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Author Topic: Ideas for Bitcoin and credit card company  (Read 863 times)
Shawshank
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October 04, 2014, 12:23:45 AM
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I have been contacted by an executive at a credit card company to explore how they can integrate or provide services with Bitcoin.

The first obvious approach would be to provide a solution similar to Xapo, but that is a huge amount of work and potentially with many pitfalls. What ideas could you give me for us to consider in our next meeting?

A bank-only system is similar to having your Bitcoin wallet confined to your national ID, essentially forfeiting your privacy and handing all private keys to the government
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franky1
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October 04, 2014, 01:06:49 AM
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I have been contacted by an executive at a credit card company to explore how they can integrate or provide services with Bitcoin.

The first obvious approach would be to provide a solution similar to Xapo, but that is a huge amount of work and potentially with many pitfalls. What ideas could you give me for us to consider in our next meeting?

xapo partnership is nothing big. infact for $15kup front for a batch of cards, or enough card recipients that $15k in fee's combined are generated a year,  anyone can start a debit card service. and it dont involve 'executives' just a card issuers customer service line

ive talked to a few card issuers. so if this is genuine.. then if your getting approached by them, they already have a plan/idea of how they want to set up a service. trust me they dont randomly approach someone unless they have an idea in mind.

think about who you wish to aim it towards.
general use? specific use?

for instance, you can tailor the charges (well you can with the issuers i spoke with) to either be something like $15 upfront admin fee and then have 0% ATM withdrawal, 0% retail fee, 0% international

or $0 upfront, 1% blah blah blah you get the idea.

so if the intended recipient was american and for american only use. then you can yank up the international use % and have the atm/retail % low. with no upfront fee, if the cards were to be treated as temporary (load once).

or if it was to me reloadable cards then an upfront fee would be advantageous, as that would help reduce the reload fee.

so think about the intended recipients


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Shawshank
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October 04, 2014, 06:52:25 AM
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Thanks, franky1. The problem I see is not that much on the price. The credit card company will already have the means to create cards and distribute them to customers efficiently. The difficult part is securely handling bitcoins in cold and hot storage, arbitrage with exchanges and so on.

Moreover, there are already several companies that provide this type of services. Xapo is one of them, Circle has just arrived, and several others, so I don't think it is wise to enter this kind of competition at this stage.

I was thinking of a solution without going the easy path of hinting that Bitcoin will disrupt credit card companies and make them obsolete. I would need thinking out of the box for a solution that would benefit both the credit card company and Bitcoin.

Any other ideas? Brainstorming would also be OK...

A bank-only system is similar to having your Bitcoin wallet confined to your national ID, essentially forfeiting your privacy and handing all private keys to the government
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October 04, 2014, 07:30:52 AM
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The first thing we need to do is to spend more....otherwise we can't make it survive.

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October 04, 2014, 08:06:23 AM
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Personally, I'd say it's more of a marketing play than anything nowadays, as all the necessary functionality is already in place.  I think you're right in not focusing on being a standard "spend your BTC anywhere" card that competes with the likes of Xapo and others.

For example, maybe concentrate on remittances, and easy funds distribution.  For example, hand out debit cards to people.  Then allow certain users to link their bank accounts to the system, and easily distribute funds to the cards.  So they can login, they'll already have the card#s of people they want to pay (preferably already saved in system), then they just specify $800 to this card, $1300 to that card, etc.  Funds come out of the user's bank account, are instantly flipped into BTC, and put on the cardholder's cards.


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franky1
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October 04, 2014, 08:07:51 AM
 #6

Thanks, franky1. The problem I see is not that much on the price. The credit card company will already have the means to create cards and distribute them to customers efficiently. The difficult part is securely handling them in cold and hot storage, arbitrage with exchanges and so on.

Moreover, there are already several companies that provide this type of services. Xapo is one of them, Circle has just arrived, and several others, so I don't think it is wise to enter this kind of competition at this stage.

I was thinking of a solution without going the easy path of hinting that Bitcoin will disrupt credit card companies and make them obsolete. I would need thinking out of the box for a solution that would benefit both the credit card company and Bitcoin.

Any other ideas? Brainstorming would also be OK...
from the feasibility side:
dont think about the exchanges such as bitstamp and btc-e, etc.. trying to get bank transfers in and out are a headache. what you should do is find a large whale FIAT investor who wishes to continually buy into bitcoin.

the secret of how most services work these days is that exchanges are just for the little fish and the large whales trade privately.
for instance bitpay got $30milllion and that investor will get bitpays bitcoins in return. without bitpay needing to throw coins at an exchange or withdraw fiat from an exchange.

obviously the credit card company has interest in  bitcoins, so maybe they want to be a whale collecting bitcoins, thus solving your problem, where all you ave to do is set the price of your swaps with them.
but if they are just looking for a "gimmick" to continue their fiat profits. then you will need to find a whale.

above was the large picture of the long time goal/strategy(private exchange). but for initial trials you could start with a small reserve to pay the card company to load the cards etc. (reserves are important to deduce delays) and then use exchanges to refill the reserves as customers participate.

reserves are easy to calculate. simply by setting reload limits.
EG $100 load limit and releasing 1000 cards = $100k reserve/investment capital requirement to start.

so having reserves and method to get more FIAT for refill is as you say a difficult thing to securely handle (as other parties are involved). but is achievable.

from the concept:
think of the "gimmick"

what will make customers come to your card as oppose to other bitcoin card issuers. again it brings it back to if its a simple cashout method for customers (0% ATM fee) if its ..umm.. branded to be used for pocket money amounts in starbucks, walmart, 7-11. (0% retail fee)

*i mention 0% obviously because bitcoiners believe in monetary freedoms. so no point branding your service as an ATM card if you have 50c fee per use*

i think the "gimmick" (sales pitch/branding) that works is the hardest part. .. trying to find whales(as envrin points out) and cold storing/swaping coins is easier.

basically at stage 1 the card issuers need to know the 'fees' they will get. thus plan the branding and the fee's around the branding, then later concentrate on how to reload' the cards.

I DO NOT TRADE OR ACT AS ESCROW ON THIS FORUM EVER.
Don't take any information given on this forum on face value. Please do your own due diligence & respect what is written here as both opinion & information gleaned from experience. If you wish to seek legal FACTUAL advice, then seek the guidance of a LEGAL specialist.
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