Xapo made big news in March of this year, launching an insured, secured repository for high exposure BTC investors. Now, the service is going after the novice or average bitcoin user credit cards that link directly to their Xapo bitcoin wallet.
“Most of our customers keep 90% of their bitcoin in our vault and 10% in their wallet,” said Wences Casares. The addition of card access to these wallets will allow that 10 percent to be instantly transferred to cash.
Users of the Xapo wallet service will receive a free credit card number, complete with expiration date that they can use for transactions online. For an extra $15, they can request a physical card with a magstripe that is usable at any store that accepts MasterCard. PIN and chip cards will be available in Europe.
Here’s the transaction structure: the card gets run and Xapo checks the associated bitcoin wallet for sufficient funds. Once the funds are verified, Xapo sells the bitcoin on Bitstamp for fiat currency and pays the vendor with the fiat currency. Vendors pay regular credit card fees while the customer pays no fee.
The service doesn’t allow for ATM withdrawals - yet. Cesares expects that functionality to come soon. The credit card clearly isn’t for the bitcoin community as a whole - only for targeted individuals that are either unfamiliar with bitcoin itself, or for those that want to use it for transactions. There are many that are simply hoarding the currency and have no intention of using it.
Cesares also claims that Xapo has no intention of becoming an exchange, which is reasonable considering the difficulties exchanges have on a daily basis to make money. Hedging a highly volatile currency is no easy task. For now Xapo seems content to specialize in the storage aspect, which they’ve performed quite well in doing.
Users who want to try the new credit card service can simply open a new wallet and request a credit card number.