Binance CEO Changpeng Zhao, known as CZ, explained how the exchange’s forthcoming debit card will spur crypto transactions while speaking at the Blockdown virtual crypto conference today. But he also hinted at problems with its rollout and didn’t provide a launch date.
Binance debit card to solve two big problems
Announced last month, the Binance Card will allow users to purchase goods and services from merchants who don’t accept crypto, using the funds in their Binance account.
This has two big advantages, said Zhao. Firstly, it solves the so-called chicken and egg problem of merchants not accepting crypto because—with less than one percent of their customers using crypto— it’s not worth their while.
“Being able to swipe a credit card, and spend crypto, solves that problem,” he said. “The merchant is basically accepting crypto without knowing it; to him, he accepts fiat. That will slowly solve the chicken and egg problem.”
The second advantage, he said, is that it will allow people to retain their cryptocurrency for much longer, instead of having to sell crypto before a transaction, and then convert it into cash.
“Now you can just pay with crypto directly. You don’t need to do that conversion. You don’t need to hold that money in fiat, you just convert when you have to pay,” he said.
Implementation issues cause trouble
Zhao was also open about the problems the exchange faced in implementing the bitcoin debit card scheme, particularly because it had to be introduced in each country individually, taking into account local restrictions. In its initial announcement on the card, Binance said it would first launch in Malaysia and Vietnam.
“It may not take off, it may not work, the fees may be too high, etc.—because the cards are still country by country. There's still a lot of risk there,” said Zhao, in his presentation today. “You’ve got to get card issuers in different countries to work with you; you’ve got to do risk checks… but the fundamental logic is sound.”
When Binance announced the Binance Card, it touted Visa as the card processor, claiming that it will open the door to more than 40 million Visa merchants worldwide. But then the Visa logo was quietly scrubbed from the promotional images on its website. Speaking today, Zhao didn’t explain why.
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