How crypto firms are using Marqeta’s platform to build crypto spending and rewards products
- Marqeta has announced new applications of its platform to support cryptocurrency payments and crypto-based rewards on debit and credit card spending.
- Coinbase, Fold, Shakepay and Bakkt are using Marqeta’s platform to build card solutions around crypto spending and rewards.
Card issuing technology firm Marqeta recently announced new applications of its platform, which are being used by a number of crypto firms to allow their customers to spend cryptocurrencies at the point of sale, or earn crypto-based rewards from debit and credit card spending. This includes new card products from Coinbase, Bakkt, Fold and Shakepay.
Marqeta’s open API platform provides its customers with access to cloud-based payments infrastructure that enables them to build customized and configurable payment solutions. The platform’s Just-in-Time Funding feature allows crypto wallets to build out card products that can make authorization decisions at the point of sale based on a user’s available crypto balance. This effectively means that the end-user can make purchases directly with their crypto balance, which is converted to fiat currency in real time when they swipe their card.
“Previously, if users wanted to spend their cryptocurrency balance, they first had to sell their digital assets and then transfer the funds to their external bank account, which can take days,” explained Randy Kern, chief technology officer at Marqeta. “Our platform eliminates the need to constantly sell crypto for fiat ahead of time to maintain a separate card balance. This creates a more seamless experience for the user, since they no longer need to worry about the crypto-fiat conversion process.”
In recent months, a number of crypto firms have used Marqeta’s platform to launch new products allowing customers to either earn or spend crypto at the point of sale.
Coinbase has worked with Marqeta to build Coinbase Card, a Visa debit card that allows users to spend their crypto balance wherever Visa debit cards are accepted and earn up to 4% back in crypto rewards for each purchase.
“Coinbase set out to make spending crypto as seamless as sending an email. With Marqeta’s flexible APIs, we’ve been able to create a customizable debit card that simplifies how crypto holders can make purchases,” said Muneeb Imtiaz, product manager at Coinbase. “Marqeta’s JIT Funding feature allows us to oversee transaction approvals and fund cryptocurrencies at the prevailing dollar price in real time, which helps us ensure that our customers always have quick access to their money.”
Digital asset management platform Bakkt has also used Marqeta’s technology to launch its Visa debit card, which allows customers to spend Bitcoin and cash balances from their Bakkt account wherever Apple Pay or Google Pay is accepted.
Other recent examples of crypto firms using Marqeta’s platform include rewards app Fold, whose cashback debit card offers Bitcoin rewards while incentivizing responsible spending, and Montreal-based Shakepay, whose new Visa card will allow customers to spend Canadian dollars at physical and virtual merchants and earn Bitcoin rewards on every purchase.
The introduction of these products makes sense considering the growing demand for solutions around crypto spending and rewards. Consumers now see cryptocurrencies as more than just a store of value: 46 million Americans say they plan to use crypto to make payments for everything from financial services to groceries and other retail purchases. Moreover, research from Cornerstone Advisors finds that 68% of crypto owners are very interested in Bitcoin-based debit or credit card rewards.
But do cryptocurrencies really have a viable long-term future in payments? Or will their high volatility prevent them from being used as a widespread payment method?
Keegan Francis, crypto editor at personal finance website Finder, says that although many cryptocurrencies including Bitcoin fluctuate in value considerably, they will likely become much less volatile as their adoption and acceptability continues to grow. This greater stability could help make some cryptocurrencies suitable for use in payments.
“We can already see Bitcoin achieving a level of relative stability compared to its price movements five years ago,” said Francis. “This trend is likely to continue in the coming years as Bitcoin gains further acceptance and becomes a multi-trillion-dollar currency.”
Ian Kane, co-founder and CEO of Unbanked, adds that as crypto adoption grows, savvy SMBs that understand the benefits associated with digital assets will begin accepting crypto payments, and may cut out major card networks entirely. On the other hand, large retailers may be slower to adapt as they are integrated with major organizations that still rely on traditional payment methods.
However, Kane says the increasing popularity of stablecoins – which are pegged to a reserve asset and thus are designed to remain more stable over time – is helping to make major businesses and banks more comfortable about stepping into the market.
“There are many benefits to stablecoins that include lower processing costs, the finality of the purchase (no chargebacks), and no interchange fees for the merchants,” said Kane. “These benefits could convince even large retailers to begin accepting stablecoin payments over time.”