【Special Feature】The trendiest new financial management model: Using a crypto debit card for instant savings while making transactions

Since the birth of Bitcoin in 2008, cryptocurrency has been considered a revolutionary product in the payment field. In addition, over the past five years, mobile payments have been on the rise in the Taiwanese market. According to the Market Intelligence & Consulting Institute (MIC) of the Institute for Information Industry, in the second half of 2019, the "Consumer Survey on Mobile Payments" revealed that mobile payment users in Taiwan have reached 60%. Taiwan also has many cryptocurrency startups that have launched cryptocurrency wallets and mobile payment solutions, hoping to explore new opportunities in the payment field.

Since the birth of Bitcoin in 2008, cryptocurrencies have been seen as a revolutionary product in the payment sector. In the past five years, mobile payments have been on the rise in the Taiwanese market. According to the "Mobile Payment Consumer Survey" released by the Market Intelligence & Consulting Institute (MIC) in the second half of 2019, mobile payment users in Taiwan have reached 60%. There are also many cryptocurrency startups in Taiwan that have launched cryptocurrency wallets and mobile payment solutions, hoping to create a new world in the payment sector.

Among the various cryptocurrency payment solutions worldwide, we believe that the current "cryptocurrency debit card" model, which combines investment and consumption functions, is the most attractive to users.

Running a Cryptocurrency Wallet Payment Is Not Easy

Currently, there are few existing cryptocurrency wallet or payment processors in Taiwan that have achieved remarkable results, mainly due to the following reasons:

Insufficient Channels
The most important aspect of building mobile payments is to have an adequate number of supported channels. The more supported channels there are, the higher the willingness of consumers to use them.

However, looking at the mainstream mobile payment projects in Taiwan such as LINE Pay, JKOPAY, and Pi Wallet, these companies have strong backing and resources that seem inexhaustible, making it easy for them to establish channels. How can new startups compete with these companies?

Insufficient User Base
In most cases seen in Taiwan, the target group is limited to cryptocurrency investors in Taiwan, attempting to have them use investment returns for daily payments.

However, as cryptocurrency itself is still a niche market in Taiwan, from a business perspective, providing services offers little benefit. In addition, the incentive to attract general consumers who do not invest in cryptocurrencies through cryptocurrency payments is almost impossible.

Is Cryptocurrency the Panacea for the Payment Sector?

Basically, it is almost impossible to build mobile payments solely using cryptocurrencies in Taiwan. This is not to deny the success of cryptocurrencies in the payment sector, but rather to clarify the reasons why cryptocurrencies are successful are often misunderstood.

The revolutionary breakthrough of cryptocurrencies in the payment sector lies in its "cross-border payment" capability. The blockchain system behind cryptocurrencies can overcome the limitations of existing financial systems, achieve low-cost and real-time settlements. In simple terms, through the blockchain system, you can transfer coins from Taiwan to a friend in the United States in just a few seconds, with a fee of less than a dollar, which is the irreplaceable advantage of cryptocurrencies in the payment sector.

Facebook and other visionary large companies clearly understand this point and have jointly created the global payment project Libra, aiming to achieve inclusive finance and build a cross-border payment system for users around the world. In contrast, for Taiwan's payment startups, limiting the target market to Taiwan, from this perspective, focusing on "cryptocurrency" and "blockchain" is undoubtedly using a sledgehammer to crack a nut, with no advantages.

Pairing Cryptocurrency with Debit Cards for Investment and Payment

Does Taiwan's payment startups related to cryptocurrencies have no chance at all? In fact, there is another better option, which is debit cards. Some may think that this payment method has been around for a long time, but in the cryptocurrency field, it is currently the most popular payment choice among investors.

Take Crypto.com, the most discussed example. This cryptocurrency startup has issued its own VISA debit card, coupled with attractive card benefits and the platform's passive income scheme, attracting millions of users worldwide.

Another example is Wirex, founded by a London fintech company in 2014, which also issues a Visa debit card and has over 3 million customers in 130 countries and regions. After success in Europe and the Asia-Pacific region, Wirex plans to expand to Canada, Japan, and the United States in 2020.

Furthermore, even the well-established U.S. exchange Coinbase has collaborated with the UK payment solutions provider "PaySafe" to issue its own debit card, the Coinbase Card. The company recently announced that it has obtained the primary membership qualification from VISA, allowing Coinbase to issue and process debit card transactions without the need to partner with banks.

These companies have chosen to focus on debit cards (physical or virtual) as payment tools, which offer the following advantages:

◎ Support from Many Major Channels
The biggest advantage of implementing a debit card system is that it does not require as much effort to establish channels. Although some merchants may selectively support issuing banks, there are still many major retail channels that do not have such restrictions, which is a significant advantage compared to "pure cryptocurrency mobile payments." Imagine how much effort a cryptocurrency startup would need to collaborate with convenience stores, pharmacies, and coffee shops like 7-Eleven, Watsons, and Starbucks to integrate their systems. Issuing a debit card puts you ahead from the start.

◎ Enhanced Effect with Investment Products
The cryptocurrency market now has many stable income investment products with savings or fixed deposit functions. Basically, even with savings, the annual return rate is much higher than traditional bank deposits. Integrating these types of products with traditional debit card services is highly attractive to ordinary consumers or investors.

◎ Faster Global Expansion to General Users
Another advantage is that issuing debit cards can leverage the power of international financial service companies (such as VISA, Mastercard) and blockchain, expanding service coverage globally and significantly increasing the user base. Issuers can focus on negotiations with overseas regulatory authorities and financial institutions, without having to spend a lot of effort negotiating with overseas merchants, and without investing too much in development and maintenance costs.

Can Cryptocurrency Debit Cards Be Used in Taiwan?

Perhaps due to regulatory restrictions or Taiwanese commercial banks' reluctance to accept such business, there are currently no domestically issued cryptocurrency debit cards in Taiwan. However, some issuers abroad support applications from Taiwanese users, enabling Taiwanese cryptocurrency investors to spend their investment returns in daily life. For the general public interested in cryptocurrencies, applying for cryptocurrency debit cards allows them to both invest in cryptocurrencies and make payments.

Currently, the most discussed and usable in Taiwan are the products of Crypto.com and Wirex. Taking Crypto.com as an example, it offers good card rewards and low exchange rate fees. It is highly recommended for those interested to give it a try.

More Imagination: EasyCard

In addition to debit cards, another imaginable direction in Taiwan is the EasyCard. After becoming the first electronic ticket company in Taiwan to conduct internet transactions, EasyCard Corporation announced that it will launch the electronic payment app "EzPay" by the end of March 2020, allowing users to top up their EasyCard through their phones and use their phones as physical EasyCards to make payments at merchants, similar to electronic payment platforms like Line Pay and JKOPAY.

As we all know, EasyCard has a considerable number of supported channels in Taiwan. If new startups or exchanges can collaborate with EasyCard Corporation to issue co-branded cards, allowing cryptocurrencies to be converted into New Taiwan Dollars for EasyCard top-ups, while this may be a far-fetched idea, compared to pure cryptocurrency mobile payments, it is a more worthwhile direction to strive for.