Coinbase (COIN) just announced a new feature for its crypto debit card that allows users to make payments in cryptos with Apple Pay and Google Pay. Many experts believe that the new feature would strengthen cryptocurrency’s ability to be a true medium of exchange.
Consumers are eager to use cryptos to pay for daily goods, according to a PYMNTS report that was done in collaboration with BitPay. The report also says that even people who don't currently own any crypto coins are interested in using cryptos for purchases. “Consumers’ comfort level with making purchases using cryptocurrencies is high among current owners but is notably strong with those who have never owned cryptocurrency,” the report wrote.
What Are The Rewards For Using Coinbase Card With Apple Pay and Google Pay?
Starting this week, Coinbase will invite selected customers from the waitlist to start using the cards with Apple Pay and Google Pay. And the rewards are incredibly generous. Consumers can earn up to 4% back in crypto rewards if they use Coinbase Card. People can apply now to get a debit card, and there is no application fee and it won’t impact the credit score. Notably, Stellar Lumens offered the highest rewards. If you buy lunch with your Coinbase Card, you can earn 1% back in Bitcoin or 4% back in Stellar Lumens.
The stores will not receive cryptos directly, though. When you make a purchase with Coinbase Card, it will automatically convert crypto into fiat before transferring money to sellers. This is the reason why the users will need to pay a conversion fee to Coinbase for every transaction.
What Does This Mean For Coinbase?
Coinbase is still experimenting with new revenue sources to generate sustainable growth in the long term. The strategy of being the leader in crypto payments for daily purchases can become a lucrative business for Coinbase. After all, Mastercard earned about $6 billion in profits last year as a payment network processor. What’s more, partnering with Apple and Google will deliver instant credibility to Coinbase and expand its moat against the competition in crypto payments.
Coinbase debuted as a public company on Nasdaq last month. Goldman Sachs analyst Will Nance is bullish. He set a buy rating and predicts that Coinbase’s business model is likely to thrive on the volatility of cryptocurrency. In the first quarter of 2021, Coinbase generated $1.80 billion in revenue and its earnings per share came in at $3.05. The launch of the debit card with Apple Pay and Google Pay may fuel the growth in revenues for the next few quarters.
Payment Giants Are Adding Crypto Features As Well
Gemini and Mastercard recently expressed plans in offering a crypto credit card with a 3% Bitcoin back. Also, PayPal just announced that it will soon permit crypto users to transfer the funds to external digital wallets. Previously, users could just buy, hold or spend the money within PayPal.
“We want to make it as open as possible, and we want to give choice to our consumers,” said Jose Fernandez da Ponte, PayPal’s head of Blockchain Services. “[Same] as we let them pay any way they want to pay, we want them to bring their crypto to us, so they use it in commerce, and we want them to take crypto they acquire with us and take it to the destination of their choice.”
The Recent Pullback In Crypto Prices
Bitcoin’s price saw a big correction in the last 30 days because of concerns over the regulations by the Chinese government and the use of fossil fuel by the miners. Bitcoin’s price is currently trading at around $37K after hitting $31K two weeks ago. Bulls believe that the adoption rate is still growing, despite these concerns. They point out the fact that fintech giants and exchanges are expanding their crypto services. What’s more, two financial titans (Ray Dalio and Carl Icahn) recently endorsed investing in cryptos. These two key drivers can help to overcome the recent bearish sentiments.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.