Beginning today, June 25, 2019, Canadian crypto-to-gift-card exchange Coincards is expanding its services to the U.S. The platform, which was founded in 2014, has experienced considerable growth in the Canadian market since it launched. Following the expansion, U.S. users will be able to buy gift cards with bitcoin from major retailers and online platforms such as Amazon, Uber and Home Depot.
Seeking New Frontiers
Coincards founder and CEO Mike Olthoff believes the expansion is a win-win for both users and brands.
“Merchants are realizing that bitcoin is here to stay,” he said in an announcement. “Offering gift cards as a bridge is a natural choice for both the brands and the consumers. Retailers gain exposure to Bitcoiners, and Bitcoiners are able to live their lives with financial freedom.”
Unlike other available exchange platforms, Coincards doesn’t have a wallet address where users can store their crypto for future purchases. It’s designed as an e-commerce platform, on which you choose an item, pay in bitcoin and receive your card instantly.
“We aren’t an ‘exchange’ in your typical order-book sense either,” Olthoff explained to Bitcoin Magazine. “We don’t hold customers’ funds, and our customers are therefore not at risk of another QuadrigaCX or Mt. Gox.”
Considering that a host of merchants on its partner list don’t accept cryptocurrency, Coincards receives BTC from consumers and settles with merchants in fiat.
A Growing Market
About 93 percent of U.S. retail customers purchase gift cards on an annual basis, according to a 2016 research report from international accounting company BDO Global. Given the recent spotlight on digital currencies thanks to Facebook’s Libra and bitcoin’s bullish run, Coincards is poised to take advantage of a burgeoning market.
But as profitable as the American market is, it is also quite competitive. Olthoff welcomes the pressure.
“We have already seen some competitors popping into the U.S. market over the last 12 months, and there will likely be many more to come,” he said. “However, we are confident that we will be able to bring some of the best offerings possible to the market.
“We have had five years of experience developing our service in the Canadian market and fine-tuning every aspect. We have also spent that time creating real relationships with some of the biggest international brands on both sides of the border.”
Lightning Payments Off to a Slow Start (but Growing)
For a platform on which users have to make small payments, the cost and time required to confirm transactions can be a hassle. This is why Coincards introduced Lightning payments in 2018, in partnership with open-source crypto payment processor BTCPay. However, results haven’t been as encouraging as they expected.
Olthoff said that Lightning traffic has been a “relatively small source” of Coincards’ transactions, “but it is a source that is consistently growing.��� He went on to add that while Lightning has great potential, “it still needs some work to become more user friendly.”
To be on the safe side of U.S. regulators, Coincards has “limited daily orders to a maximum of $2,000 per day per user/email/IP,” Olthoff said. “This allows us to fall within all minimums set out under the U.S. laws related to the exchange of value and gift cards.”