Mastercard and Nexo Launch World’s First Crypto-Backed Payment Card

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By Sam Gazeley | 2Q 2022 | IN-6541

As the cryptocurrency market expands and penetrates further into the mainstream, gaining traction with an increasing number of merchants, Nexo and Mastercard have offered a convergent solution between the physical payment card and digital assets.

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A Landmark Moment for the Crypto Market


Nexo, an established institution for digital assets, announced that it has entered into a partnership with Mastercard to launch the world’s first crypto-backed payment card to enable users to make purchases without selling their digital assets. Nexo’s zero-cost credit will be available to eligible Nexo clients in Europe initially, enabling clients to use multiple assets as collateral, including Bitcoin, Ethereum, and Tether.

How Will Crypto and Payment Cards Synergize?


The Nexo card will be usable with around 92 million merchants worldwide where Mastercard is already accepted, permitting cryptocurrency investors to spend up to 90% of the fiat value of their crypto porfolios. Furthermore, the Nexo card also comes with Apple Pay and Google Pay integration, reflecting an overall trend in the payments market toward digitization and mobile wallets. Clients with the card can leverage their preferred mobile wallet from the Nexo Wallet App.

Nexo’s current intention is to add debit card functionality to its offering and expand the solution beyond Europe as part of a longer-term roadmap.

As it relates to the solution offering itself, Nexo has joined forces with DiPocket, Nexo’s card issuer for the new offering in Europe, to innovate various offerings for the Nexo card:

  • No Fees: The Nexo card offering does not have minimum repayments or monthly or inactivity fees.
  • Crypto Rewards for Users: All transactions with a Nexo card are carried out with crypto cashback, paid out in Bitcoin or in Nexo’s native NEXO Token. The end result is that customers are not only able to retain ownership of their digital assets, but can earn up to 2% back in crypto with each purchase, immediately redeemable in their Nexo account.
  • Straightforward Access: Echoing the trend from neo and challenger banks in their offerings of digital and physical cards, the Nexo card is available in both virtual and physical forms. Furthermore, the Nexo card comes with direct Apple Pay and Google Pay integrations, and requested additional virtual cards have no further cost attributed to them.
  • Collateral Crypto: The payment card is connected to a Nexo-provided, crypto-supported credit line at 0% interest.

Are Crypto Payment Cards the Future?


The concept of a crypto-backed payment card is not so inconceivable; as cryptocurrencies are decentralized currencies with no central management, rather than isolated currencies on the opposite side of the market, converting a crypto coin, such as Bitcoin, into fiat currency is a simple operation with the advantage of having the same amount of currency regardless of geographic location. Furthermore, end users are not required to open a bank account to use a crypto debit card, although it is worth noting that prospective users will require an account at an exchange or wallet.

On the other hand, the solution has limited scope at the present time, primarily due to the fact that using cryptocurrency in the real world today still has its limitations. The majority of retail and smaller shops will not accept cryptocurrencies, such as Bitcoin, as most merchants are unwilling to accept the currency. Their reticence in accepting crypto comes from an innate caution for several reasons, including exchange rate volatility, undetermined legal status for payment processors, and an innate lack of knowledge around Distributed Ledger Technology (DLT) for most of the general public.

The drive toward crypto acceptance in the payments market is still far from universal integration; however, the convergence between the payment card and cryptocurrency will go a long way toward allaying some of the fears in the market. Four considerations that will have to be tackled are:

  • The Role of Taxation: The majority of Western developed economies will consider cryptocurrency as property or capital assets. Rather than a currency, they may be considered as a financial mechanism in a similar vein to stocks and bonds. The result of this is that prospective customers and clients will need to consider they may be required to report capital gains/losses when making purchases with a crypto card.
  • The Availability of the Solution: Cryptocurrency adoption is increasing on a global scale Year-over-Year (YoY). However, this is not a universal trend, with some economies moving in the opposite direction and becoming increasingly mistrustful of the crypto space. Turkey, China, and India have shown some opposition to the idea of decentralized currencies and many countries have proposed the idea of Central Bank Digital Currencies (CBDCs) as more controllable and monitorable digital currencies, with some countries already having launched pilots. Prospective customers should have a backup of a traditional payment card in the event they find themselves transacting in a crypto-hostile economy.
  • Fees and Exchange Rates: Transaction fees will differ from card provider to card provider. The majority of players active in the debit card space tend not to charge deposit fees, but some have implemented withdrawal fees, with the possibility of fees being waived at a particular threshold of yearly crypto spending. It will also be critical to consider Foreign Exchange (forex) fees, as they are a point of contention in the traditional financial market. In the majority of examples, forex fees will not apply when it comes to crypto payment card exchange.
  • Which Cryptocurrencies Are Actually Being Accepted: It will depend on the card offering as to which cryptocurrencies are supported, with Bitcoin likely to take the helm as the prime choice that the processing company will convert into the fiat currency. While the number of cryptocurrencies and tokens have exploded over the last few years, only a few have achieved a position in the mainstream; therefore, prospective users will want to opt for the crypto card that supports the most widely accepted coins to ensure it is transactable with the highest number of merchants.


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