previous cards have only been issued in select states. Xapo and Wirex cards aren’t available to U.S. citizens at all, due to strict anti-terrorism and anti-money laundering laws.

The Coinbase Shift card has been available since November 2015, making it BitPay’s only competition in the domestic bitcoin debit card space, and BitPay has a distinct advantage to the residents of Arkansas, Connecticut, Georgia, Hawaii, Kentucky, Maryland, Michigan, Minnesota, New Hampshire, New York, and Wyoming.

Coinbase doesn’t have the licensing required to issue cards to residents in these states, who now have access to a debit card that can be funded quickly with bitcoin for the first time.

While the BitPay card has a geographical advantage over the Coinbase Shift card, which is available to residents of the other 39 states plus Washington DC and Puerto Rico, the fees are harder to compare.

The Shift card fees are simplified, whereas BitPay’s fees are more complex, but a little better for ATM withdrawals, $2, and the cost of the card itself, $9.95. These are fees that most users will have to pay, so BitPay may be more attractive.

The BitPay fee structure, which looks much more like a traditional bank’s fee chart, could be much more expensive in specific cases, such as card loss, speaking to a support representative, or allowing your card to be declined during an ACH transfer.

BraveNewCoin spoke to BitPay’s marketing lead, James Walpole, about the card and structure. “Our primary aim at BitPay is to make it possible for merchants and consumers to transact with bitcoin natively in everyday purchases,” Walpole explained, “but that’s not always possible (yet)”

“We think this card will be the right fit as a tool for bitcoin holders who want a useful, fast way to get US dollar funds for their bitcoin when they can’t use bitcoin itself.”
— – James Walpole, BitPay

“In general, the card’s liquidity allows bitcoin users more flexibility in their spending and in moving between bitcoin and US dollars,” Walpole explained. “This can be especially useful for anyone who has accumulated bitcoin but needs access to an instant, secure exchange method – one they can use on the go, with any bitcoin wallet, and wherever in the world they take their card.”

BitPay describes the bitcoin deposit process as “instant” on their website, which includes zero confirmation transactions, a risky proposition for any bitcoin recipient. However, BitPay has converted bitcoin for tens of thousands of merchants over several years now.

“Our payment system for the Card uses an advanced algorithm that screens for risk factors of potential double spends,” Walpole explained. “If no risk factors are present, then we have a very high confidence that the transaction will be confirmed, and we can credit the payment sooner.”

Once cleared, the funds are converted into dollars using the BitPay Best Bid Exchange Rate, a conversion rate that BitPay uses for all of their customers, consolidating rates from multiple USD trading bitcoin exchanges.

There are also other ways of adding dollars to the account, such as Western Union Reload and GreenDot MoneyPak transfers, although a fee of $4.95 applies to both. Having employers deposit paychecks onto the card is also possible, extending the options further than those offered by traditional banks.

According to the U.S. FDIC, 7.7 percent of U.S. households were completely unbanked in 2013, and at least 20 percent were underbanked. That equates to 64+ million Americans who are likely to find such a card very handy. It’s inexpensive to obtain and offers many of the same benefits of a bank account, without any kind of credit check.

“Ask your employer to send your funds directly to your BitPay Prepaid Visa automatically each pay period.”
— – BitPay

In the end, what may be the most important feature of any bitcoin debit card is the user experience. The simplicity and flexibility of topping up is where the BitPay Card shines.