There’s now a debit card that lets you spend bitcoin in stores without a fee

You’ll be able to use bitcoin in more stores, thanks to Coinbase.
You’ll be able to use bitcoin in more stores, thanks to Coinbase.
Image: REUTERS/David Gray
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Bitcoin has a problem: It’s hard to use in the real world. Not many merchants know about the digital currency, let alone accept it as a form of payment.

Coinbase, a bitcoin startup backed by venture capital firm Andreessen Horowitz and ex-CitiGroup CEO Vikram Pandit, among others, is trying to solve that problem through a new partnership with Shift Payments, a card company. The two are offering a new Visa debit card that connects to users’ Coinbase accounts so they can spend their bitcoin in stores or access it through ATMs. However, because of regulatory issues, the card is only available in 24 states. The companies said they’re working on covering the whole US.

The partnership underscores bitcoin’s difficulties achieving mainstream acceptance. While the cryptocurrency and its underlying technology, known as blockchain, have potential to make financial services cheaper, more accessible, and more efficient, non-tech savvy consumers are having trouble understanding how it all works. This is a first step by Coinbase, one of the bigger bitcoin “wallets,” to bridge the gap between the digital world of bitcoin and offline use.

This isn’t the first bitcoin debit card—Xapo, a bitcoin startup backed by ex-PayPal president and current head of Facebook Messenger David Marcus, released one last year. However, it looks like Coinbase learned at least one lesson from Xapo’s release.

Whereas Xapo discreetly added fees—something that irked users—the Coinbase debit card costs $10, and there’s no annual or domestic fee. It costs $2.50 to use the card at an ATM and there’s a 3% charge for international transactions. Coinbase doesn’t take a cut, so it’s unclear how it makes money on the initiative. However, people may be more interested in opening accounts if there are more ways to access them with low fees.

Beyond accessibility, bitcoin still faces many questions, especially over regulation. Case in point: Because of regulatory issues, the Coinbase debit card is only available in 24 states, but the companies said they’re working on covering the whole US.