Why there are still much fewer crypto card users than cryptocurrency holders, who need cryptocurrency cards and what are their benefits, shared СEO of the virtual bank TTM Bank Vladislav Utushkin.
- The first crypto cards, analogs of bank cards that can be replenished with cryptocurrencies, appeared more than five years ago, but even among the crypto assets holders not everyone can boast of having one. Why does the popularity of crypto cards lag behind the growth rate of the crypto market?
- Indeed, until recently, not every cryptocurrency holder had a crypto card. This is due to several constraining factors that have hindered and partly still hinder the development of this sphere. First, the card is primarily about everyday payments: stores, restaurants, or plane tickets. Most of these companies do not accept payments directly in cryptocurrencies. Not to mention Russia where it is illegal to accept payments in cryptocurrencies. Thus, to use crypto cards, there must be a working scheme with instant conversion of cryptocurrencies into fiat money, what is called a payment gateway, passing through which the crypto turns into fiat with minimal losses on the exchange rate difference. Secondly, there is still no such crypto card that would be available for a resident of any jurisdiction. The American market has its own leaders, European and Asian markets are dominated by other players, while in the Russian market we are the only company that offers crypto cards. The reasons behind this are hard to explain. I assume that partly it is because of the lack of expertise among project founders on how to work under different jurisdictions and how to adapt to local regulations.
Thirdly, almost all crypto cards assume depositing funds from the wallet on the associated platform. Simply put, to charge up most of the crypto cards, it is necessary to first transfer coins to the virtual wallet on the corresponding platform and then to transfer funds to the card account. Moreover, at the moment of topping up the card, the cryptocurrencies are being converted to one of the fiat currencies. This means that a user agrees to store some funds in a third-party wallet. What if it gets hacked? And if the project turns out to be a scam? And a million “what ifs”. The key advantage of cryptocurrencies is that their holders have total control over their funds. But if a user agrees to transfer funds to the third party wallet, how is such a card different from any card issued by a traditional bank? This advantage vanishes while the holder has to perform more actions to get the card.
- What is the primary target audience for crypto cards?
- Mostly, these are people who receive a salary in cryptocurrencies, and the number of such people is growing every year due to its advantages in the field of international payments. Also, these are people who want to use cryptocurrencies not as an investment or a trading tool but as a payment method for their daily purchases. These are people who prefer to convert cryptocurrencies into fiat only in cases of absolute necessity or at certain situations.
- Would you say that the market of crypto cards has reached maturity and now has sustainable leaders?
- In my opinion, no. As I mentioned before, most of the projects with crypto cards have lots of restrictions, primarily geographical ones. For example, in the US the market leader might be BitPay, the European market was dominated by Wirex before the emergence of the problems with the payment system Wirecard. In the Russian market, TTM Bank is the market leader.
- So it seems there are already at least a dozen companies working with prepaid crypto cards on the market. How does TTM Bank distinguish from them?
- First, сryptocurrencies credited to the TTM Bank card are instantly converted into fiat money. Other similar products have a time lag, and the user has to wait for the exchange operation to be completed. Secondly, TTM Bank cards are accepted anywhere in the world where VISA cards are accepted. We have almost no geographical restrictions. TTM Bank is the only cryptocurrency card that is available to citizens of Russia and the CIS. It is a convenient and reliable tool for daily purchases in both online and offline stores. This is a kind of link between the traditional financial system and the world of digital currencies.
- You said that when being credited crypto assets are instantly converted to fiat. So the funds on the card are not stored in cryptocurrencies?
- Now it is possible to top up the TTM Bank card with such currencies as BTC, ETH, TRX and USDT. In the near future, we also plan to add two more cryptocurrencies: BNB and Bitcoin Cash. To replenish the card, users need to transfer the necessary sum from a personal wallet to the card account. I mean that users can deposit money from any personal wallet of their preference, there is no need to transfer funds to some imposed wallet on any other platform. When being credited, the cryptocurrencies are converted into euros. Thus, the volatility inherent in the digital market does not affect the currency stored on the card in any way. It is a very important aspect when it comes to everyday purchases.
- Is it possible to pay with a card for, say, utilities?
- Of course! It is possible to pay for any goods or services, including online purchases or booking a taxi.
- Is it possible to use the card for storing funds? How convenient is it?
- TTM Bank card was not designed for storing cryptocurrencies. It is not a storage facility. The card is intended for online and offline purchases. Your digital assets are stored in your wallet, and you have full control over them, and when you need to pay for goods or services, you can send the required amount of cryptocurrency to the TTM Bank card. Funds are credited to the card and converted into euros very quickly, just in a couple of minutes.
