Meet The First Bitcoin Debit Card On SmarTech

• Bitcoin may be the future of digital money, but it has a big problem here in the United States: why use it to buy anything when millions of merchants already accept debit and credit cards?
  Today, if you want to buy a bottle of lemonade with bitcoins, you need to scan a QR code with your phone or email a long bitcoin address to the seller. For most people, buying with bitcoins just isn’t as easy as Visa or MasterCard.
  
       One card you can use everywhere
  But that’s set to change in the next two months.
   Xapo, a company that offers online bitcoin wallets, says it’s two months
  away from introducing the first debit card that will let you
   spend your bitcoins at any place that takes Visa or MasterCard.
  It’s a sign of bitcoin’s growing maturity, and a look at how the digital currency is slowly integrating with the mainstream financial services industry, thanks to a raft of venture-backed bitcoin startups that are now coming online. There are a few other companies that
  offer prepaid bitcoin cards, but some of them have a fly-by-night feel. Xapo, it seems, is the first to really link your online bitcoin wallet to a card, and–backed by $20 million in VC funding–it’s on far firmer footing. Unlike others, it also operates out of the United States–though it’s incorporated in Hong Kong.
  Here’s how it works. Xapo, a bitcoin wallet provider, is in the process of becoming a debit card issuer on one of the major credit card networks. That means that, like your bank, Xapo, can issue you a debit card number and expiration date. You get the card number for free. If you want them to send you some plastic so you can gas up or buy beer at a corner store with your bitcoins, then they’ll charge you $15.
  
  

  Image: Courtesy of Joshua Alvarez/The Hatch Agency
  When you use the Xapo card, the credit card number checks in with Xapo, which approves or declines the transaction, depending on how much bitcoin you have in your wallet. It then sells the bitcoin on the Bitstamp exchange and pays out the merchants just like any other card issuer.
  “You just have one card that you can use everywhere without restrictions,” says Wences Cesares, Xapo’s founder and a veteran of the digital payment space.
  You can already buy prepaid gift cards using bitcoin thanks to a company called Gyft. But Gyft’s cards only work with specific merchants–Amazon or Target or Dell, for example. That’s because the regulations covering cards such as MasterCard or Visa (known as “open loop” cards in the payment industry) are much more onerous than the gift card rules, says Vinny Lingham, Gyft’s CEO.
  Gyft is a peer-to-peer gifting service that “cannot guarantee that open loop cards would not be used by international people accessing our website,” Lingham says. “[I]t’s not worth the risk to offer these cards, knowing we could not, with 100% certainty, comply with the laws.”
  Xapo complies with U.S. law by requiring its customers to provide proof of residency and identification before they can open an account. Cesares says that his company isn’t sure yet which payment network the Xapo card will use, but the company is testing MasterCard, Visa and Discover. “I think it’s most likely MasterCard, but there’s still a chance that it will be another,” he says.
   BY ROBERT MCMILLAN
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