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The collaboration of Coinbase and Apple Pay may assist to expand the use of crypto debit cards.
On Tuesday, Coinbase announced that customers of its debit card product, known as Coinbase Card, may now pay using their mobile phones using Apple Pay. The announcement represents a new degree of integration between two big U.S. businesses and underlines cryptocurrency’s continuous march into the mainstream of retail business.
Coinbase Card lets users draw on their balances of Bitcoin and other cryptocurrencies to make purchases in stores or to draw cash from ATM machines. While the product has been available in the U.K. and Europe since last year, U.S. customers remain on a waitlist—though the company said in a blog post it will invite “select customers off the waitlist” starting this week.
Coinbase adds that people who have been accepted for the debit card can begin using it immediately via Apple Pay, even if the actual card has not yet arrived. Google Pay, which has been available to debit card users in the United Kingdom and Europe since last year, will also be available to US clients, according to the firm.
Coinbase Card is noteworthy since it is among the first to offer an economic advantage that can exceed the expenses associated with using a bitcoin debit card in some circumstances.
For customers in the United States, this perk comes in the form of receiving 1% back in Bitcoin or 4% back in Stellar Lumens for every purchase. These benefits can help to offset Coinbase’s 2.75 percent fee for each crypto debit card transaction.
While that cost implies that customers will continue to lose money on Bitcoin transactions, there is one key exception: any transaction they make using the USDC stablecoin will not incur a cost. As a result, Coinbase clients who make USDC transactions get 1% back in Bitcoin, a benefit equal to many credit card incentives in the United States.
More broadly, the combination of these incentives plus the ease-of-use of Apple Pay may result in an increase in Bitcoin-based payments in the United States.
However, the incentives feature is only available to Coinbase clients in the United States, implying that crypto debit card purchases remain an unclear value proposition for people in Europe and the United Kingdom. However, some customers may think that the novelty of buying at businesses that accept Bitcoin, Ethereum, or other cryptocurrencies overcomes the disadvantages of the fees.
Coinbase, which relies on the widely-used Visa network to process debit payments, is one of numerous companies offering crypto debit cards. Others include Gemini and BitPay, both of which have announced Apple Pay integrations of their own. But Coinbase’s large customer base along with the rewards offering could help expand beyond what is currently a very niche offering.