Last week, we tested Hashkey, the first Hong Kong licensed exchange aimed at retail investors. This time, let's try the RedotPay Visa card, another Hong Kong company that emerged after the government's glamorous turn to embrace web3 and clearly regulate licenses last year.
First, let's clarify some basic concepts.
Perhaps because of the deep-rooted image of Visa credit cards, some people mistake Visa cards for credit cards, but that's not the case. Visa, Mastercard, American Express, Diners Club, China's UnionPay, Japan's JCB, etc., are payment networks, but not necessarily credit cards; Visa can also be a debit card, or a prepaid card, similar to Hong Kong's EPS EasyPay, where you can only spend what you have and cannot overspend. Most merchants that accept Visa, both online and offline, support both credit and debit cards, with a few exceptions. For services with variable and potentially high monthly fees, like Google Cloud, where the risk of payment failure due to insufficient funds is high, customers are often required to use credit cards, shifting the risk to the bank.
Credit cards that allow spending future money are convenient, but for someone like me without proof of income, a freelancer, or part of the gig economy, a debit card is the only option. I also have friends who, even though they qualify for credit cards, prefer debit cards to avoid overspending and risks like lost cards or fraudulent charges. Some purely adhere to the lifestyle of spending within their means.
Using cryptocurrency doesn't require tying to a legal identity or credit rating. Before further integration with the traditional financial system, all payment cards are essentially debit cards, including Coinbase Card, Wirex, Ledger's CL Card, Gnosis Card, etc. Among them, Crypto.com is most familiar in Taiwan and Hong Kong, not only because it supports more countries (Coinbase, CL, Gnosis Card don't support Taiwan and Hong Kong) but also due to aggressive promotion during the bull market, including issuing CRO, offering substantial subsidies, and even acquiring the naming rights for the NBA Los Angeles Lakers and Clippers home stadium, naming it Crypto.com Arena.
I have used three different cryptocurrency debit cards, with Crypto.com being the most used. However, after an initial trial, I have a good impression of RedotPay and plan to use it alongside Crypto.com. If no major issues arise with further use, I will gradually increase my usage of RedotPay.
Incidentally, Crypto.com's headquarters were originally in Hong Kong, but they were scared off by Hong Kong’s attitude towards cryptocurrency. I hope the Hong Kong government's support for web3 this time doesn't change overnight and drive RedotPay away too.
RedotPay has a mysterious background. The website, while clearly stating it's a new company headquartered in Hong Kong, only vaguely mentions that the team comes from prestigious universities. Unlike typical startups, there's no public exposure of the founders. Even Google and LinkedIn searches yield no relevant information. While more diligent research might uncover something, I'm only interested in the product and service, not the founders' background, which is typically a standard introduction for a product.
Although a new company, RedotPay doesn't give off the vibe of a lean startup. It appears to have abundant resources, collaborating with Visa for card issuance and supporting use in Apple Pay, Google Pay, and Alipay - a high barrier not easily attained by ordinary graduates just starting a business. Also, the RedotPay Visa card supports almost all countries except about 40, including the USA and mainland China, right from the start, and its mobile app supports 10 languages from the beginning - not typical startup strategies. I assume that the shareholders behind RedotPay have strong business capabilities but choose to remain anonymous, understanding that their background isn't a selling point. Headquartering in Hong Kong and renting in Central might be the remaining value that Hong Kong can offer for now.
The main potential risk with prepaid cards is whether the recharged funds could be misappropriated and then lost if the company goes bankrupt. On this front, RedotPay's official website lists the license number of a trust company registered in Hong Kong and is insured by Lloyds of London for 50 million USD. Additionally, customers' private keys are stored in an HSM (hardware security module), a custodial solution recommended by the Hong Kong Securities and Futures Commission, providing a certain level of confidence.
However, similar to the logic with exchanges, while a reliable custodian is good, it's more important for users to establish the habit of managing their assets autonomously. Keeping only a small amount of assets in the prepaid card for daily expenses is prudent. Doing so ensures that even in the unfortunate event of a company collapse, the loss would be minimal.
The RedotPay experience was very smooth. I completed the entire process of downloading the app, registering an account, verifying identity, applying for a card, and adding it to Google Wallet in about 5 minutes. Even a novice should be able to finish within 15 minutes, unless they encounter issues, such as not having cryptocurrency to transfer into the RedotPay wallet address.
The RedotPay app interface is very minimalistic, quite different from the feature-rich Crypto.com app. It’s straightforward with almost no redundant elements, which I prefer, except for the reward program interface and text, which has a strong 'local flavor.'
