Cryptocurrency cards: pitfalls and safe use

Today cryptocurrency users in most countries can order and use debit or prepaid cryptocurrency cards to quickly convert cryptoassets into fiat currency and buy goods and services online, at points of sale, or withdraw money from ATMs.

Coinidol.com news portal collected the most frequent complaints from cryptocurrency card users and recommendations for their use with the least problems.

To issue a cryptocurrency card, whether Visa or MasterCard, it is necessary to undergo the procedure of personal identification (KYC) – it is required by the user’s agreement with the company issuing the cryptocurrency cards. A basic KYC check consists of:

1. Identity checks, including providing full name, date of birth, copy of passport (almost always).

2. Address verification – Users must upload one or more utility bill, bank statement, or rental agreement (often).

3. Providing information about your monthly/annual income and where it comes from (sometimes).

Providing all the necessary documents and then waiting for verification can take time, especially if the user has just moved, changed jobs, or is requesting a card from another country with documents in a foreign language. During the COVID-19 pandemic and its associated restrictions, users face great difficulty in gathering all the necessary documents, especially if physical presence is required to issue them.

History Lessons

Several companies began offering prepaid and virtual Visa cards for bitcoin issued by Wave Crest Holding back in 2017. These cards were quite popular in Europe. However, in January 2018, Wave Crest Holding announced it was discontinuing all cryptocurrency cards due to regulatory concerns. Visa immediately terminated its license agreement with Wave Crest Holding, attributing it to continued noncompliance with the company’s rules.

Customers of BitPay, Cryptopay.me, Coinsbank, TenX, Wirex and AdvCash lost the ability to use their cryptocurrency cards. It took a few months before companies started issuing cards and working with them again. But, remembering the mistake of the first cryptocurrency card issuer, these firms were forced to follow Visa’s rules – conducting KYC verification for all users.

As a result, cryptocurrency card users found themselves caught up in the same verification process that accompanies getting a card from a regular bank, leaving some crypto-asset holders in unpleasant situations. Here are the problems faced by users of cryptocurrency cards. They demonstrate what actions can be misinterpreted by cryptocurrency companies and lead to sanctions that prevent a cryptocurrency cardholder from using it.

Country of service

Cryptocurrency regulation varies greatly from country to country, including tax rules and the amount of cryptocurrency that can be converted into fiat. Companies offering cryptocurrency cards must have an agreement with a local bank that will conduct fiat transactions. Therefore, cryptocurrency card users usually have two or more accounts: one managed by a cryptocurrency firm to handle cryptoassets, and another one at a local bank to store and send fiat money.

Often users need to exchange cryptocurrency for rubles, U.S. dollars, euros, or other national currency before buying. That’s why many companies offering cryptocurrency cards can’t provide services to users in different countries – they simply don’t have an agreement with the operating bank or the authorities in the customer’s region.

Before ordering a cryptocurrency card, it is necessary to check whether it works in the country where the user plans to pay with it. Most companies don’t list this on their home page, but usually in their FAQs or user reviews.

For example, some customers who were planning to use BlockCard’s Visa cryptocurrency card found that as of 2020, the card is only available to U.S. users. According to a review
one user:

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“I opened an account and made the required deposit to order the card. Only to realize that we do not have this map in Europe. Since then I can no longer log in. It is not possible to contact customer service because you need to log in to submit a request.. I seem to have lost my money. Keep that in mind and look for another supplier!”

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The challenges of verification

Before using a cryptocurrency card, users must go through all KYC procedures and checks. Refusing to go through identification can be costly.

Adv Cash offered its first Visa cryptocurrency cards before the 2018 restrictions. Years later, the firm announced plans to issue cryptocurrency cards again, with the condition that all customers pass KYC checks, including providing copies of proof of identity. However, not all users manage to comply with the company’s requirements. One customer writes:

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“They are impossible to please.. The five of us tried unsuccessfully to complete the KYC process. They are not satisfied with anything, no matter what you offer.. We tried the scanner, the camera, the original PDF documents, and so on. This is the most complicated account opening process I have ever encountered. It’s not worth the trouble; there are plenty of other services that offer better and more convenient service.”

