USDT bank cards outline a clear business model for the Web3 payment ecosystem.
Written by: Liu Honglin
As a lawyer surfing the Web3 industry, I often have the opportunity to experience some beta products and services in advance, thanks to the care and trust of friends in the industry. Recently, a friend from BG reached out to me, mentioning that they saw my articles about USDT bank cards and invited me to try their premium card, claiming that their product experience was excellent.
As an internet product enthusiast, I had no reason to refuse, so I provided my UID, and after being added to the whitelist, I found myself stuck at the bank registration KYC stage due to my passport nearing expiration. I had to get a new passport to smoothly and seamlessly complete the entire process.
After the experience, my sentiment was: this is the future of crypto payments.
In conversations with many friends from traditional internet companies, the most frequently asked question is: what is the actual use of blockchain? What are the truly commercially valuable sectors of blockchain?
My answer, aside from the traditional mining exchanges and crypto fund investments, is basically: cryptocurrency payments.
Operating Principles of Cryptocurrency Bank Cards
Taking the cryptocurrency bank card I experienced as an example. First, BG acts as a traffic pool, accurately directing users to a certain crypto-friendly digital bank abroad, helping the bank acquire new customers and deposits.
Secondly, I opened an account at an overseas bank using my Chinese passport and completed KYC and AML processes according to the bank's compliance requirements, meeting the local bank's account opening standards. After that, I obtained a virtual bank card.
Next, when I needed to make a cryptocurrency purchase, I had to first transfer crypto assets from my account in a centralized exchange (CEX) directly to the bank card (conversely, I could also transfer the balance from the bank card back to my CEX account). This process is not completed on-chain, so there are no Gas fees incurred.
Finally, when I needed to make a purchase, I could directly bind this virtual credit card to Alipay or WeChat. I even made a purchase using Alipay, and it was no different from using a bank card in mainland China; my transaction record was visible in the app. More importantly, for some internet purchases that particularly require an overseas bank card, having this virtual card is incredibly convenient, so I quickly linked it to my ChatGPT's automatic billing.
Even more astonishing, the bank card deducts my fees and returns them to me in the form of platform tokens. Isn't that "Pay to earn"? At that moment, the concept of PayFi naturally emerged in my mind.
The Positive Flywheel of Web3 Payments
It’s not hard to imagine that if a bank card issuer wants to capture users, or if a Web3 startup focused on payments wants to quickly increase its user base and transaction volume, it can completely subsidize its project tokens through transaction fees, making it a more cost-effective approach than existing internet advertising for user acquisition.
Of course, this article cannot be purely about user experience; more importantly, this experience has led me to several new thoughts.
The first point is the headache of frozen withdrawal cards that crypto players face. As the proportion of virtual currencies used in gray and black markets increases, more and more bank cards are being frozen under the crackdown by law enforcement agencies worldwide. This is essentially a probability issue, and there is no completely safe solution. However, using USDT bank cards can at least meet the consumption needs of most small-amount players in the traditional financial world at this stage.
The second point is that the existing method seems relatively compliant. According to my understanding, when U card users make purchases, there should be two processes: one is the conversion from USDT to fiat currency, and the other is the cross-border settlement from fiat to fiat. The former is completed by licensed institutions or banks abroad, requiring only compliance with local regulatory systems, while the latter still follows the existing logic of cross-border consumption with bank cards, not requiring any changes or technical upgrades from terminal merchants and consumers. It can be said that the compliance work and difficulties are left to themselves, while convenience is provided to the naive users.
The third point is building a commercial growth flywheel through payment scenarios. The freezing of bank cards can be said to be the most painful pain point for cryptocurrency players. Whoever can effectively solve this pain point can acquire customers at a very low cost. By helping banks attract users and funds, there is already income from channel fees. If a portion of these channel fees is used as platform tokens to "subsidize" users, it can further enhance user stickiness to the platform, leading to an increase in consumption frequency and amount, thus promoting the project’s tokens to more crypto players in a positive and healthy cycle. This can be described as killing three birds with one stone.
It is not an exaggeration to say that USDT bank cards outline a clear business model for the Web3 payment ecosystem. For ordinary users, this payment method allows crypto assets to truly enter daily life, no longer just as investment tools, but as part of consumption payments. For the industry, it accelerates the integration of cryptocurrencies with traditional finance through innovative models, effectively addressing pain points such as the difficulty of withdrawing virtual currencies, poor integration of traditional payment systems, and challenges in promoting project tokens, finding a clever balance between compliance and convenience.
As I exclaimed after the experience: "This is the future of crypto payments!" The future of payments is not distant; it is happening right now through innovation.
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