Xapo, a company actively developing secure vaults for Bitcoin storage has announced another the upcoming launch of a full functionality debit card. With substantial support from venture capital reported to be around $20 million, the firm is aiming to deliver widespread and convenient transaction mechanism using already existing credit card payment infrastructure. According to Xapo, the card is expected to become available in two months.
While the announcement is big it has already sparked some controversy surrounding the actual partnership of Xapo with Mastercard – while first media reports based have stated that the firm has stricken a deal with Mastercard itself, those later have been dismissed by a Mastercard spokesperson.
According to a Xapo spokesperson cited by the Wall Street Journal, the firm is partnering with unnamed banks in the US and Europe. Considering the general attitude of the banking industry towards Bitcoin a friendly hand from banks development would be quite a surprise. The spokesperson has concluded that it is very likely that the banks would be using Mastercard’s network to conduct the transactions, however a spokesperson for Mastercard has stated that all card-issuers need to obtain permission from the company to issue debit cards. There is no clarity whether Mastercard or Visa for that matter would e granting such a permission.
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Essentially the function of the card is supposed to be executed in the following way – as a user swipes the card to pay for a product or service, the partner bank would query the user’s Xapo Bitcoin wallet to ascertain sufficient funds to conduct the transaction. If the funds are present, Xapo would then exchange the Bitcoins into the currency of the transaction and the system would execute the payment.
Among major banks, executives have typically had a negative attitude towards the use of bitcoins. As such, a Xapo partnership with banks to provide debit based payments using existing financial infrastructure would be considered a breakthrough in forming relations between digital currency firms and banks.