xapo debit card backed by BitCoin

It will take a while until we can pay with BitCoin at most merchants. For the time being xapo introduced a visa debit card that credits your expenses directly from your BitCoin online wallet at xapo. Since it runs over the visa network, and since there are currency conversions involved, it can’t be as cheap and frictionless as BitCoin directly, but it is an interesting option nonetheless. Since I’m planning on cancelling my regular credit card, this could be an interesting intermediary solution. I found a couple of articles that more or less describe the card, but they all left some uncertainty. It appears that they only recently expanded their offer to Europe. But only cards with USD, EUR or GPB as nominal currency are available. That means for me that an additional conversion from CHF to EUR will be required, adding to the transaction costs.

So, first you create an account with xapo, which is as easy as with any other online service. Then you find an option to pre-order a debit card, which will require you to allow them to hijack your twitter and facebook accounts. I don’t have none of the two, so I was stuck for a moment. There is a support chat easily accessible, and they respond quickly. European customers just need to send some money from their regular bank account to the xapo wallet where it is converted to BitCoin. After that, you receive a debit card automatically.

I received mine last week. To enable it and get the pin code, I had to call a number in the UK with a fully automated computer system. On the web you will find different information about the card. The third party issuer seems to have prohibitive fees, which xapo promised to absorb. So, I’m a bit curious about the business model behind. but this post is about it’s usage. Since I planned it as a replacement for my regular Visa credit card, I tried it for online purchases first. I always thought Visa is Visa, after all Visa debit cards are uncommon around here. Turns out most online merchants only accept Visa credit cards, and wont go with debit cards. I have no idea why this is. Today it should be easy to verify a payment with a bank where the customer’s account is. That was not the case twenty years ago, but nowadays ….?

Then I used the card to buy some chewing gums and a train ticket. That worked like a charm. When I calculated the cost with the current CHF price that the android BitCoin wallet displayed, it was about CHF 5.99 which would be even less than the fees indicated. But as we all know BitCoin is very volatile, and so this calculation is difficult to carry out exactly. But I think it’s save to say that the fees with the two currency conversions are not as prohibitive as I feared. I don’t know if the merchants pay equally high fees as with credit cards, but I guess it’s for sure higher than with the Maestro debit cards that all local banks hand out to their customers.

To sum it up, it’s great that there is now a way to indirectly spend BitCoin for everyday purchases. Even if BitCoin is used in the background, this particular use case seems to add more friction than just using the Maestro card from my local bank. The minus that bugs me most, is that I can’t use it for online purchases.

Coop sbb xapo-card

 

Update

After the card initially failed for most online purchases, I asked the xapo staff about it. They couldn’t find a good reason why the transaction failed, nor were there any logs indicating reasons for the declines. Hence I kept trying, and indeed the last few times I used the card for online purchases, it was always successful, even with merchants that failed previously.
The other issue I had a close eye on was the fees. The Amazon transactions were free, which was most welcome as purse.io stopped working with amazon.de lately. All other card transactions carried a 3% fee, which is quite hefty. But compared to the CHF 120 I currently pay for my Visa credit card, that’s acceptable. So, the time to cancel the credit card has finally arrived.
I usually have the card charged with about CHF 100. After I used it to pay something, I can recharge it immediately with a simple BitCoin transaction.

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