What is a crypto card, and how does it work?

What is a crypto card?

A crypto prepaid card is much like a regular prepaid card. You can use both for everyday spending. The main difference between them is that a crypto prepaid card may allow you to more easily convert cryptocurrency to fiat in order to top up the card. 

In either case, these cards are typically issued in partnership with major payment networks like Visa or Mastercard, which means you can use them almost anywhere in the world.

You can use a crypto prepaid card for everyday expenses like coffee, groceries, travel bookings or online subscriptions. Many crypto prepaid cards also support multiple cryptocurrencies for top-up.

Another useful feature is that some crypto prepaid cards offer cashback-style rewards that are paid out in cryptocurrency instead of cash or points. For example, a purchase at a retailer might earn you a small amount of Cronos (CRO) or another supported coin.

In addition to prepaid cards, there are crypto credit cards.

What’s the difference between crypto prepaid and credit cards?

Crypto prepaid cards

Crypto prepaid cards work like any other prepaid cards. You choose which cryptocurrency to sell, and the fiat proceeds are loaded onto your card for spending. They’re similar to topping up a gift card. You can only use what you’ve already added, which makes it easier to control spending. 

Crypto prepaid cards may support multiple cryptocurrencies, letting you choose which one to use to top up your account. They don’t involve borrowing and are easier to qualify for, but they also generally come with fewer perks. These cards may suit someone who already holds crypto and wants a straightforward, low-risk way to spend it. 

Crypto credit cards

Crypto credit cards let you spend on credit up to a set limit, then repay later – typically in fiat currency. Instead of earning traditional points or cash back, many offer rewards in cryptocurrency. 

Using this type of card can be a way to accumulate crypto gradually through everyday purchases or convert your crypto to fiat to pay off your account balance. Compared to crypto prepaid cards, most crypto credit cards require a credit check and may have stricter eligibility requirements with availability limited to certain regions.

A crypto credit card may be better for those who are comfortable using credit and also want to earn crypto rewards without buying coins or tokens directly.

How do crypto cards work?

Here’s the simple process:

1. Load funds (prepaid only)
   For prepaid cards, you deposit cryptocurrency (or sometimes fiat) into your account with the provider and convert the assets into fiat. This balance is what you’ll spend from, similar to topping up a gift card.
   
2. Make a purchase
   Use your card online or in physical stores anywhere Visa or Mastercard are accepted. The checkout experience is identical to a traditional prepaid card.
   
3. Conversion

• With prepaid cards, your crypto is converted into local currency at the current exchange rate when you top up (depending on which card you use).
• With credit cards, the issuer processes your transaction in fiat but tracks it for crypto rewards.
  

4. Settlement
   The merchant receives payment in local currency, just as with any regular card. For prepaid cards, the equivalent value is deducted from your balance. For credit cards, the purchase amount is added to your statement balance.
   
5. Rewards (credit + some prepaid)
   Crypto credit cards return a percentage of your purchase in cryptocurrency. Some prepaid cards also offer crypto rewards.
   
6. Repayment (credit only)
   If you’re using a credit card, you repay your balance later in fiat currency, just like with any traditional credit card.

How to order a crypto prepaid card

1. Sign up and verify your identity – Create an account and complete identity verification, usually with a government-issued ID and a selfie or other proof of identity.
   
2. Fund your account – Load cryptocurrency or fiat into your prepaid balance before spending.
   
3. Order your card – Select the prepaid card option and receive your virtual card immediately with a physical card sent to your address.
   
4. Start spending – Prepaid cards convert your loaded crypto into local currency when you top up , and you can earn rewards on eligible transactions.

For both crypto credit cards and crypto prepaid cards, look for strong security measures, transparent fees and any rewards programmes that match your spending habits.

Benefits of using a crypto card

• Spend crypto like cash: Use your cryptocurrency to fund everyday purchases. This works anywhere Visa or Mastercard are accepted, making it simple to pay in stores, online or while traveling.
  
• Earn rewards: Many cards offer cashback-style rewards paid in cryptocurrency instead of points or cash. Rewards can help you gradually grow your crypto holdings through your regular spending.
  
