Crypto cards: which one to choose?
Many crypto investors are looking for a payment card to easily spend their cryptos in trade. While this product has long been reserved for exchange platforms, other innovative initiatives have emerged. We take a look at the best cards.
Many have already forgotten, but the 2019 release of Coinbase's crypto payment card was a turning point. At the time, it was the first "mainstream" card that made it easy to spend your cryptos in the real economy without going back through your traditional bank account. Not everything was perfect, but the product proved to be very attractive to users.
Most importantly, the Coinbase card had a following. Today, we can no longer count the number of cards that have been released by other players. While these cards use traditional payment networks such as Visa and Mastercard, they don't all work in the same way, and fees can vary. We've put together a detailed article (with a table 😎) to help you get your bearings.
Various fees from one card to another
The best-known cards have been launched by exchange platforms such as Coinbase, Binance, Cryptocom or Bitpanda. The reason is simple: these platforms make money when you sell cryptos. By providing you with a card, they are guaranteed to multiply the number of transactions (which is exactly what banks do).
When choosing the one that suits you best, you need to keep an eye on the fees charged when selling cryptos against euros that you use in commerce. Often, these are the same rates charged for a traditional sale on the platform. On Binance or Cryptocom, this is inexpensive (between 0 and 0.1%). But Coinbase, for example, charges 2.5% of the transaction amount!
Globally, you need to be vigilant about small "hidden" charges. For example, when you want to withdraw cash from an ATM (Coinbase charges an additional 1.5%). Using the card outside Europe can also lead to unpleasant surprises.
Payment limits also need to be checked. With Cryptocom's card, this limit is very high: you can spend up to 25,000 euros a day!
Cashback... under certain conditions
To entice you, "crypto" card issuers often offer cashback, i.e. they pay you a small percentage (in cryptos) of what you've spent 😏.
On the Binance or Cryptocom side, the level of cashback depends on the number of BNBs or CROs, their in-house cryptos, that you hold. On Binance, you can get up to 8% cashback (paid in BNB) as long as you have at least 600 BNB (or €120,000 at the current rate).
On Cryptocom, you can get 5% cashback (paid in CRO) as long as you have €350,000 in CRO.
Reassure yourself, you can qualify for cashback with lower thresholds!
But be careful with the ceilings: on Binance you can't receive more than the equivalent of 100 euros per month (a bit meagre if you're required to hold 600 BNB...). At Cryptocom, there is no limit for large CRO holders. In short, the devil is in the detail...
What we can recommend is that you don't choose your card on the basis of cashback. The level of rewards is often revised downwards by the platforms because cashback is expensive for them.
On the other hand, different models that involve receiving cashback in bitcoins seem more attractive to us. Bitpanda allows this, but only if you hold a certain number of BESTs, their own cryptocurrency. A problem, again, for those who do not wish to expose themselves to this asset.
In the end, the cashback offer that seems most relevant to us is perhaps that of Bitstack's future card. When it comes out (end of 2023), users will receive cashback in bitcoins if the spend is made at a network of partner merchants. There will be no requirement to hold another crypto. And that's something we really appreciate.
Gnosis card leads the way in innovation
There's currently a fresh wind blowing through crypto cards with the announcement of a newcomer last July: the Gnosis Pay Card.
This product claims to be highly innovative because it's non-custodial. What does that mean? Your ready-to-spend cryptos aren't stored with someone else (like Binance, Cryptocom or Bitstack). But this card isn't for everyone...
If you trust the company that manages your cryptos, this feature isn't essential. Especially as it's harder to manage for a beginner. The Gnosis Pay Card is above all reserved for the most advanced crypto users who attach importance to being alone in exercising control over their funds.
And decentralisation comes at a cost: expect a card issue and dispatch fee of €30. Gnosis then charges less than €0.10 on each transaction. For the time being, you can only spend EURe, the stablecoin from Iceland's Monerium.
So it's a bit limited, but the initiative is probably the most "crypto-ambitious" in the sector. We'll continue to follow it closely.
Be careful to declare each transaction to the tax authorities!
Last recommendation, don't imagine that spending your cryptos with a card frees you from your tax obligations 😅. As each transaction constitutes a sale of cryptos for legal tender, this fact generates a capital gain or loss that must be reported to the tax authorities.
The tax rate is set at 30% in the context of a capital gain, and that can give you quite a few headaches if you use your card a lot...
"Currently, the French tax regime applied to cryptos was not thought out with payment in mind," says Pierre Morizot, boss of Waltio, an assistant specialising in the tax declaration of his cryptos.