On 31 January 2019, Binance announced that the firm partnered with Simplex, a payments processing firm based in Israel to enable the purchasing of cryptocurrencies using Visa and Mastercard credit cards.
While Binance is not the first crypto exchange to introduce the payment method, it is certainly one of the largest exchanges in the world in terms of trading volume to introduce it. The integration would expose more people to the crypto industry as purchasing of cryptocurrencies becomes simpler. Currently, the exchange will be allowing Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Ripple (XRP) to be purchased through credit cards.
Changpeng Zhao, CEO of Binance, commented that the crypto industry is still beginning to develop, and fiat currencies are still the go-to currency used globally. He further added the creation of “fiat gateways” is key to expand crypto’s ecosystem, introducing the digital asset to more people and promoting the adoption of the currency.
Users who wish to purchase crypto with their credit cards need to buy a minimum crypto of $10 worth. The limit for credit card purchases is $20,000 daily per user, and $50,000 monthly per user. Take note that Simplex will charge 3.5% of the transaction as an extra fee.
Binance’s terms and conditions pages excluded some regions from being supported by the services, which included countries Afghanistan, Cuba, Iran, Iraq and others. Additionally, six states from the U.S. were not supported as well, including New York, Connecticut, Hawaii, Georgia, New Mexico and Washington. The firm further stated that some issuer banks may decline charges even if “users reside in a supported jurisdiction” on their own terms as “Simplex payment processing is subject to local bank policies”.
While it is good news for the crypto world, it is unsure how long the service could last as traditional banking groups and firms continue to prevent their users from purchasing the digital currency using credit cards. Such banks in the U.S. include JPMorgan Chase, Bank of America and Citi. U.K.’s Lloyds Banking Group and Virgin Money also prohibited their users from doing so. As a result, Coinbase which was a crypto exchange that supported credit card purchasing of crypto ceased to allow U.S. customers from adding new credit cards to the platform for payments.