Users should also keep in mind that card issuers generally prefer fresh documents, usually issued no more than three to six months ago. Lack of recently issued documents, such as bank statements, can also cause difficulties
when it comes to verifying. Some cryptocurrency card providers may ask the customer for a passport photo with the date of the photo to complete verification.

Cryptopay.me, which offers cards to users in Europe and the UK, confirms that such a complicated verification “happens rarely, but is possible.”

Language barrier

Some services require verification of a user’s home address via utility bills, rental agreements, bank statements, etc.. However, users report that if the document is written in non-Latin characters, such as Russian, it may be rejected.

Sometimes the automated systems that check can’t handle Russian, Ukrainian, Greek, or Macedonian to confirm the address in the document. Users can try to resolve the issue by contacting customer service or requesting documents with their address in English from a bank or other institution.

Lack of responsive customer support

Sometimes cryptocurrency card transactions can be “frozen” for a variety of reasons, including suspicious user behavior, technical issues with the platform, high transaction volume, hacker attacks, or service disruptions.

The first thing customers do when that happens is contact customer support. But when it comes to cryptocurrency card providers, fast support is not their strong suit. Most major banks have a 24-hour hotline for customers, such as those wishing to block their cards if lost or stolen, as well as physical offices in the customer’s country. But cryptocurrency card users usually can’t just call a cryptocurrency company or visit their office for clarification or help.

In the event of a problem, cryptocurrency cardholders can only act promptly on their own, using a mobile app or by logging into their account in a browser. Sometimes the solution can be found in the FAQs on the issuer’s website.

For specific questions, users need to create a support request. Sometimes you can get an answer via online chat on the platform. However, the average response time is usually a few days. Usually users have to make several requests explaining their problem before they get a solution.

The Coinbase cryptocurrency exchange is one of the safest platforms offering a wide range of services, including cryptocurrency cards for U.S. and European citizens. However, users are not always satisfied with the quality of customer service. Users of all other major cryptocurrency card companies have similar complaints.

Problems with mobile apps

Technical glitches can happen with any mobile app, but a non-functioning payment app can cause users a lot of problems.

TRASTRA – provider of banking services for crypto-assets and issuer of Visa debit cards in Europe. Users receive a debit card along with a personal IBAN (International Bank Account Number) for instant transactions. One TRASTRA user expressed
his dissatisfaction with the mobile app:

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“The app hasn’t worked in half a day, the company hasn’t even bothered to send out a warning to users.”

Users should also update the app in time for it to work properly. If the app doesn’t work properly, users can’t use it or their cryptocurrency card.

The developers of Ethereum-based Monolith Wallet are calling it the first non-custodial wallet to support DeFi tokens in the UK and Europe. Users get a Visa debit card along with the wallet. Users can trade cryptoassets using the Monolith app on their smartphones.

However, despite the stylish design and concept of the project, customers of the service report that the company does not pay enough attention to the development of the app, and call
The app is “incredibly slow.

Unexpected changes in terms of service

Most customers don’t expect the terms of service to change over time when they sign an agreement with a service provider. However, sometimes it happens. The cryptocurrency market is a fairly new industry. Any new regulatory rules change the way the market works, and its volatility sometimes forces companies to take unpopular steps with users.. While some companies try to do this as transparently as possible, others take their users by surprise.

In December 2020, the SEC filed a lawsuit against Ripple. The firm’s executives were accused of
of selling $1.3 billion in unregistered securities. XRP has since been delisted by Bittrex, Coinbase, OKcoin and the U.S. division of Binance. Some cryptocurrency companies have done this quickly and without notifying customers.

Nexo advertises itself as the leading regulated financial institution in the world of digital assets. The firm also offers its users cryptocurrency cards. Recent problems with Ripple came as an unpleasant surprise to Nexo users. One customer stated that the company suddenly and without warning removed the XRP sales button:

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“Without warning, Nexo removed the ability to sell XRP, the only asset for many users of the app. This left a large portion of users without the ability to repay credit by selling their crypto assets while their price was still high.”

