Coinbase reveals the Shift bitcoin debit card is off to a solid start

Towards the end of last year Coinbase partnered with Shift Payments, a company that provides Visa debit cards. “We are working hard to enable users to connect everything from bank, airline mile, and alternative currency accounts to their Shift Card,” states Shift Payments.

“Since launch in November, over 10,000 people have signed up for the card and spent over $1,000,000 worth of bitcoin.”

• Coinbase

The card costs US$10, and allows Coinbase account holders in 32 American states to spend bitcoin anywhere that VISA is accepted. Unlike some older debit cards that simply allow you to fiat that were purchased with bitcoin, when Shift is used in a purchase the equivalent value of bitcoin is debited from the Coinbase wallet, based on the current Coinbase spot price.

For the first time ever, the majority of bitcoin holders in the US can now walk around their hometowns and spend bitcoin on groceries, gas, and anything else they normally pay for with a VISA card, regardless of the whether a merchant accepts bitcoin or not.

There are no overdrafts, no renewal fees, nor domestic transaction fees; just an international payment fee of 3%, and an ATM fee for cash withdrawal, US$2.50 domestic and US$3.50 international.

Of course, Shift isn’t the only debit card using bitcoin. Both Xapo and e-Coin have competing debit cards that hold bitcoin balances of some kind, and both arrived many months before Shift did.

Unfortunately, neither company has the user base that Coinbase enjoys, and neither can be shipped to US customers due to international restrictions. That makes Shift uniquely positioned to be the most popular of the bitcoin debit cards, if only because of the 3.2 Million Coinbase customers.

After two full months of gathering data, we can now see that the Shift card is off to a good start. While Coinbase doesn’t tell us how many new bitcoin transactions have been made, the most popular types of purchases are from everyday spends at grocery stores and restaurants.

The fundamental principal of these payment services has attracted criticism from bitcoin advocates. The founder of BigBTC.ca, Brett Russell, made the argument that they don’t help bitcoin adoption.

“Shift Payments says the Shift Card works like any debit card today. That’s because the Shift Card IS JUST a US Dollar debit card. Nothing more.”

• Brett Russell, BigBTC.ca Founder

“The Shift Card itself does not display a bitcoin logo or anything to indicate bitcoin may be part of the transaction,” Russell states on his blog. “When the Shift Card is used merchants don’t see bitcoin, they don’t hear bitcoin, they don’t learn about bitcoin. Further, as the merchant didn’t receive any bitcoin, they cannot participate in expanding the bitcoin economy by using it to pay their suppliers.”

A similar situation is arising with Near-Field Communication (NFC) payments, an industry that has Apple, Google and Samsung vying for dominance. Circle and Plutus both provide NFC payment options for bitcoin users, without a card. They allow retail payments to be made with a simple app on your smartphone.

However, merchant adoption was never the primary objective for bitcoin debit cards, nor NFC solutions. The classic challenge in boosting Bitcoin adoption is a Catch-22 paradox; How do you get more merchants to accept bitcoin for payments if their customers don’t have any bitcoin yet, and how do you get more people to use bitcoin if merchants don’t accept it?

Bitcoin debit cards break this paradox. Customers can rest assured that they can spend their bitcoins at most every merchant out there.

“At the end of the day, what we’re trying to do is make bitcoin easy to use,” said Coinbase vice president of business development and strategy Adam White. “We want to make it easy to buy and sell bitcoin, and we want to make it easy to spend. A mainstream debit card based on bitcoin is a key element.”