Bitcoin exchanges have to keep up with the competition if they want to stay relevant while adding innovative new features to their platform. Sometimes, those new features come in the form of taking a huge gamble to facilitate the buying and selling of Bitcoin. Even though credit cards were never intended to be used for online purchases, Bitcoin exchange Coinbase will start accepting card payments very soon.
Coinbase’s Aggressive Expansion Plan
The name Coinbase is synonymous with buying and selling Bitcoin in the United States, as well as 27 other countries around the world. Ever since the company opened its doors to the public, it became adamantly clear Coinbase was forging a path of expansion and did so at an aggressive rate.
Offering a Bitcoin exchange service across multiple continents is not an easy feat, especially given the United States’ regulatory approach to Bitcoin in the past 18 months. Coinbase is one of the handful of Bitcoin exchanges applying for a BitLicense, complying with the money transmitter requirements in the state of New York.
And it looks like Coinbase will not be resting on its laurels anytime soon, as the company announced the integration of credit and debit card payments. Credit and debit card payments are widely used in the United States, yet most companies try to steer away from card payments due to high rates of fraud and chargebacks.
That being said, card payments are far more convenient for the everyday consumer to buy Bitcoin and other virtual currencies. Coinbase announced that Bitcoin purchases through credit or debit cards will be completed instantly, although we have not received a response from the company as to whether or not additional user verification will be required.
In a rather surprising turn of events, Coinbase indicated this new service will be rolled out to users in the UK and Spain first, and not the United States or Canada. This is a very interesting choice, and it will be interesting to see when Bitcoin purchases through credit and debit cards will be available to other countries.
Coinbase Is Following Circle’s Lead?
One of Coinbase’s major competitors in the US market is Circle, a company providing Bitcoin purchases with credit and debit cards for quite some time now. Even though customers can buy a small amount of Bitcoin without verification, purchasing larger quantities requires the submission of verification documents to Circle.
The decision by Coinbase to offer this functionality comes at an opportune time, as rumours have started surfacing about Circle blocking users’ credit cards without further explanation. Once a credit card has been blacklisted by the company, users can not use that card for funding or withdrawal purposes.
Finding a reliable third-party payment processor, who will take the risk of processing credit cards on behalf of Coinbase, will be key to providing this new feature for an extended period of time. No Bitcoin company wants to deal with fraud and chargebacks themselves, as analysts expect a lot of fraudulent transactions to be made through the Coinbase platform.
Images courtesy of Coinbase, Circle, Shutterstock