Asia, in particular Hong Kong and mainland China, has been a quick adopter of the bitcoin digital currency. Early headlines focused on the speculative buying of Chinese investors that drove bitcoin prices up to record levels late last year. Prices have since ease off by about 40% as the initial surge of speculative buying dried up, but acceptance of the currency among consumers, if not necessarily central banks, is steadily rising. Bitcoin ATMs have popped up in Shanghai and Hong Kong and more and more retailers are accepting them.
In mid-June Hong Kong-based ANX, one of the world’s largest bitcoin exchanges, launched the world’s first reloadable prepaid bitcoin debit card, which could potentially spark the next wave of consumer activity with the crypto currency. In an interview with China Economic Review, ANX CEO Ken Lo explains how the debit card works and how it removes a substantial barrier for bitcoin users by allowing them to use bitcoins in traditional credit card payment systems.
Why did you launch a bitcoin debit card?
We believe prepaid cards will play an integral role in a bitcoin consumer’s day-to-day financial life. As a market leader we felt it was important to go beyond current offerings in the marketplace and bring something new and innovative to our customers. Although the merchant adoption is increasing daily, there are still a lot of places where bitcoins are not accepted. We wanted to allow our bitcoin users to be able to use their bitcoins on a traditional payment network that has 30 million merchants worldwide.
Can you explain how the process, from applying for the card to loading and paying, works?
The ANX Bitcoin Debit cards are only offered to our customers. Users must first register and verify their account on ANX before applying for the debit card … Once they receive their card, they send a request to the ANX support team to load funds from their ANX account to the debit card. We will be releasing a fully automated solution in our following release. The card is then useable in over 30 million merchants worldwide through a traditional payment network.
How are a card holder’s bitcoins exchanged into useable currency?
Funds can be loaded onto the ANX debit card via bitcoin or in any of the 10 major currencies that ANX supports. The stored currency on the ANX debit card is in US dollars. This card is then useable at merchants and ATMs worldwide that don’t support bitcoins because the card will be debited in US dollars.
Can card holders convert the balance on their cards back into bitcoins?
Which card payment processing providers are you working with?
Although it is public knowledge we are not allowed to market publicly the payment provider.
Where do you expect your biggest user base to be in the short-to-medium term?
People who need travel a lot, and students who study abroad. This card can use bitcoins to purchase items through conventional payment system such as online retailers or physical retail stores. Cash withdrawals can be performed via an extensive ATM network spanning over 200 countries. The debit cards are linked to our ANX bitcoin exchange account and bitcoin wallet. This integration does not exist today.
The debit card currently supports the US dollar. Are there plans to add the yuan?
The debit card currently supports the US dollar only as the base currency. However, we are working on adding more currencies later.
Can the card be used to make payments in mainland China?
Can people in mainland China apply for your card?
China is one of the world’s biggest bitcoin markets. If the debit card takes off there, what could that mean for global acceptance?
A debit card would definitely be a plus for global acceptance. However, we have no plans for that region right now.
How closely is this system able to follow bitcoin’s constantly changing exchange rate?
The cards will be loaded at the market rate and thus will not be fluctuating.
How does this debit card promote the acceptance of bitcoin among retailers if the onus for conversion is placed on a service provider like ANX?
By having an ANX bitcoin debit card, bitcoin users now have another way for spending their bitcoins at a retailer that doesn’t accept bitcoins because the card is debited in US dollar.
ANX is not a traditional financial services company. How are you able to operate a debit card and how can users be sure that it will be accepted by retailers?
This is because our payment provider is one of largest payment processors in the world.
Part of the appeal for bitcoin users is anonymity. Surely that ends with a physical debit card as transactions can be much more easily traced?
We have no anonymous users on our system. All of our users are verified. The one advantage to our ANX bitcoin debit card is now you are able to buy that surprise gift from Amazon to your significant other using bitcoins, whereas previously you had no alternative because Amazon does not accept bitcoins.
What interest are you getting from retailers in Hong Kong?
Hong Kong being a world financial capital has all the right ingredients for driving and leading innovation in the bitcoin industry. More and more merchants and people are accepting bitcoin as a payment method. We are glad that we are a part of it.
How is the card integrated into existing payment networks?
Our payment processor is global and can process in 30 million merchants worldwide and can access an extensive ATM network in 200 countries.
If holders can use the card at a regular point of sale, is there some kind of integration that needs to happen at the merchant?
Nope, the whole benefit to the ANX bitcoin debit card is that it is debited through traditional POS systems and there’s no change that has to happen on the merchant side. ANX provides all the integration to get the card to be accepted globally.