A new company, Blade Financial, is developing a platformthat will enable digital currencies to launch debit card services. Ed Boyle, the CEO of Blade Financial andformer general manager of American Express’ prepaid card unit, saw the need forthis type of service for digital currencies and put together a team withexperience in launching similar products. The biggest problem digital currencies have is the lack of expertise inin dealing with “cross-jurisdictional legal and compliance problems” tied todebit card products.
“The reality ofthat process is that the banks work directly with the payment networks andreally we’re, at our core, a technology company that provides connectivitybetween banks and bitcoin companies,” Boyle said.
The Blade platform enables the banks to understand thetransaction data denominated in bitcoin. The platform provides connectivity, processes trade requests, settlementinstructions and other mechanisms to translate bitcoin into fiat currency. Blade is taking a global perspectiveregarding its customer base, since digital currencies are often looking tocreate multi-country/worldwide customer relationships.
Regarding the decision to develop debit card solutions, therationale is that debit cards have become an accepted worldwide device forstoring value and spending. This wouldmore quickly enable consumers to adopt digital currencies.
So operating as the “middleman” in this process will enabledigital currencies to build out debit payment cards to access the underlyingbitcoin. At the same time it will enablethe banking industry to integrate digital currencies into a core bankingproduct. Finally, the consumer will have an easier mechanism to invest inbitcoins and extend their use in the payments space.
Blade is currently doing initial testing on itsinfrastructure and debit cards and anticipates first digital currency partners inearly 2015.
Overview by Ron Mazursky, Director, Debit Advisory Service forMercator Advisory Group
