Paycard, the first digital currency (Bitcoin) funded card to be launched by the currency conversion services provider BitInstant, will not have a Bitcoin balance, BitInstant chief executive Charly Shrem has confirmed.
The unplanned announcement of the card launch, that Shrem inadvertently made public in a web chat conversation in August this year, attracted media attention for what is not going to be: a Bitcoin wallet.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Its cleverly done, Dutch payment expert Simon Lelieveldt told Cards
International. If you package it nicely, it seems like Bitcoins are on your card, but actually they have already been converted, he said.
Shrem confirmed that the card will be another recipient where BitInstant will use for Bitcointraditional currencies transfers, in addition to the existing transfer methods such as PayPal, bank deposit, or MoneyGram.
As the reloadable debit card will handle only traditionally accepted currencies, legal issues regarding the trading of a new currency are avoided.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataShrem said that Paycard will be launched in the next two months in partnership with two banks, whose names he does not want to reveal at this stage.
MasterCard provides the Bank Identification Number (BIN) for the cards issued by these banks. As soon as the launch of Paycard was announced, MasterCard stated publicly it was not aware of the initiative. Shrem said that the banks involved have already established relations with MasterCard in place, and the application for a cobranded card is likely not to be refused.
The banks we are working with have been issuing cards with MasterCard since the 90s. There is no reason they wouldnt approve Paycard, as long as they dont mind our design, Shrem said, adding that proper talks between the two companies will be hold closer to the launch date.
Seven thousand Payacard applications were made in the first week after its announcement.
According to Shrem, the aim of the initiative is to facilitate immediate and less expensive money transfer around the world and to improve the general perception of the digital currency, often associated with illegal businesses such as money laundering because of the anonymity of its transactions.
Despite Paycard is not technically a Bitcoin-funded card, Lelieveldt said that from a consumer perspective this is the first step that the Bitcoin makes into the card world.
However, he stressed the importance for consumers to be aware of the risk associated with a currency which has debatable store value and can encounter enormous and rapid exchange rate fluctuations.
Because of this intrinsic instability, experts said the further expansion of Bitcoin as a widespread payment method should be carefully considered. Taking Bitcoin outside of a niche set of transactions to a larger public will pose a challenge to central banks, Francesco Burelli, partner at the management consulting firm Value Partners, told Cards International.
I would expect a response similar to that Beenz attracted when it was trying to establish itself as the web-currency, he added.