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The card may not work everywhere

Cryptocurrency cards differ from “fiat” cards issued by major banks. Sometimes cryptocurrency card holders can’t pay at some points of sale. This is because the card is backed by a local rather than a global bank, which may not have an agreement with the merchant acquiring organization.

Cryptocurrency payment company BitPay issues cryptocurrency cards for its customers. However, some of them face difficulties when trying to pay for goods and services. One user complained that his card with a balance of more than $1,000 was not accepted at a restaurant, and he waited more than three hours for BitPay support to respond at the time of writing this review. A similar problem sometimes occurs when shopping online. One Binance VISA card user did a great review
on the subject.

Cryptocurrency card users should be aware that sometimes there are problems with payment, both at offline outlets and when shopping online. For now, don’t rely entirely on the cryptocurrency card and need to have backup options for urgent payments.

High and unexpected fees

Despite promises of no hidden fees or restrictions, cryptocurrency card users often face high bottom line fees. There are several ways to charge users extra fees:

• Unfair exchange rate. Cryptocurrency card issuers often receive income from exchange fees for cryptocurrency into fiat currency and exchange rate differences. Sometimes a bad exchange rate is the main reason for closing a cryptocurrency card.

• Monthly maintenance fee. Almost all issuers of cryptocurrency cards charge service fees. The average monthly fee is about $2. However, companies may offer cards with different limits, and users will pay more for cards with higher limits.

• Transaction fees. Most issuers charge a small percentage or fixed rate per transaction. Some Bitpay card users complain about extremely high fees (about 20%) for some transactions.

• Other fees. High exchange fees, refund fees, inactivity fees

British company Revolut, in addition to traditional financial services, allows customers to buy and send cryptocurrencies among themselves, and issues cryptocurrency cards for European users. However, cryptocurrency cannot be sent to the Revolut wallet directly from an external cryptocurrency wallet – the user must first send fiat from their bank account to their Revolut card.

Only after that user can buy cryptocurrency and send it to other Revolut clients. To withdraw money, users must sell the cryptocurrency for fiat again. Some Revolut users have complained about high exchange fees:

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“Recent changes to the app have made the interface uncomfortable for the user. For example, it is difficult to know the exchange rate. Charts are inaccurate. Cryptocurrency exchange fees are too high. After paying extra for a premium account, the commissions remained the same, even though the company promised otherwise…”.

Users of some cryptocurrency cards should also be prepared to pay a fee if they want a refund. Bitnovo offers two types of cards for residents of the European Union: the Bitcard debit card and the BITSA prepaid card. Although all information about options, restrictions and commissions are described on the company’s homepage, some users are warned
about fees for any refunds or cancellations:

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“Horribly long process.. Got to the end of the order after payment and found that I could not complete it. I’m waiting to cancel and they [Bitnovo] tell me that I have to pay an “administrative fee” of 10 euros to cancel my order. Absurd, a scam.”

Some operators of cryptocurrency services charge for lack of account activity. Card issuers sometimes charge this fee in cryptocurrency, usually BTC. Given the volatility and cost of BTC transactions, the commission can reach huge amounts.

Coinsbank’s Travel Bitcoin Debit Card users often write about charges for card inactivity. Users are informed by email that if they do not use the account for more than twelve months, the company will charge a special monthly fee of €49.95.

Coinsbank was one of the first companies whose Visa cryptocurrency cards came under a freeze in 2018. First, the company promised to provide customers with the ability to withdraw money through Western Union, and also said it would soon issue new cryptocurrency cards. However, no new cards have been issued in the past almost three years, and the withdrawal of money from the Coinsbank account to external cryptocurrency wallets implies a high fee.

Old Coinsbank cardholders often stopped using their accounts for a long time, waiting for a better rate, a new cryptocurrency card or another way to withdraw their money. They ended up facing an inactivity fee on the account.

Digital payment platform Wirex, which offers cryptocurrency cards supporting multiple cryptocurrencies and fiat currencies, charges a similar fee. But in terms of
it is called a “storage fee”.. This fee may be applied to accounts with no transactions for 9-18 months and is GBP/USD/EUR 5 per month on fiat currency balances. There is a storage fee of 0.003 BTC if the account is inactive for over 18 months.

