MetaMask launches self-custody crypto payment card

Leading digital wallet provider MetaMask has launched a new crypto payment card that lets users spend money from a self-storage wallet.

Crypto payment card

The card is powered by Mastercard and developed in collaboration with partners CompoSecure and Baanx, and uses smart contracts to transact in real life (IRL) with a processing time of less than 5 seconds, and runs on the Linea network, a layer 2 solution on Ethereum.

MetaMask’s main selling point is that it is a safer alternative to centralized exchanges, which are prone to hacking, such as Bybit, which lost $1.4 billion in a hack in February.

However, MetaMask faces fierce competition in the market, as major exchanges such as Binance, Bybit, Coinbase, and Crypto.com already offer crypto debit cards, and some even offer features that allow users to earn crypto cashback when they pay for goods and services with their cards.

Meanwhile, MetaMask is experiencing a drop in revenue. According to Dune Analytics, the wallet has earned just $289,312 in fees in the past two weeks, down significantly from $1.3 million in the same period last year.

Crypto Payment Card Payment Mechanism

The Crypto Payment Card payment mechanism combines the world of cryptocurrencies with traditional payment systems, allowing users to pay with digital assets via a debit or credit card that supports real-time conversion to fiat currencies (e.g. USD, EUR). Here are the main steps and mechanisms:

1. Types of Crypto Cards
   Crypto debit card: Connects to the user’s crypto wallet, spending amounts are deducted from the wallet balance.
   Crypto Credit Cards: May Let Users Borrow Money Using Crypto Assets as Collateral
   
2. Mechanism of operation
   Automatic Crypto to Fiat Conversion: When using a payment card, the system instantly converts cryptocurrency (e.g. BTC, ETH) to your local currency or fiat at the current exchange rate.
   Payment Network Processing: Most crypto cards work through Visa, Mastercard, or UnionPay networks, making them widely available at points of sale where these cards are accepted.
   
3. Payment Procedure
   Users pay with crypto cards in stores or online.
   The card provider (e.g. Coinbase, Crypto.com, Binance) will accept the request and convert crypto to fiat instantly.
   Merchants accept fiat payments without having to deal with crypto directly.
   The debt is deducted from the user’s crypto wallet according to the converted amount.
   
4. Advantages of Crypto Payment Cards
   Convenience: Spend crypto like regular money.
   Wide Acceptance: Accepted everywhere Visa/Mastercard is accepted.
   Reduce volatility risk: Instant conversion to fiat protects against loss of value.
   
5. Cautions
   Fees: Conversion fees, annual fees, or other service fees may apply.
   Regulations: Depending on the jurisdiction, some countries may restrict the use of crypto cards.
   Security: Must be protected against unauthorized access, just like a regular card.
   
6. Popular Crypto Card Providers
   Crypto.com (Visa Card)
   Coinbase Card (Visa)
   Binance Card (Visa)
   Wirex (Mastercard/Visa)
   

Example of spending with crypto payment cards

• The user has BTC in his Binance wallet and uses his Binance Card to pay for 1,000 THB worth of merchandise at a merchant.
• Instant BTC to Fiat conversion based on current exchange rates.
• The store received xxxx Fiat USD,THB,EURO without knowing that the user paid with crypto.

Crypto cards are thus a bridge between the digital currency system and the traditional economy, providing liquidity to cryptocurrency assets.

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