The chaotic era of crypto payment cards, a business strategy that is hard to sustain?

Author: Web3 Farmer Frank

How many "U Cards" do you have in your hand now?

From the early Dupay and OneKey Card to the cards launched by exchanges Bitget and Bybit, and then to the crypto payment card services from Infini, Morph, and SafePal, even Coinbase and MetaMask have joined the fray. This year, crypto payment cards (U Cards) targeting the PayFi narrative have almost become standard for Web3 projects.

In the new round of players scrambling for territory, various promotional tweets and review information about U Cards are overwhelming, reminiscent of the colorful shared bicycles that once filled the streets. The plethora of options has shifted the market's focus from usability to comparisons of registration/use thresholds, fees, and other dimensions, trying to find the king of cost-performance in the "sea of cards."

However, if we observe over a longer time frame, we find that the apparent prosperity of the U Card track still cannot hide its underlying fragility. In simple terms, the lifecycle of a U Card is sometimes not longer than that of some meme coins: cases of running away, shutdowns, and card replacements are numerous, and most crypto payment card players from the last wave have long since disappeared.

The reason is simple: security and compliance have always been the sword of Damocles hanging over all U Cards. In addition to heavily relying on the compliance willingness of channel banks for crypto business, U Cards themselves also have inherent structural flaws— the custody of the fund pool is in the hands of the service provider, which poses a significant test for operational capability and moral standards. If either the cooperating bank or service provider encounters problems, users may become innocent collateral damage…

For the current "hundred groups battle," the underlying fee costs of U Cards are mostly similar, and user experience often relies on subsidies and high interest measures. However, these short-term incentives clearly cannot build true long-term competitiveness. Once subsidies decline, faced with homogenized card consumption services, it is difficult for users to maintain long-term loyalty to any brand.

Therefore, as the traditional U Card model gradually exposes its ceiling, some crypto payment card services have begun to emerge with new variables, launching interesting attempts from multiple dimensions such as wealth management and bank accounts:

For example, the star project Infini's "Card + Wealth Management" model provides custody and interest income for users' deposited crypto assets through on-chain DeFi configurations; the established wallet SafePal's "Card + Bank Account" model allows users to truly hold a personal real-name Swiss bank account, achieving an overseas broker/CEX deposit and withdrawal experience under the euro/franc framework.

Objectively speaking, whether a broader "Card +" service can truly break out of cycles and become an exception remains to be further tested by the market. However, it is certain that only those crypto payment card projects that can achieve a balance in security, compliance, and user experience may have the potential to break the "short-lived" curse in this "chaotic era."

Crypto Payment Cards: Hard to Call "Evergreen"

Why have U Cards transformed from a niche track into a coveted "hotcake"?

There are two core reasons behind this.

First, in the backdrop of a market that seems bearish yet bullish (when writing it was a "bear market," when published it was a "bull market," what will it be when you read this?), crypto payment cards are actually a good business that earns both attention and traffic: they not only have a clear profit model and stable cash flow but also significantly enhance user activity and community stickiness.

After all, one of the biggest pain points for Web3 players, especially those in mainland China, lies in deposits and withdrawals: how to directly use the crypto in hand for daily consumption payments, and how to conveniently convert fiat into crypto has always been a naturally strong demand landing scenario.

Thus, for Web3 projects that urgently need to expand their business boundaries, regardless of whether they were originally strongly related to the PayFi track, they are almost all eager to enter this field, making U Cards a rare "certain business" and the best business expansion outlet in the eyes of many Web3 projects.

Second, in addition to market demand, the low entry barrier for issuing crypto payment cards is also an important factor attracting many project parties. They are usually issued in collaboration between Web3 project parties (such as Infini and Bybit mentioned earlier) and traditional financial institutions (banks and other issuing organizations), presenting a three-tier structure of "Card Organization - Issuing Institution - Web3 Project."

Source: @yuexiaoyu111

Taking the commonly seen Mastercard U Card as an example:

• Card Organization: This is Mastercard, whose allocated card BIN number segment (the first six digits of the bank card) is the core resource of the payment system, directly authorized by the card organization to the primary issuing institution (such as licensed banks, electronic money institutions);
• Primary Issuing Institution: Licensed financial institutions like Singapore's DCS Bank (DeCard) are responsible for compliance-related fund custody and card BIN management;
• Web3 Project Party: As a secondary issuer, they cannot directly obtain the card BIN and can only obtain technical authorization through cooperation with primary institutions, responsible for product design and operation on the user side;

The primary issuing institution plays a key role in the entire chain, responsible for connecting with the card organization, mastering consumption data, and handling risk control matters such as freezing and card blocking. The Web3 project party focuses on brand building and user operation, constructing a business model for traffic conversion.

