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    Author Topic: Need some feedback on a potential reloadable prepaid VISA program  (Read 4635 times)

    • DeathAndTaxes (OP)
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    Gerald Davis


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    May 07, 2012, 04:11:59 PM
    Last edit: May 10, 2012, 01:43:30 AM by DeathAndTaxes
     #1
    [Update] Alternate vendor:  https://bt.irlbtc.com/view/80005.msg890795#msg890795


    We are looking at potential of offering prepaid card which can be funded by selling Bitcoins.

    Restrictions
    1) The card MUST be registered. The card must be registered in order to reload it.  Card issuance and registration will be by 3rd party bank.  Normal KYC and AML requirements will apply (including full name and SSN).   When you receive the card you will use the bank's portal to register. Our company will have no access to this information.  If you do not register the card it will continue to function but you will be unable to reload it until registered.

    2) You sell coins, we buy them, and as a result we owe you USD.  That debt in USD will be settled by loading your prepaid card.  Selling price will be based on MtGox prices minus a spread of 1% to 2%.  We won't be able to accept Mt.Gox (or other exchange) codes or facilitate trading between peers (exchange).  Trades will always be only one way.    These aren't our ideas and are required to implement them if we wish to secure a license and merchant account. The load/reload will be a cash deposit to your account.  That means your funds will be available (almost) instantly.

    3) There will be fees.  The majority of these fees go directly to the bank and interchange network.  Our compensation will be primarily* based on the spread between rate we purchase coins at and the rate we can sell them to the major exchanges.   Our goal is for that spread to be 1% to 2% but will float dynamically based on our available cash reserves.   Consumers will know in advance what rate they are selling coins at.  *In the name of full disclosure we do receive a small payment from the network for each card sold and each load performed but we are prohibited from discounting or disclosing it.

    4) Offer will be for US residents only.

    Tentative fee schedule
    Card issuance:  ~$5.00 (plus S&H)*
    Reload: ~$3.00 **
    Monthly: ~$3.00
    ATM Cash Withdrawal: ~$1.00
    ATM Balance Inquiry: ~$1.00
    ATM Decline: ~$1.00

    POS Signature Purchase: FREE
    POS PIN Purchase: FREE
    "Cash Back" on PIN Purchase: FREE
    Lost Card Replacement: FREE ***
    24/7 Phone Customer Service: FREE
    Employer Direct Deposit: FREE

    * We can provide account details (card #, exp date, etc) however you will be unable to reload until you receive the physical card and register it with the bank.

    ** Reloads are possible via Bitcoin sales and ~10,000 POS locations (no they don't take Bitcoin, only USD).  The network is significantly smaller than GreenDot or NetSpend but should be useful for loading some emergency cash.

    ***Card replacement at no cost is for first replacement and by USPS First class mail only.  Subsequent replacements or overnight delivery has higher fee.

    Loading Limits
    Max Initial load: $500 (unregistered)
    Max reload per tx: $1,000 (requires registration)
    Max reload per day: $1,000
    Max value per card: $5,000

    [Update] Alternate vendor:  https://bt.irlbtc.com/view/80005.msg890795#msg890795

  • rjk
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    May 07, 2012, 04:28:17 PM
     #2
    Sounds interesting, but I don't think it would be something I would use. Also, a $1 fee just to check the balance at an ATM? Is that a joke?
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  • DeathAndTaxes (OP)
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    May 07, 2012, 04:38:07 PM
     #3
    Quote from: rjk on May 07, 2012, 04:28:17 PM
    Sounds interesting, but I don't think it would be something I would use. Also, a $1 fee just to check the balance at an ATM? Is that a joke?

    Sadly no.  One can check balance online or by phone for free though.

  • check_status
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    May 07, 2012, 05:42:20 PM
     #4
    Sounds like a Green Dot card. I no longer give out my SSN and it is illegal for anyone to ask me for it if it doesn't involve income taxation. I can't be taxed for debt so a credit card company doesn't need to have it. I am quite happy to purchase cards where I don't need to provide any personal details.

