With the booming development of the crypto asset market, we are facing an era of "big payment cards." It seems that every protocol is eager to have its own crypto card business, aiming to maximize user retention within the protocol. Behind the dazzling array of choices, countless payment providers are building bridges between crypto and traditional payment methods. Moreover, the unique on-chain asset environment also provides ample support for the growth of payment cards. Why are there so many payment cards in this cycle? This article will take you through a multi-faceted analysis.
Operational Model Overview
Crypto payment cards are essentially a bridge connecting the cryptocurrency ecosystem with traditional payment networks. The entire system involves multiple participants, including users, card issuers, custodian service providers, payment channels, merchants, and card organizations. Users first apply for a crypto payment card from the card issuer, who then connects with card organizations such as Visa and Mastercard through a card issuance intermediary to complete the card issuance. Meanwhile, custodian service providers are responsible for managing users' cryptocurrency assets and may invest part of the funds in other areas to generate returns, forming a complete capital management loop.
When users make purchases with a crypto payment card, the system automatically executes real-time conversion of cryptocurrency to fiat currency. The specific process is as follows: Users swipe their cards at merchants, the payment request is processed through the payment channel, the system deducts the equivalent cryptocurrency from the user's custodian account and converts it into fiat currency, and finally completes the payment to the merchant. For merchants, the entire process is no different from traditional bank card payments, while users achieve the goal of using digital assets for daily consumption.
At present, crypto payment card products have been widely integrated with mainstream payment methods, including Google Pay, Apple Pay, and Alipay, significantly enhancing their convenience. The main products on the market include the Crypto.com Visa Card, Binance Card, Bybit Card, Bitget Card, etc., which are usually launched by major cryptocurrency exchanges. On the technical side, some card issuers have also integrated DeFi protocols such as Ethena, Morpho, and USUAL, providing users with asset value-added services and building a complete financial service ecosystem from payment to wealth management.
Why Are There So Many Crypto Payment Cards in This Cycle?
Image source: X: Yue Xiaoyu
Growth Catalyst: Booming Demand Side
According to a report by The Brainy Insights, the global crypto credit card market was valued at $25 billion in 2023, and it is expected that the crypto payment card market size will exceed $400 billion by 2033. The essence of the rush of various protocols into the payment card business is a scramble for growth. Although the profit share of the payment card business itself is relatively limited for protocols, it has extremely high strategic value in user acquisition, ecosystem building, and capital accumulation. Therefore, exchanges, asset management companies, and Web3 project teams are still willing to invest, as it can bring a broader user base and business growth, and even further ecosystem expansion.
In the crypto field, the underlying demand for payment has given rise to many PayFi products. However, a survey by Bitget Wallet shows that although cryptocurrency payments demonstrate unique advantages in speed (chosen by 46% of users), cross-border costs (37% value low fees), and financial autonomy (32% pursue decentralization), their actual application scale still has a significant gap compared with traditional payment systems. The current traditional payment market is worth trillions of dollars, covering the vast majority of daily transactions worldwide, while crypto payments only account for a very small share, mainly concentrated in niche scenarios such as cross-border remittances and digital asset trading.
The core reasons why users prefer traditional payment methods can be summarized as follows:
Trust and Security: Crypto users are concerned about the security risks of crypto payments (such as hacking and fraud), while traditional payments rely on a mature banking system, legal protection, and dispute resolution mechanisms, significantly reducing transaction risks.
Stability and Convenience: Price volatility makes crypto payments difficult to serve as a stable medium of exchange, while the stability of traditional fiat currency is more suitable for daily consumption. Moreover, users believe that insufficient merchant acceptance limits the practicality of crypto payments, while traditional payments have achieved seamless coverage through widespread POS terminals and online integration.
User Experience Inertia: Traditional payment tools have a low operational threshold, and users have developed long-term usage habits. In contrast, the complexity and technical barriers of crypto wallets pose obstacles to their widespread adoption.