However, the risk point lies here: if a secondary issuer is reported for violations (such as money laundering, unclear fund flows, etc.), the card organization or regulatory agency may impose direct penalties. Even if there is no direct violation, some banks may tighten cooperation due to regulatory pressure or risk control considerations.

This leads to the relevant U Card services facing the risk of shutdown at any time, explaining why so many emerging "U Card" projects have very few that can last a year or so.

Of course, there is a deeper issue: the risk of fund security, because under this structure, the vast majority of U Cards are essentially prepaid cards that require users to recharge before consumption. Users first recharge funds to the project party and only receive a "spending limit" based on the recharge record, rather than independent custody of real assets.

This is no different from the gym cards or supermarket recharge cards we are familiar with. For example, suppose you spend 5000 yuan at a gym to obtain a stored-value card; the funds go directly into the gym's bank account. The gym promises that each time you consume, it will deduct from the card's limit, but there is no independent 5000 yuan cash stored in the card; instead, it forms a "fund pool" together with the recharge funds of other members.

The gym might use this fund pool to pay rent, purchase equipment, or even invest in other branches. However, if one day the gym goes bankrupt due to poor management or the owner runs away with the money, your stored-value card limit would become "waste paper," because you never truly owned "your 5000 yuan"; you only had a "debt claim" against the gym.

The same applies to U Cards. When you recharge 100 USDT/USDC, it directly enters a unified fund pool controlled by the secondary issuer, and the "fiat limit" you receive on the U Card is merely a sub-account under the company account opened by the issuing institution based on the recharge situation, only used for payment settlement. There is no actual fiat deposit in the card—you can use it for consumption but cannot transfer it freely.

In other words, the crypto assets that users recharge mostly flow directly into the project party's on-chain account, rather than a true banking account system. The corresponding fiat side has not opened an independent account in the user's name; it merely allocates spending limits through a unified account. Your "limit" is essentially just a string of numbers, and whether it can be redeemed entirely depends on the platform's survival capability and willingness to redeem.

This model means that the security and stability of the entire system almost entirely rely on the project party's moral standards and risk control capabilities.

When the deposited user funds reach a certain scale, if the project party encounters moral hazards (such as misappropriating funds or running away with the money) or risk control failures (such as a broken capital chain, hacking, or inability to cope with large-scale withdrawals), user assets will face the risk of loss or even irretrievability (cases of U Card running away online are numerous).

Currently, whether it is U Card products launched by exchanges or crypto payment cards from well-known projects, the vast majority belong to prepaid cards, making it difficult to establish a long-term business. Of course, U Cards issued by platforms with good reputation and compliance capabilities can reduce risks to some extent.

"Card +" Services: A New Variable for Crypto Payment Cards?

Because of this, more and more project parties are no longer satisfied with a single U Card service but are actively seeking to transform towards more financial attributes and long-term value.

For example, Bitget and SafePal have invested in crypto-friendly banks with financial licenses (such as DCS and Fiat24), no longer focusing solely on "U Card" business but instead working on building a comprehensive financial service system of "Card + Bank Account," stepping out of the single consumption tool business scope.

Taking SafePal as an example, at the beginning of 2024, it disclosed a strategic investment in the Swiss compliant bank Fiat24 and officially launched personal Swiss bank accounts and co-branded Mastercard services for users, including those from mainland China, at the end of last year. I also tested and experienced this "above U Card" service model.

In simple terms, the biggest advantage of this "non-U Card" model is that it fundamentally solves the fund security issues present in traditional U Cards—users directly hold a bank account in their name, and funds enter the real banking system rather than being stored in the project party's fund pool, effectively reducing the risks of running away, withdrawals, and redemption.

Even in extreme cases where the Web3 project itself encounters problems, users can still independently withdraw funds through the banking system. This independence and security of funds is incomparable to the traditional U Card model.