Other cryptocurrency companies charge similar fees to users – the number of platforms adding such fees is growing. Cryptocurrency card users should remember that these companies profit from every transaction the user makes and are not interested in operating as a long-term depository.

Blocking a card or account

Some cryptocurrency cardholders complain about the unexpected blocking of their card or account without explanation. Former Wirex cryptocurrency card users report that even after years of using the card, they received a short email that the customer had 24 hours to withdraw all their money before the account was blocked. When asked about the reasons for the blocking, users received the following response:

“Due to the requirements of current law, we are unable to provide a reason for closing your account.”

Any failure in the system, any warnings about suspicious behavior, even if the customer can fully explain it and provide necessary confirmations, can lead to an unexpected closure of the account. The Bitwala customer reports the same problem.

After being blocked, customers face inability to withdraw money from their account. Accounts are frozen instantly, and there is no time to withdraw money or send it to an external wallet. Users of several companies, including BitPay
and Wirex, described such a situation.

In addition, in March 2021, Wirex froze all previously issued Visa cards and switched to
to MasterCard. Many users emphasize that it was an unexpected move. What’s more, customers are reporting that they are having more trouble communicating with customer service.

Reasons for blocking

No cryptocurrency card issuer explains clearly and openly how customers can avoid the problems described above, whether it be account blocking or KYC issues. Each cryptocurrency company provides a user agreement and its terms. However, when opening an account and applying to issue a cryptocurrency card, users do not read the agreement carefully enough and accidentally violate its terms. Every potential cryptocurrency cardholder should patiently and carefully read all the documents they sign, regardless of their length.

The most common reasons for a cryptocurrency service provider to block a card or account include suspicion of violating the following terms of service agreement:

• Money laundering, terrorist financing, fraud, or the commission of any other financial crime;

• Opening multiple accounts on a platform, which is generally prohibited;

• Using a card to collect a debt;

• Erroneous transaction;

• Use of the account or card by third parties without the owner’s knowledge;

• Providing false, inaccurate, incomplete or misleading information by the customer;

• Buying or selling any illegal goods or services;

• Using an account to manipulate the price of any asset or currency in the marketplace;

• Violation of any applicable electronic payment network rules or card issuer association rules;

• Presence of malware on a user’s computer or smartphone;

• Tax evasion;

• Using the account for commercial and speculative purposes;

• An attempt by a customer to verify the behavior or reaction of an issuer to certain actions;

• Customer’s refusal or failure to provide additional information about its activities when requested.

If the issuing company suspects any of the above activities, most firms reserve the right to restrict, freeze or terminate service to the customer. According to Bitpay’s terms of service:

“We reserve the right, in our sole discretion, to restrict your use of the card, including restricting or prohibiting certain types of transactions. We may refuse to issue a card, revoke card privileges, or cancel your card, with or without cause, except as required by applicable law.

Automated algorithms check all transactions and accounts and alert you if there has been a suspicious activity from the list above. As a rule, these warnings should then be checked by company employees and security. However, users should keep in mind that such systems have flaws as well.

Rules for the safe use of a cryptocurrency card

Considering the customer complaints described above, we can make the following recommendations about what cryptocurrency card users should and should not do to save their money (and nerves):

• Check if the chosen cryptocurrency card works in your country before ordering it;

• Read the customer agreement carefully when opening an account and follow its terms and conditions;

• Don’t send large amounts of money to your account before you complete the identity verification process;

• Check the exchange rates offered by the company and compare them to other platforms;

• Check that you have all the necessary documents before you go through KYC verification;

• Find out all the fees the service charges: for cryptocurrency to fiat transactions, payments over the counter, withdrawals, no account or card activity;

• Check your card’s available limits regularly-they are subject to change;

• If you don’t use your cryptocurrency card very often, remember to make at least one payment or transaction every six months;

• Try to avoid atypical large transactions in foreign countries;

• Use strong passwords and two-factor authentication;

• Don’t keep all your money on one platform;

• Don’t give your card passwords or PINs to third parties;

• Do not use cryptocurrency cards for illegal activities or to buy or sell illegal goods and services;

• Remember that cryptocurrency cards may not be accepted by all merchants, and be prepared with alternate methods of payment.