• Global acceptance: Because they are backed by major payment networks, crypto cards can be used in millions of locations worldwide. This makes them more versatile than trying to find merchants who directly accept cryptocurrency.

Downsides and risks of crypto cards

• Fees: Some cards charge transaction, conversion or annual fees that can eat into rewards or convenience. Fees may also vary depending on whether you are spending domestically or internationally.
  
• Tax considerations: In many countries, using crypto to make a purchase is treated as a taxable event. You may need to keep records of each transaction for reporting purposes, which can be time-consuming.
  
• Merchant acceptance limits: While the payment network (Visa or Mastercard) is widely accepted, some merchants or payment processors choose to block transactions from crypto-related cards. This can occasionally limit where you can use your card.

Is a crypto card right for you?

A crypto prepaid card can be useful for people who already hold cryptocurrency and want a simple way to use it for everyday spending. It may also appeal to those who like the idea of earning rewards in cryptocurrency instead of traditional points or miles.

On the other hand, someone who rarely uses crypto or prefers to hold it purely as a long-term investment might not see much benefit in having a crypto prepaid card. For these users, the potential rewards or convenience features may not outweigh the effort of setting up an account.

Read more about picking the right rewards card and the best crypto prepaid cards in the UK.

Note: This piece is for informational purposes only and shouldn’t be taken as financial advice. Always do your own research and consider your personal circumstances before making any decisions about financial products.

FAQs about crypto cards

What’s the difference between a crypto prepaid card and a credit card?

A prepaid card is topped up with fiat that can be funded from cryptocurrency and can only spend what’s loaded on the card. A credit card lets you borrow up to a set limit and earn rewards in cryptocurrency. Crypto.com focuses on prepaid cards, which deliver stronger perks and rewards.

How do crypto card transactions work?
When you make a purchase, some cards convert your crypto to local currency instantly and the merchant receives payment in that currency. Others require that you convert your crypto to fiat first before spending it (like Crypto.com’s). 

Which crypto card should I get?
It depends on your location, spending habits and whether you prefer a prepaid or credit card. For the Crypto.com Prepaid Visa Card,¹ see https://crypto.com/uk/cards. 

Are crypto cards safe to use?
Yes. Crypto cards are safe if issued by reputable providers. They include standard card security features, such as encryption and fraud monitoring.

Are crypto card rewards taxable?
In many regions, yes. Check your local tax laws or consult a tax professional.

Is a crypto card worth it?
If you spend crypto regularly or want to earn rewards in cryptocurrency, it can be. If you mainly hold crypto as an investment, you might prefer the accumulation benefits of a crypto credit card's rewards programme.

Ready to try a crypto card?

1. Download the Crypto.com App.
2. Explore the Crypto.com Visa Card options.
3. Complete verification and fund your wallet.
4. Start using your crypto for everyday purchases.

Important information: This is informational content sponsored by Crypto.com and should not be considered as an investment recommendation or advice. Staking rewards, fee reduction, and other benefits referenced in this article may be subject to eligibility requirements, token holdings, and may change at the discretion of Crypto.com. 

¹ The Crypto.‌com Visa Card is provided by ForisGFS UK Limited, a company incorporated in the United Kingdom with company registration number 12586871 and registered office at Suite 5, 7th Floor, 50 Broadway, London SW1H 0DB, United Kingdom, an electronic money institution authorised by the UK Financial Conduct Authority under the Electronic Money Regulations 2011 (Firm Reference Number 988571). The Crypto.com Visa Card is an electronic money product and is not covered by the Financial Services Compensation Scheme. Any funds received by you are held in a segregated account so that in the unlikely event that ForisGFS UK Limited becomes insolvent your funds will be protected against claims made by creditors.

The Crypto.com Visa Card is an electronic money product and is not covered by the Financial Services Compensation Scheme (FSCS). Any funds received by you are held in a segregated account so that in the unlikely event that ForisGFS UK Limited becomes insolvent your funds will be protected against claims made by creditors.

² Offer is available to Level Up Rewards members that are in the 'Pro' and 'Private' tiers. Click here for terms and conditions.