I liked the option for a virtual card during the card application process, which saves unnecessary physical items and allows for immediate use. If you apply for a physical card, it can be used at merchants that accept Visa but don’t support payWave, and it allows cash withdrawals from ATMs, which is handy in cash-only situations. Unlike many aggressively promoted payment cards, RedotPay only offers a meager $5 bonus after account registration, with no cashback or other incentives. There is a fee for card issuance, $10 for a virtual card (with a $2 discount using the code 'trendhkvc') and $100 for a physical card (with a $20 discount using 'trendhkpc'), and the given $5 can’t be used to pay for these. Although less exciting without incentives and having to pay for card issuance, I hope this indicates a healthier and more sustainable business model.
RedotPay supports four cryptocurrencies: USDT, USDC, BTC, and ETH. USDT can be recharged via Ethereum, Tron, Binance Smart Chain, and Arbitrum, and USDC adds Polygon. I deposited USDT into my dedicated RedotPay wallet address via Arbitrum twice, and it was credited within 1 minute each time. Later, when I deposited ETH via Ethereum, it took 14 minutes to confirm, which was somewhat slow, but still acceptable. Be careful, ETH top-up only supports Ethereum and Binance Smart Chain. Don’t make my mistake of depositing 0.005 ETH on Arbitrum, as getting it back from customer service is highly unlikely.
For the core function of payment testing, I first tried an online transaction. I purchased a Brave New World NFT book priced at $0.99 from https://liker.land and paid with RedotPay Visa. The transaction was successful, and $1.0302 was deducted from the $5 given bonus, with a fee of about 4%. Another advantage of RedotPay over Crypto.com is that you don’t need to exchange cryptocurrency into fiat currency before spending (Crypto.com uses SGD, which adds another layer for Taiwan and Hong Kong users). Instead, it converts at the time of purchase, directly deducting the corresponding cryptocurrency. This type of immediate conversion debit card has been around for a while. In 2019, I shared about using the now-defunct Ten-X debit card to buy a HKD 130 at IKEA, deducting 0.00352481 BTC (coincidentally also 130… USD now). RedotPay, launched in 2023, represents a resurgence in the industry with more mature infrastructure and more regulated laws.
However, there’s a problem. Along with the given USD spending amount, RedotPay supports a total of 5 currencies. How does the system decide which one to deduct first? I found that in 'Payment Settings,' you can choose 'Payment Priority Order' to set the order of using each currency. I wanted to try buying snacks with ETH, so I moved ETH to the front in payment priority. However, there was a bug in the system that it still deducted the given spending amount first. I tried again, spending the $5 bonus until it was insufficient for payment, but the system still didn’t touch my ETH and chose to deduct my USDT instead. Reluctantly, I had to buy more snacks to reduce the USDT balance to a few cents. Finally, on the fourth attempt, I successfully bought two boxes of Lotte Bear Biscuits for 9.9 Hong Kong dollars (on special offer, very cheap) using 0.00064354 ETH.
Possibly the First Ever Purchase of Lotte Bear Biscuits with ETH
Assuming the USD to HKD exchange rate is 7.8, RedotPay converted my ETH to HKD 9.9 for payment at a rate of USD 1972, while at the time, Coingecko’s quote for ETH was USD 2011. This means RedotPay's exchange rate was 2% higher, which I assume includes a 1% service fee and a 1% exchange rate difference. Anyway, I consider this a 2% cost. Considering the convenience and the ability to convert at the last moment, this is acceptable. I’d like to give special thanks to the staff at the OK convenience store, James, who remained cheerful and provided attentive service despite dealing with a customer repeatedly buying small amounts of snacks and insisting on using Google Pay for small transactions each time.
I couldn’t find a way to report the bug, and I hope RedotPay’s team reads this article and corrects the error soon. Also, I'm left with small change in several currencies, which is quite frustrating for someone with OCD like me. It would be ideal if there was a way to spend these small amounts or convert them into another currency.
In summary, although RedotPay’s functions are somewhat basic and have some minor bugs, these don’t overshadow the overall positive experience.
The design of payment priority is good, but the system has a bug
Whether Bitcoin can buy wonton noodles is an important and practical question. However, using this to judge Bitcoin's value is foolish and misses the point. If you randomly visit a wonton noodle shop and ask if you can pay with USD or Euros, nine out of ten times you’ll probably be kicked out. But obviously, we cannot conclude from this that USD or Euros are worthless. At most, it can be said that these two assets are not used as a medium of payment among the general public in Hong Kong.
Regardless, Bitcoin, most suitable as a store of value, can now also be easily used as a medium of exchange to buy wonton noodles. Although I doubt many people will do this in the short term (strictly speaking, I wouldn't either, as I prefer wonton noodle shops on the street that don't accept Visa cards), the convenience of RedotPay Visa, which converts and withdraws money at the same time of purchase, using cryptocurrency in physical life, will definitely give a significant boost to the widespread adoption of cryptocurrencies.
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