Cryptocurrency card companies as of May 2021

Company & Map

Availability in countries

Supported cryptocurrencies

Supported fiat currencies

Helpful Information

Binance  VISA Debit Card

EEA, Guadeloupe, Guernsey, Isle of Man, Jersey, Martinique, Monaco, Reunion, San Marino, St. Maarten, Aland Islands

BTC, BNB, SXP, BUSD

Euro

Commissions and restrictions

Bitnovo Bitcard VISA Debit Card

EEA

BTC, LTC, DACH, BAT, BCH, ETH, DAO, XMR, ONT, ONG, TRX, USDT, XRP, ZEC, XLM

Euro

Card info

Bitnovo Bitsa VISA Prepaid Card

EEA

BTC, LTC, DACH, BAT, BCH, ETH, DAO, XMR, ONT, ONG, TRX, USDT, XRP, ZEC, XLM

Euro

Commissions and restrictions

BitPay MasterCard Prepaid Debit Card

USA

BTC, BCH, ETH, GUSD, USDC, PAX, BUSD), XRP

U.S. Dollar

User Agreement

Bitwala VISA Debit Card

EEA

BTC, ETH

Euro

Commissions

Blockcard VISA Debit Card

U.S., soon to support EEA

XLM, BTC, ETH, TERN

US Dollar

FAQ and Fees

Coinbase VISA Debit Card

EEA, UK, USA

BTC, ETH, LTC, BCH, XRP, BAT, REP, ZRX, XLM

British pound, US dollar, Euro

FAQ

Crypto.com Midnight Blue, Ruby Steel, Jade Green, Royal Indigo, Icy White, Rose Gold, Obsidian VISA Debit

U.S., EEA, Canada. Service in Singapore temporarily suspended

BTC, LTC, ETH, XRP, PAX, TUSD, EOS, XLM

British pound, US dollar, Euro

FAQ

C.Pay Prepaid VISA Card from Cryptopay.me

EEA, UK

BTC, LTC, ETH, XRP

Euro, British pound

Commissions and restrictions

Crypterium VISA Card

Worldwide except some countries

BTC, ETH, LTC and others

Euro

Information

Monolith VISA Debit Card

EEA, UK, Gibraltar, San Marino, Monaco, Guadeloupe, Reunion, Martinique, Isle of Man, Jersey, Guernsey, Aland Islands, St. Maarten

ETH, aDAI, DAI, TKN, USDC, USDT, SAI, MKR, DGX, MATIC, KNC, RLC, DGD, QNT, NPXS, GUSD, GNO

British pound, Euro

Commissions and restrictions

Nexo MasterCard

Worldwide except some countries

BTC, ETH, XRP and others

British pound, euro, US dollar

Customer Support Center

Revolut MasterCard or VISA

EEA, UK, USA, Australia, Canada, Singapore, Switzerland

BTC, ETH, BCH, XRP, LTC, XLM, ZRX, XTZ, EOS, OMG

Rubles, US dollar, euro, British pound and other major fiat currencies

Fees

Spectrocoin VISA Debit Card

EEA

BTC, ETH, BCH, LTC, XRP, DASH, NEM, USDT, XLM

Euro

Commissions and restrictions

TRASTRA VISA Debit Card

EEA

BTC, ETH, BCH, LTC, XRP

Euro

Commissions and restrictions

Uphold MasterCard Debit Card

Worldwide except some countries

BTC, ETHC, BAT, XRP

U.S. dollar, British pound, euro, yuan and 23 other currencies

Terms of Service

Wirex MasterCard Debit Card

EEA, Australia, Hong Kong, New Zealand, Philippines, Singapore, Taiwan, UK

BTC, ETH, LTC, WXT, DAI, WAVES, XRP, NANO, XLM

U.S. Dollar, Euro, British Pound, Singapore Dollar, Australian Dollar, Japanese Yen, Hong Kong Dollar, Czech Krona, Mexican Peso, Canadian Dollar, Swiss Franc

Commissions and restrictions