BitInstant, MasterCard Have Different Views on Prepaid Debit Card

by Mercator Advisory Group 0

BitInstant and MasterCard currently are involved in a bit of a he said, she said confrontation over a prepaid debit card that would be tied to the controversial digital currency, BitCoin.

BitInstant, which is an exchange that helps consumers who use BitCoin transfer funds, Monday announced it soon would launch a prepaid debit MasterCard. But MasterCard claims it is unaware of BitInstant’s plan.

Here’s MasterCard’s statement in a Finextra article:

MasterCard has no relationship with BitInstant. There are issuers who allow the conversion of BitCoins to U.S. dollars and other currencies, delivered on prepaid cards. However, we’re not aware of this particular program from BitInstant.

BitInstant released a statement Thursday attempting to clarify MasterCard’s position.

“BitInstant’s partners, who are issuing the card, have been working with MasterCard for many years, and the specific relationship will be between these partners and MasterCard (not directly between MasterCard and BitInstant).”

It’s possible MasterCard might be trying to distance itself from a direct BitInstant connection because of the anonymous, and sometimes illegal, nature of BitCoins. BitInstant might have trouble convincing intended users to give up some privacy in exchange for a card. Know-your-customer rules require prepaid card providers and issuers to secure some information about the cardholder.

BitCoin’s popularity is somewhat based on its cloak-and-dagger nature. Users are anonymous and the currency is often used to conduct illegal, black-market transactions such as drug purchases on websites such as Silk Road.

Click here to read more from Finextra.