A company called Xapo is introducing a Bitcoin debit card that's actually usable for everyday transactions.
By tapping into MasterCard's payment network, Xapo will allow cardholders to spend their Bitcoins anywhere that MasterCard is accepted. A digital version of the card for online retail will be free, while a physical card for swiping at brick-and-mortar stores will cost $15.
Xapo already offers a Bitcoin Wallet, in which users can store Bitcoins for fast access. When the cardholder makes a purchase, MasterCard confirms that the funds are available in the Wallet and clears the transaction. Meanwhile, as GigaOm reports, Xapo will take the appropriate amount of Bitcoin from the user's Wallet and sell it on Bitstamp, which is currently the largest Bitcoin exchange.
As with most retail debit purchases, the cardholder doesn't pay any fees, though MasterCard does charge the merchant with a commission fee, which is typical for debit transactions. The card will not work at ATMs initially, but Xapo told TechCrunch that ATM withdrawals are in the works.
This is not the first example of a Bitcoin debit card. Cryptex also offers a card that works with an estimated 90 percent of ATMs, and at retailers where Discover is accepted. But Cryptex appears to work a bit differently, charging users a premium to exchange Bitcoins for U.S. dollars--not unlike when you exchange currency in a foreign country.
Xapo hasn't said anything about exchange rates, though the company will likely encourage users to store the bulk of their funds in Xapo's Bitcoin Vault service. In exchange for a 0.12 percent annual fee, the Vault insures users against hacking, theft or bankruptcy. It takes about 24 hours to move Bitcoin from the Vault to the Wallet.
Xapo is accepting pre-orders for Bitcoin debut cards now, and expects to ship them in two months.