We have deliberately chosen such an approach. Any attempt to make a crypto card also a storage space is a way to nowhere. We wanted to make a card that is convenient to use in everyday life and can be charged with cryptocurrencies. The market needs crypto cards for daily purchases, not yet another storage or wallet for bitcoins. At the same time, users do not need to transfer their coins for storage — they independently control their assets, thereby avoiding unnecessary risks.
Imagine that you are sitting in a restaurant, get a bill, and want to pay with cryptocurrency. You just need to log in to your own (not our) wallet — the one you are used to, the one where you usually store coins — and send the required amount of cryptocurrency to top up the TTM Bank card. The money is credited instantly, so the TTM Bank cardholder can easily pay the bill.
- How is the TTM Bank crypto card connected to the VISA payment system?
- We cooperate with the financial services operator, which is a member of the Visa payment network. Our partner UAB Walletto is a well-known company registered in Lithuania and has accounts in a licensed bank. Thanks to this partnership, the TTM Bank crypto card can be used almost all over the world, with the exception of countries such as Afghanistan, Somalia, Sudan, Syria, Yemen, Venezuela, the Gaza Strip and some other regions.
- Are there any limits on deposits or transactions?
- Yes, and these limits are stipulated by the European legislation. The maximum card is 5,000 euros, the same limit applies to purchases per month through POS-terminals or online platforms. The ATM withdrawal monthly limit is 2,500 euros.
But users hardly notice these ‘restrictions’, since the TTM Bank card is designed for daily purchases, and their cost can rarely go beyond the established limits. Even very wealthy people do not so often visit restaurants where the bill exceeds several thousand euros.
For clients who exceed those limits, we recommend ordering several cards. TTM Bank allows our customers to issue up to five cards per user, thereby formally increasing the spending limit fivefold. You can differentiate these cards by type of spending: one for shops, one for online purchase, one for restaurants.
- How profitable is it to pay with such a card?
- If you get income in cryptocurrency, then it is more convenient for you to spend in digital coins. But there is a trick: now it appears that almost anyone can earn on cryptocurrencies but few people know how to spend what they earn in everyday life. And the TTM Bank card perfectly solves this problem, because with it you can easily go to the nearest supermarket for groceries.
The TTM Bank POS transaction successful is 0.25 EUR per transaction. The Monthly Service charge per card is 2.00 EUR. The highest is the ATM disbursement: 2.50 EUR + 2.00%. But this is the standard fee for most virtual bank cards without their own ATM networks.
- The user base of TTM Bank at the end of 2020 exceeded 40,000 active users per day. How did you manage to increase the number of users so quickly?
- I believe that other projects helped us in this, or rather, their significant shortcomings. For example, some crypto cards are linked to a hot wallet, where digital assets are stored, which deprives cryptocurrency holders of control over their funds. Other companies are trying to impose internal tokens, attracting funding for this purpose through ICOs, and this method has not a very good reputation after the 2017 boom with plenty of scam projects. Some projects face a number of restrictions — they do not work in certain regions or with citizens of certain countries.
But even such professionals who are well versed in the field of cryptocurrencies need an easy-to-use, convenient and secure card that can be used to pay for goods and services around the world, book flights and withdraw cash all around the world.
- The TTM Bank website states that the crypto card is reliable and secure. What does it mean exactly?
- First, a few months ago, we changed our jurisdiction from Hong Kong to the European Union. And this is not only a more convenient way for citizens of Russia and the CIS, but also more secure, because Europe has already learned to deal with crypto assets ‘on friendly footing’ and has even developed a reliable data protection regulation (GDPR), which will help protect your funds from unnecessary risks. Thus, your balance is now under secure protection.
Secondly, we have developed a fully secure cryptocurrency wallet for our users, which is part of the TTM Bank infrastructure. That allows our customers to use private keys that are stored in the system and never leave it. Moreover, now all cryptocurrencies are stored in one place.
Finally, we have changed the card design making it more secure. Until recently, our customers could accidentally compromise their card number or personal data by posting it on their Instagram or other social networks. This problem was quite acute, since it affected the interests of both the cardholders themselves and the company, but we have also solved it. The current design has become more concise and simple - We removed a logo and personal data from the front side of the card. Now our clients can easily share photos and videos featuring the card without any risks for safety.
Thus, thanks to the new concise design of the cards and the use of the EU General Data Protection Regulation (GDPR), our users’ personal data is reliably protected from hacking or being compromised.