By Jon Matonis
Forbes
Monday, May 7, 2012
http://www.forbes.com/sites/jonmatonis/2012/05/07/bitcoin-funded-debit-cards/
Yes, it’s entirely possible to fund your existing debit
card, or credit card, with your accumulated bitcoin. And I don’t mean
that you are shipped a generic, low-limit prepaid VISA or Mastercard
from some anonymous reseller. I mean that you convert bitcoin online to
dollars or euros and the funds are available to spend with a card that
you are most likely already holding in your wallet.
Why is this so
significant? It’s important because it leverages a little-known type of
transaction that is available on the VisaNet system called ‘Original Credit Transaction’.
The other major card payment networks have a similar feature too. These
transactions act like a refund or credit transaction when you return an
item to a store except that they don’t have to be associated with an
original purchase. Essentially, they enable your card to be a two-way
payment device. Surprisingly, not many financial institutions have taken
advantage of this feature yet but I expect that to change.
Visa Personal Payments, already offered by financial institutions outside the U.S., became available in the U.S. market
last year marking the first time that a major payment network has
introduced a global requirement for account issuers to accept incoming
funds. It’s the technology behind now-merged P2P service providers ZashPay and Popmoney.
Previously,
it was cumbersome for bitcoin account holders to transact in national
currencies because they had to go through one or more exchanges and then
wait further for funds to arrive in a bank account or other
intermediary like the formerly bitcoin-friendly Paxum.
Now these personal payments are being offered by e-currency exchanges
as a way to provide easy worldwide access to e-currency account balances
most notably by AurumXchange.
The digital currency exchange operated by Dominica-based Aurum Capital
Holdings, Inc. supports bitcoin as well as Liberty Reserve, Pecunix,
Perfect Money, and c-gold and they offer two choices for cashing out
into a card-based product.
The first option is the Withdraw2Card
service that does not require any sender identity verification.
Requiring only the destination card number and expiration date (name and
CVV code are not required), funds can be transferred to any credit or
debit card in any country in the world. If the destination account
currency is not dollars or euros then it will be converted to the native
currency automatically. Service fee is $9 plus 1.99% (for MtGox USD)
with a $1,000 maximum transfer amount and you should not send more than
the credit card’s limit. The bitcoin portion of the transaction is
accomplished through the use of redeemable coupon codes from the popular
bitcoin exchanges that act as digital bearer certificates.
According to AurumXchange, they plan to offer direct two-way
convertibility for bitcoin in the near future so you won’t need the
redeemable code.
This service is ideal for regions of the world
where a large majority of the population may not have bank accounts or
where international wires are cost-prohibitive. AurumXchange’s General
Manager Roberto Gutierrez explains, “The service so far has been
tremendously popular. Just counting countries alone where people don’t
have access to bank accounts or foreign wires are highly taxed or
scrutinized, such as Africa, Brazil and China to name a few, we have
processed over 3,000 orders since we started a few weeks ago. North
American and European customers have been using the service quite a lot
as well especially for small transactions that would otherwise be too
expensive to conduct through means such as international wire
transfers.”
The second option is the AurumXchange Premium Mastercard issued through North Carolina-based Four Oaks Bank which
comes with instant funds availability. After a $24.99 two-year
membership fee, the card will be shipped for free anywhere in the world
via first class mail.
OKPAY is another interesting provider in the bitcoin debit card space. They offer the OKPAY Debit Card
which is issued by CSC24Seven.com Limited, a financial institution
licensed by the Central Bank of Cyprus to issue cards. Founded in
2007, OKPAY, Inc. is a subject of British Virgin Islands (BVI)
regulations.
Now that they have completed their bitcoin integration into the OKPAY system,
it is possible to fund your OKPAY account directly with bitcoin,
withdraw via bitcoin, and use bitcoin as a payment option for purchases
of goods and services. Although, they do not offer the Original Credit
Transaction feature to any card, they will provide timely and direct
conversion of bitcoin to their proprietary Mastercard product.
By
removing friction from the process, bitcoin becomes easier to spend
overall because not every merchant will accept bitcoin directly for
payment yet and not all transactions demand irreversibility and privacy.
Logically as a consumer, you may still want your VISA chargeback rights
for certain purchases. The Original Credit Transaction is an excellent
way to leverage the legacy card payment network to facilitate the growth
of the bitcoin network and these two exchangers are in the vanguard.