    I think that moving away from the traditional systems is a much better direction, though some amount of interface between traditional systems and Bitcoin maybe needed to ween us off of the traditional systems.
    For Bitcoin to be a true global currency the value of BTC needs always to rise.
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  • DeathAndTaxes (OP)
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    Gerald Davis


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    May 07, 2012, 05:51:11 PM
    Last edit: May 07, 2012, 06:06:46 PM by DeathAndTaxes
     #5
    Quote from: check_status on May 07, 2012, 05:42:20 PM
    Sounds like a Green Dot card. I no longer give out my SSN and it is illegal for anyone to ask me for it if it doesn't involve income taxation. I can't be taxed for debt so a credit card company doesn't need to have it. I am quite happy to purchase cards where I don't need to provide any personal details.

    Well there is no law prohibiting a bank or other financial institution from asking for your SSN. You aren't obligated to provide it however the bank isn't obligated to open your account.  Sadly in the US there is no reloadable prepaid card (or credit card, or bank account, or payroll card) which doesn't require a SSN to open.   You can still purchase non-reloadable prepaid VISA without providing KYC & AML information (limited to single load of $500 or less).  

    This card acts like a non-reloadable card if you never register so that is also an option.  Simply purchase it, load up to $500 and never register.  The card will work function them same however you will be unable to reload until you register.

    Thank you for your opinion.

  • Yankee (BitInstant)
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    May 07, 2012, 05:57:50 PM
     #6
    I like the idea, and I think your rates are really good compared to the others that offer it.

    I'm assuming the upfront investment is the killer here, we looked into similar situations and they wanted 15k+ to start.

    Maybe we can work something out together, PM me!

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  • evoorhees
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    May 07, 2012, 06:08:15 PM
     #7
    My thoughts:

    -Rates and fees are pretty good, not a deterrent.
    -$500/$1000 load limit is problematic, and would be a deterrent for me. I know of similar cards with limits more like $10,000, and that is reasonable.
    -The requirement of SSN is a deal-breaker though, as is the fact that it's US only  (interestingly, if you solve the latter problem, by necessity you solve the former Wink

    I appreciate you doing market research and I hope you find the feedback here valuable.

  • Meatpile
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    May 07, 2012, 06:20:29 PM
     #8
    All these ideas to shoehorn bitcoin into the existing system are dumb, piling on a bunch more fees onto the existing system makes on sense, so the only reason to use bitcoin is for slightly anonymous and illegal stuff.   If I wanted to be anonymous I sure as hell wont be giving my SSN to these services?

    So its cheaper to just use the existing system rather than -> convert to bitcoins -> exchange and more fees -> back into fiat -> still not anonymous no reason to go through all these dumb steps.

  • Red Emerald
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    May 07, 2012, 06:45:31 PM
     #9
    I think a re-loadable card would be really nice for Bitcoin until we can actually use smart phones/cards for payments.

    I do dislike monthly fees though.
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  • DeathAndTaxes (OP)
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    Gerald Davis


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    May 07, 2012, 06:53:40 PM
     #10
    Quote from: Red Emerald on May 07, 2012, 06:45:31 PM
    I think a re-loadable card would be really nice for Bitcoin until we can actually use smart phones/cards for payments.

    I do dislike monthly fees though.

    Noted.  We have been and will continue to look at other issuers and will keep that in mind.

  • DeathAndTaxes (OP)
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    Gerald Davis


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    May 07, 2012, 08:52:56 PM
     #11
    Quote from: evoorhees on May 07, 2012, 06:08:15 PM
    My thoughts:

    -Rates and fees are pretty good, not a deterrent.
    -$500/$1000 load limit is problematic, and would be a deterrent for me. I know of similar cards with limits more like $10,000, and that is reasonable.
    -The requirement of SSN is a deal-breaker though, as is the fact that it's US only  (interestingly, if you solve the latter problem, by necessity you solve the former Wink

    Thanks for the feedback.  No US bank is allowed to issue a "open loop stored value card" which can be reloaded or have a fixed value of > $500 without collecting KYC & AML information.  Bypassing that means finding an offshore issuer.  While they do exist they tend to have prohibitive fees.  Honestly given the fees by most off shore issuers simply using only non-reloadable cards is likely cheaper for most consumers.

