Crypto Cards: The New Frontier For Mass Adoption or a Fad from the Past?
The idea of crypto cards has always been compelling. In an industry long associated with enigmatic technological complexities and relatively high barriers to entry, being able to access one’s crypto funds at a swipe of a card seemed like the obvious answer to the struggle faced by the crypto industry with regard to mass adoption. The promising growth demonstrated by the crypto card industry is, perhaps, a testament to this; but is it enough to say that its value proposition will lead to greater adoption among the general populace?
In order to answer this question, it is important to identify where crypto cards stand vis-a-vis the greater market. Payment processing giants Mastercard and Visa have invested a considerable amount of resources in programs supporting exchanges and payment service providers, even working with intergovernmental organizations on regulatory frameworks to facilitate their use in the market. They have also highlighted that they have developed key relationships with some of the largest players in the crypto industry, including Coinbase and Wirex, which use the providers to power their crypto debit card services.
With support from well-established fintech companies that have become trusted and ubiquitous in markets around the world, it is fair to say that crypto cards have the potential to disrupt the fiat-dominated industry. Nonetheless, popularity and considerable market growth alone do not provide clear indications of greater adoption among the greater public. This is because crypto cards still face considerable challenges that hinder their ability to appeal to the average user.
Obstacles are alive and well
Since crypto cards were first introduced, blockchains supporting them have achieved better scalability, regulators have a better understanding of the technology, and priorities among its proponents have shifted for the better. Be that as it may, challenges remain.
According to the founder and CEO of Elitium Raoul Milhado, crypto cards face challenges that are typical in fast-growing industries.
“Players in the crypto card industry must contend with three major pain points: optimizing processes, having uniform standards in terms of service quality, and acquiring the necessary talent to propel the industry forward,” he said.
Many users have cited bad experiences with crypto cards, specifically around security breaches, accounting scandals, and misuse of funds. This has created a sense of distrust towards the industry, and I believe that addressing the three pain points is fundamental in regaining the users’ trust.
It is also worth noting that adopting crypto takes a considerable level of technical knowledge compared to simply using fiat bank cards. For many average users, the challenge of setting up a wallet, learning how to trade, and generally understanding how crypto mechanisms work are simply not worth going through given that a well-established system that uses fiat already exists in the market. It is perhaps this predicament that acts as a greater hindrance to the adoption of crypto.
“Getting in and out of crypto is still very complicated for average consumers where the majority of them get dropped at the initial level of KYC (know your customer) or even before that given that many don’t even know where to start,” said Haseeb Awan, founder of cellphone security services firm Efani which specializes in crypto.
Those who do proceed may not be aware of the intricacies involved in keeping their funds safe, leaving them exposed to a number of security issues. This leads to a certain level of distrust towards the use of crypto, particularly when users fall victim to security breaches.
Of course, these challenges are by no means limited to crypto and can be attributed to any disruptive technology that is still in the process of gaining maturity. Nonetheless, there are several ways in which the industry can overcome these problems.
The light at the end of the tunnel
For Raoul Milhado, cohesion among different stakeholders both within and beyond crypto is crucial in order to inch closer towards maturity.
“We need to create synergies, share knowledge, acquire talent, and focus on long-term strategies in order to provide products and services that are up to standard,” he said.
“We also need to work on making the technology accessible, scalable, and more profitable to keep the momentum going.”
This, again, goes back to the strides made by Visa, Mastercard, and their partners in paving the way for crypto cards to take hold as a legitimate means of payment. It is this level of cooperation between different stakeholders, each with their own strengths and competencies, that will enrich the industry with the insights and experience necessary to not only improve existing infrastructure but to also spread awareness of the technology among those who are not familiar with it.
Going beyond the fad
Among the wealth of ideas conceived by players in the crypto industry, crypto cards have truly provided an avenue for users, both experienced and complete beginners, to be able to access their crypto funds at will. As a result of the considerable recovery made by the crypto industry in the last few years since 2018, crypto cards have once again become very popular, even among large corporations. Raoul Milhado states that “without crypto cards, crypto will not survive the greater market.”
But the question remains: how long will it take before crypto cards become “the new normal’? It might take the industry a certain amount of time before the technology is adopted by a greater audience. This will take cooperation with multiple stakeholders, making strides in improving the technology, and spreading awareness about the technology in order to get it ready to challenge the status quo.