Recently, BitInstant CEO Charlie Shrem announced that his company would be releasing a new product: a Bitcoin prepaid debit card. The product is scheduled to come out in six to eight weeks, and would cost $10, although Shrem announced that the first thousand cards would be given out for free. The concept of a Bitcoin card is nothing new; they have existed in some form for months. However, with all of the previous options the costs have so far been prohibitive; beyond the initial cost of the card itself, deposits could cost anywhere from 4% to as high as 10%. BitInstant’s card, on the other hand, once loaded will cost a mere 1-1.49% to deposit, exchange fees included. What makes this possible is that unlike any of its competitors, BitInstant is working through a Mastercard banking partner directly, with no intermediaries.
Almost immediately after the announcement, however, there arose some confusion in the Bitcoin community as Mastercard came forward to deny1 that such a card was in the making. Before being able to issue a card with a MasterCard logo on it, both the issuer and its banking partners need to go through a rigorous screening process, a MasterCard spokesperson explained, and “at the moment, BitInstant has submitted no documents to MasterCard, and is not even present on their system.” However, Shrem quickly clarified the situation2, explaining why MasterCard made such a claim: BitInstant was not working with MasterCard directly, as the card would be made through an international banking partner, and the submission to MasterCard would not take place until the preparations with the banking partner were complete.
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