    It is a tough dynamic.

  • check_status
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    May 07, 2012, 09:17:11 PM
     #12
    ArrumExchange offers Withdraw2card and they state they can load funds onto any debit/credit card including prepaid cards. Can you do this also?

    Quote from: Red Emerald on May 07, 2012, 06:45:31 PM
    I think a re-loadable card would be really nice for Bitcoin until we can actually use smart phones/cards for payments.

    I do dislike monthly fees though.
    See above.
    You can make payments now, no need for any re-loadable cards.
    What is stopping me from sending Bitcoins for payment to the Cable company right now? Answer: The limitation is not smart phones/cards.

    The solutions the Bitcoin economy needs are increasing the merchant and service provider acceptance. The ones who will benefit the most by adopting Bitcoin payments are the small businesses; News Stands, Coffee Shops, Hair Salons/Barber, Restaurants and Eateries, Smoke Shops, Fleamarket Sellers, etc. When you go to get your morning coffee before work and you see they accept Bitcoins, nothing could be more powerful to initiate change. Cashing out of Bitcoins to make a payment is an expensive and complicated solution.
    For Bitcoin to be a true global currency the value of BTC needs always to rise.
    If BTC became the global currency & money supply = 100 Trillion then ⊅1.00 BTC = $4,761,904.76.
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  • DeathAndTaxes (OP)
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    May 07, 2012, 09:27:26 PM
    Last edit: May 09, 2012, 05:49:26 PM by DeathAndTaxes
     #13
    Quote from: check_status on May 07, 2012, 09:17:11 PM
    ArrumExchange offers Withdraw2card and they state they can load funds onto any debit/credit card including prepaid cards. Can you do this also?

    No.

    However I would point out three things.
    1) The above service while "universal" isn't exactly Cheap.  $9 + 2% + 0.6% (exchange fee).  To sell 40 BTC and load that $200 would cost ~$14.20.  I don't want to take anything away from it.  In the convoluted world of traditional banking (and all the hoop jumping that involves) it is a nice service they are offering.

    2) Your objection seemed to be the need to provide SSN (and other KYC, AML information).  If you are in the US and have a debit or credit card which can be reloaded you have already provided that same information.

    3) The above service has a funding time of 2-3 days while the prepaid card I am investigating would allow funding within an hour and at a lower cost.

    Quote
    The solutions the Bitcoin economy needs are increasing the merchant and service provider acceptance. The ones who will benefit the most by adopting Bitcoin payments are the small businesses; News Stands, Coffee Shops, Hair Salons/Barber, Restaurants and Eateries, Smoke Shops, Fleamarket Sellers, etc. When you go to get your morning coffee before work and you see they accept Bitcoins, nothing could be more powerful to initiate change. Cashing out of Bitcoins to make a payment is an expensive and complicated solution.

    Well the two aren't mutually exclusive but small businesses tend to be cashflow constrained.  Accepting Bitcoins and then having slow or costly methods to disburse them isn't exactly attractive.  Even if a large number of small businesses accept Bitcoins many of their vendors, suppliers, partners, and billers won't and that means needing to convert at least some of that revenue back into fiat.    How long before the coffee shops wholesale, landlord, insurance company, and utilities all take Bitcoins?  If they can't rapidly convert funds between crypto and fiat then that illiquidity creates a barrier to adoption.

  • Red Emerald
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    May 07, 2012, 09:49:07 PM
     #14
    Quote from: check_status on May 07, 2012, 09:17:11 PM
    ArrumExchange offers Withdraw2card and they state they can load funds onto any debit/credit card including prepaid cards. Can you do this also?