More importantly, this model opens up a broader deposit and withdrawal channel, achieving a seamless connection between the TradFi and Crypto worlds: still taking SafePal & Fiat24's bank account service as an example, users can not only complete free deposits and withdrawals with overseas brokers (such as Interactive Brokers, Charles Schwab) and CEX through their personal bank accounts but can also use channels like Wise (for euro SEPA transfers) to transfer funds back to Alipay/WeChat or domestic banks, achieving a closed loop of asset flow on and off-chain (for further reading, see "SafePal Practical Manual: Transfers, Deposits, and Withdrawals with Brokers/CEX, the Most Comprehensive Guide to Connecting Crypto and TradFi").

In contrast, most U Card products remain at the stage of subsidy and fee competition. Taking Bybit as an example, it attracts users through high cashback strategies, but a cashback of 10% or even higher means that fee competition is nearing its limit. Once subsidies decline, the severely homogenized product experience cannot retain users, let alone build true brand loyalty.

This structural contradiction makes it difficult for most pure U Card products to cross cycles, while the broader "Card + Bank Account" model may be the direction for a few projects to break through.

I have also summarized the current market's reputable crypto payment card products, roughly comparing the registration thresholds, fee structures, and compliance functionalities during actual use:

From this comparison, it is clear that the "Card + Bank Account" model adopted by SafePal currently has significant advantages in terms of fund security, fees, and functionality, especially in compliance and support for actual deposit and withdrawal scenarios, creating a competitive barrier that is difficult to replicate simply.

On the surface, crypto payment cards compete on fee subsidies, but in essence, they are competing over who can truly master the scarce compliance resources and financial infrastructure. Only players who possess licenses and bank-level resources are likely to emerge victorious in this chaotic era.

From "U Card" to "Card + Bank Account": A New Narrative Curve

Starting in 2025, Web3 payments have somewhat reached a narrative turning point.

The biggest difference is that the entire track, which used to focus mostly on 2B enterprise service crypto payment solutions, is now seeing more and more leading institutions entering the 2C consumer scene. The most representative case is OKX's newly launched OKX Pay, which directly targets the personal payment market, leveraging its own traffic and ecological advantages to tap into the mass market.

From a development trend perspective, the exit of the "pure U Card" model is only a matter of time, as the market has gradually evolved from a single payment tool to a comprehensive asset management tool. After all, U Cards only achieve "consumer terminal reach" but cannot construct a complete ecological closed loop for fund circulation— for example, when users need to remit funds to Interactive Brokers, 99% of U Cards can only remain silent.

Therefore, surpassing the simple positioning of consumption cards and integrating functions like savings, investment, and remittance is essential to seize the new narrative curve.

Just like the approach of SafePal & Fiat24, allowing users to directly deposit into Interactive Brokers for stock trading through euro accounts, and also using tools like Wise to freely remit to Alipay, achieving free flow of funds on and off-chain, enabling crypto wallets to possess capabilities akin to fully functional commercial bank accounts.

From this perspective, Web3 wallets inherently possess the capability for crypto asset management and are the most ideal carriers for PayFi services. This is also the fundamental reason why OKX Pay and SafePal are accelerating the promotion of the "Card + Bank Account" model. They aim to provide a new asset management experience that integrates the convenience of virtual cards, the security of compliant bank accounts, and the characteristics of decentralization:

Users can enjoy decentralized features through non-custodial wallets while also utilizing Visa and Mastercard networks for global consumption payments, and at the same time, enjoy financial services close to traditional banks (transfers, remittances, deposits, and withdrawals), while still retaining the flexibility of crypto assets.

In the future, as crypto assets further integrate into the global financial system, this model may truly be the ultimate solution for achieving large-scale user growth.

The evolution from "U Card" to "Card + Bank Account" has clearly shown the path for crypto payment cards to break through—finding a new narrative curve, shifting from a single consumption tool to a comprehensive asset management entry point.

Future competition will no longer be about who offers more cashback, but rather who can truly bridge the last mile between Crypto and TradFi. This market ultimately belongs to those long-termists who can build financial infrastructure and possess compliance resources, rather than short-term arbitrage traffic players.

Final Thoughts

Returning to the initial question: Can crypto payment cards become a sustainable business?

The so-called "short-lived" essentially reflects the inherent flaws of the business model—over-reliance on subsidy-driven growth, lack of compliance moats, and genuine user stickiness. When subsidies decline and regulations tighten, this seemingly lively game will naturally come to an end.

But this does not mean the story will end here.

In other words, "short-lived" is not necessarily fate, but to achieve "evergreen" status, a new business narrative that aligns with the essence of finance and can transcend cycles must be told.