Web3 Credit cards

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Web3 Credit cards Overview

What do we mean by Web3 Credit cards?

A crypto card functions similarly to a traditional debit card, allowing users to make purchases. However, instead of directly paying vendors with cryptocurrencies, the card converts the crypto into local currency, making transactions seamless. Companies like Visa and MasterCard partner with businesses to offer these cards. While some give crypto rewards for expenditures, others act as credit cards and require credit assessments.

How Do They Work? Imagine having $500 worth of BNB in a Binance Card. At a restaurant with a $100 bill, when using the crypto card, Binance sells $100 of BNB, converts it to fiat, and pays the restaurant. Within seconds, the crypto card processes the transaction, leaving you with $400 of BNB. Some cards also support ATM withdrawals, converting crypto to cash in real-time.

Difference from Traditional Cards? Prepaid crypto cards are akin to debit cards: funds need to be available beforehand. They differ in that they're loaded with cryptocurrencies, not fiat. When used, the cryptocurrency gets instantly converted. Crypto credit cards, like offerings from Gemini and BlockFi, operate on a "buy now, pay later" model, but rewards are in crypto. They function like conventional rewards credit cards.

Getting a Crypto Card To obtain a crypto card, users typically need an account with a licensed issuer, like a crypto exchange or bank. Compliance processes, like KYC and AML, are standard, and credit checks may apply for crypto credit cards. For instance, Binance offers a Visa card with features such as zero fees and cashback for verified customers.