    Quote from: Red Emerald on May 07, 2012, 06:45:31 PM
    I think a re-loadable card would be really nice for Bitcoin until we can actually use smart phones/cards for payments.

    I do dislike monthly fees though.
    See above.
    You can make payments now, no need for any re-loadable cards.
    What is stopping me from sending Bitcoins for payment to the Cable company right now? Answer: The limitation is not smart phones/cards.

    The solutions the Bitcoin economy needs are increasing the merchant and service provider acceptance. The ones who will benefit the most by adopting Bitcoin payments are the small businesses; News Stands, Coffee Shops, Hair Salons/Barber, Restaurants and Eateries, Smoke Shops, Fleamarket Sellers, etc. When you go to get your morning coffee before work and you see they accept Bitcoins, nothing could be more powerful to initiate change. Cashing out of Bitcoins to make a payment is an expensive and complicated solution.
    We are saying the same thing, but just to make you happy I'll make my statement a little clearer.

    I think a re-loadable card would be really nice for Bitcoin until merchants start to accept coins directly from our smart phones/cards/whatever mobile payment method is available.

    Most stores are already part of the Visa or Mastercard networks and less tech savvy people will be much more comfortable with a piece of plastic that works exactly the same as the piece of plastic they already carry in their wallet.
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  • FreeMoney
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    May 07, 2012, 09:54:44 PM
     #15
    Quote from: check_status on May 07, 2012, 05:42:20 PM
    Sounds like a Green Dot card. I no longer give out my SSN and it is illegal for anyone to ask me for it if it doesn't involve income taxation. I can't be taxed for debt so a credit card company doesn't need to have it. I am quite happy to purchase cards where I don't need to provide any personal details.

    I think that moving away from the traditional systems is a much better direction, though some amount of interface between traditional systems and Bitcoin maybe needed to ween us off of the traditional systems.

    Check_status, may I please have your SSN?
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  • SgtSpike
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    May 07, 2012, 09:56:13 PM
     #16
    Here's what I would like to see:

    A debit card that holds a balance in BTC, but is usable in USD.  As soon as I swipe my card, the conversion is made at the current spot price, the vendor is paid in USD, and the BTC equivalent is deducted from my account.

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    May 07, 2012, 09:56:48 PM
     #17
    Quote from: FreeMoney on May 07, 2012, 09:54:44 PM
    Quote from: check_status on May 07, 2012, 05:42:20 PM
    Sounds like a Green Dot card. I no longer give out my SSN and it is illegal for anyone to ask me for it if it doesn't involve income taxation. I can't be taxed for debt so a credit card company doesn't need to have it. I am quite happy to purchase cards where I don't need to provide any personal details.

    I think that moving away from the traditional systems is a much better direction, though some amount of interface between traditional systems and Bitcoin maybe needed to ween us off of the traditional systems.

    Check_status, may I please have your SSN?
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  • willphase
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    May 07, 2012, 10:50:11 PM
     #18
    do you have plans to offer a virtual credit card for online use only?

    Will
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  • DeathAndTaxes (OP)
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    May 08, 2012, 01:15:24 AM
     #19
    Quote from: willphase on May 07, 2012, 10:50:11 PM
    do you have plans to offer a virtual credit card for online use only?

    Will

    Good question.

    That certainly is a possibility however I haven't found any provider which meets the requirements and costs less than physical cards.  It may simply make more sense to offer physical card and make delivery optional.  We are looking into it though.

  • RaggedMonk
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    May 08, 2012, 02:54:14 AM
     #20
    Quote from: SgtSpike on May 07, 2012, 09:56:13 PM
    Here's what I would like to see:

    A debit card that holds a balance in BTC, but is usable in USD.  As soon as I swipe my card, the conversion is made at the current spot price, the vendor is paid in USD, and the BTC equivalent is deducted from my account.

    +1. I would put up with the KYC hassle for this.  Requirement to convert BTC back to $ on deposit has kept  me from jumping in so far. 
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