Therefore, as a bridge connecting crypto assets and the traditional payment ecosystem, the core potential utility of payment cards lies in leveraging the existing merchant settlement network to instantly convert crypto assets into fiat currency to complete transactions. This extends the utility of on-chain assets to real-world payment scenarios while reducing cross-border channel costs and price volatility risks.
Regulatory "Arbitrage": Avoiding Off-Chain Risks and Reducing Costs
Geographically, payment settlement providers, which need to balance the dual compliance characteristics of cryptocurrencies and fiat currencies, are more concentrated in Europe. According to research by Adan.eu, European countries have an average cryptocurrency adoption rate of over 10%, especially among younger demographics and in regions with active fintech. The preference of consumers for flexible payment methods, combined with the expansion of the stablecoin ecosystem, has made crypto payment cards an important bridge connecting traditional finance and the Web3 world.
Additionally, due to the strong cross-border circulation of the US dollar and the euro, and the fact that payment cards often involve stablecoin payments, using crypto payment cards in some countries that need to avoid systemic bank risks can help people achieve more flexible financial services. In terms of taxation, the process of directly converting crypto assets into cash through payment channels avoids some tax collection in transactions, which has also become an opportunity for some users to use crypto cards.
However, in the context of imperfect regulation on the settlement side and on the blockchain, the existence of gray areas has become a sought-after opportunity for many payment providers, leading to potential money laundering and regulatory evasion. In terms of compliance, Europe and the United States are both working to quickly advance and implement crypto market-related bills (for example, the EU's MiCA requires relevant business companies to apply for compliance licenses within EU member states to continue services and restrict the scope of services). Such a model will no longer be sustainable.
Business Model: Connecting On-Chain and Off-Chain Asset Entry Points
On the settlement side, crypto payment cards exhibit diverse operational forms, with the most common being the stablecoin - credit limit credit card / prepaid card model. The debit card model, which involves more complex fund management and risk control mechanisms, is only achievable by a few payment cards. When users have a demand to use the card, they need to first recharge stablecoins into their account. Once the credit limit on the card increases accordingly, users can use this limit for various types of consumption. In this capital flow chain, there is a conversion between cryptocurrency and fiat currency limits. Card issuers earn income through exchange rate differences and fees. In the process of converting cryptocurrency to fiat currency, card issuers generally charge a fee of 0.5% to 1%. Therefore, the recharge fees generated during the user's recharge process also become one of the important sources of income for the payment card business.
On the blockchain side, some payment cards adopt a model integrated with DeFi protocols, introducing idle funds in the user's card into a profit-generating mechanism. For example, by integrating with DeFi protocols such as Morpho, Infini can automatically deploy users' unconsumed stablecoin balances into profit protocols, allowing users to earn on-chain profits during the consumption process. In this model, card issuers can not only obtain transaction sharing from traditional payment channels but also share part of the profits from DeFi interest generation, forming a dual-profit model. At the same time, users enjoy payment convenience and obtain asset value-added services that traditional bank cards cannot provide.
Therefore, from the perspective of profit, the model of crypto payment cards mainly consists of two parts:
On-Chain Tax: Reserve asset interest income / product income
Stablecoin issuers earn interest by holding reserve assets (such as US Treasury bonds). In the first quarter of 2025, Coinbase's stablecoin-related income was approximately $197 million, with an annual interest rate usually ranging from 2% to 5%. For users, before the advent of on-chain payment cards, they had no way to access such profit opportunities while using payment tools. The integration of on-chain protocols has eliminated this barrier and provided crypto card issuers with a new idea, namely, innovating capital channels through payment cards to reduce capital introduction costs while transforming into an alternative "asset management" model. In the future, once a certain scale of TVL is generated, crypto card issuers can further innovate asset types and investment paradigms to create more value-added services for users.
Off-Chain Tax: Payment card operator and card issuer fee sharing
When users make payments with USDC through a payment card network (such as Visa), Visa usually charges an interchange fee of 1.5% to 3% of the transaction amount, which is generally borne by the user. Card issuers may also charge additional fees such as a 2% foreign transaction fee or ATM withdrawal fee. In these processes.
