Bitcoin startup Xapo is widely known in the space for being: 1) one of the most well funded startups; 2) one of the very first companies to offer bitcoin debit cards.

Announced in mid-2014, the Xapo bitcoin debit card promised to allow bitcoin users similar spending freedoms to traditional debit cards. “With the new Xapo Debit Card you have the best of both worlds in the palm of your hand,” the company claims. But at what cost?

How does it work?

The Xapo Debit Card is a Visa card, meaning that you can use it anywhere on the Visa network for buying goods and services in stores, online, as well as withdrawing cash at ATMs.

Like any other debit card, the card debits directly in bitcoin from your Xapo main wallet – not the vault. It is available in three different spending currencies: USD, EUR and GBP, and is valid for three years.

Now, one thing that should be considered seriously is the cost of using such a tool.

Purchases in your card’s spending currency are free of charge. However, you will be charged a 3% Foreign Exchange fee if you make a purchase in a different currency.

ATM withdrawals always have a fixed fee, which is here lower than with traditional Visa cards (at least Swiss cards), but slightly higher than with normal debitcards. Good to know: Swiss Bitcoin ATM’s are charging also a fee of 5%.  But if you dare making an ATM Xapo Debit Card withdrawal in another currency, then that’s a fixed fee PLUS a 3% Foreign Exchange fee, which is quite in line with normal credit and debit cards.

Oh and let’s not forget the annual fee and the one time issuance card fee.

It’s obvious that Xapo issues this debitcards via a third party and this is for sure also the reason why the fees are that high. For a deeper discussion about the Xapo debit card fees we would like also to refer to the following article from August 2014 “Xapo Responds to Backlash Over Bitcoin Debit Card Fees” (see Coindesk)

Inconvenient Lifetime Limits

Unfortunately, the fees aren’t the only drawbacks of this card. In fact, the spending limits are also somewhat inconvenient. Users are only allowed to make two ATM withdrawals per day with a daily value limit of US$400. The maximum value in ATM withdrawals you can make with one card – which is valid for three years in case you forgot – is US$1,000.

As of purchases, you are limited to US$2,500 in value of lifetime purchase.

Now that’s of course, if you haven’t upgraded your status to increase those limits. To upgrade your card, you need to provide Xapo with ID documents and proof of residence documents – obviously.

Bitcoin debit cards have some obvious advantages. First, they remove the headache of finding bitcoin-accepting merchants. Then, they, in a way, bring the digital currency to people’s wallet, moving bitcoin from an online-only niche to people’s everyday life.

But clearly, there is still room for improvement. Despite the convenience of being able to spend our bitcoins using a plastic card that is accepted almost everywhere in the world, we may ask ourselves if the cost is worth hanging on our old habits.

Bitcoin is widely praised for allowing nearly free value transfers by removing intermediaries. But these bitcoin debit cards are everything but cheap.

Image credit: Xapo Bitcoin Debit Card, https://xapo.com/.