Visa has granted its principal membership to a UK based cryptocurrency company for the first time, it has been reported. The membership was awarded to Coinbase in December but remained under an embargo until Wednesday.
Visa confirmed it granted Coinbase the principal membership, clarifying that the company itself won’t actually accept cryptocurrency when the project goes live later this year.
The membership cuts out a crucial, and expensive middleman from the process of issuing a debit card that lets users spend their own bitcoin, ether and XRP anywhere Visa is accepted.
Meanwhile, Coinbase has said it’s not planning on issuing cards to others anytime soon. The principal membership status marks a potentially important new revenue stream for the company, which saw a 40% decline in earnings last year.
Managed by Coinbase’s fully-owned UK subsidiary, in London, it also has offices in Dublin.
It will be available in 29 countries when it is first issued later this year, including Denmark, Estonia, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden and the UK. The Coinbase Visa debit card will not be available to US residents.
Zeeshan Feroz, CEO of Coinbase UK said direct access to the Visa network gives the cryptocurrency exchange more flexibility in the business models it pursues.
"Direct membership allows us to take control of our issuing program,” he said.
A previous Coinbase Visa card was issued in April 2019 by financial services firm Paysafe Group Holdings Limited, which vets its customers, including corporate spending firm Soldo and mobile banking app Lunar, and charges a fee for the service.
Currently, Coinbase charges 2.49% fee on domestic transactions regardless of the value, in addition to other potential charges.
Historically, revenue for cryptocurrency exchanges like Coinbase has been directly tied to the price of cryptocurrency, with fees charged in fiat currency increasing when the price is high and decreasing when it drops.
Feroz said that fees charged to companies outside the cryptocurrency space could eventually become a new source of revenue, less reliant on cryptocurrency price fluctuations but that it is a long-term plan.
“Our primary focus is to build our own services,” he said.
From funding holidays abroad to trips on public transport, Coinbase Card customers are making their crypto work for them in everyday situations. Over half of the customers who’ve signed up to Coinbase Card use it regularly, with its usage peaking in the UK, followed closely by Italy, Spain, and France.
Wednesday's announcement is another milestone in the mainstream adoption of crypto as a genuine utility. The company said that it will continue to build on this relationship with further initiatives which will make interacting with crypto as seamless as possible for their customers.