Crypto firm Nexo has reportedly partnered with global payments company Mastercard Inc. to debut the world's first crypto-backed payment card. The new card is currently available in only a few European countries and can be availed by users to spend without having to sell their digital assets such as bitcoins.
Notably, unlike traditional credit cards which are unsecured and come with a credit limit, digital assets are typically used as collateral to back the credit granted to users in crypto-based cards.
Nexo stated that the new card, which is issued by Lithuanian electronic money firm DiPocket, has a crypto-backed credit line and can be used at any location that accepts Mastercard, which is close to 92 million merchants worldwide. This will make it possible for the investors to spend approximately 90% of their flat value of crypto assets.
Head of Crypto and Blockchain Products and Partnerships at Mastercard Raj Dhamodharan was quoted saying that the company participated in this move after it recognized that digital assets are profoundly changing the financial sector.
Interestingly, unlike conventional credit cards, these cards will not necessitate any minimum repayments, either monthly or otherwise. Also, it will not charge any inactivity or foreign transaction (FX) fees up to a monthly limit of USD 21,822.
Besides that, the card does not impose a spending limit that a customer can or cannot exceed. They can use this to withdraw from an open credit line and pay interest only on the amount of credit used. It is worth noting that the interest rate for customers with a loan-to-value (LTV) ratio of 20% or less remains 0%.
With digital assets becoming more influential, this latest development suggests that collaboration between crypto companies and other financial networks is the way forward for the economic landscape.