Industry experts think that it is time for traditional financial organizations to accept that crypto industry has developed enough and does not cause significant risks.
Crypto cards have become an integral part of most crypto companies. Aiming to prevent the risk of transactions blocking companies reiterate the reasons why their clients have to use plastic. Though as for crypto services such cards is not the solution for users or fintech companies.
They are not needed just as we do not need specific financial tools for purchase of gold, oil, precious metals or any other resource. But they do not eliminate the risks related to any kind of money.
Should we pay to Visa and Mastercard for making crypto transactions?
As we all know the bank cards make our life easier and avoid in some way the possibilities of our money being stolen. For this purpose we pay some commissions to bank. As for crypto they make more convenient the purchase of crypto from various exchanges and convert them into fiat for using it in our daily life. So it will be silly thinking that fintech companies will be quickly refusing from bank services and stop paying transaction fees.
At the same time Visa and Mastercard can make their cards more crypto friendly and do not cause additional problems.
Issuing company cards
Now then the amount of cashless payment is greater than the amount of cash payments any company wanting to have their own brand bank card has three options.
Direct participation in the international system. For doing this the company has to observe some principal criteria, have correspondent technological platform, observe security requirements, have stub funds.
Just to set an example one VISA member needed to have 56 million USD capital directly at VISA to get the possibility to issue own bank card. The price of license is around one million plus the fund for security deposit and direct royalties, so such option is not very suitable for small or medium scale fintech companies.
Associated membership in the payment system via sponsoring bank. With such option banks deals with all license formalities. The fee is around 200-300 thousand USD plus several million USD of deposit.
Though even on such conditions banking institutions do not want to cooperate with crypto companies as cryptocurrencies are still treated as high risk asset without exact juridical regulation. Such situation causes greater fees for transactions.
Connect with processing company. Payment processing systems deal with bank cards issuance and it makes them attractive for crypto services. Such companies take for themselves various risks in order to avoid funds from blocking by standard payment systems.
Such risks include the following:
- hiding the information about the company true activity.
- application of incorrect Merchant Category Codes.
- making crypto cards with their own BIN despite the rule of payment systems about the allocation of specific BIN for each product.
- making cryptocurrency cards with individual design and their further sales via crypto services.
- enlarge the transactions limits irrespectively of regulator and/or payment system requirements etc.
The processors similar to Wirecard take on, by thus growing the fees for crypto services and end customers.
The risks are quite high so banks should search for the ways of cooperation with traditional banks and reduce all possible risks. Such approach might bring additional cash flows and make end users assets more secure sooner or later in this life.