Xapo Responds to Backlash Over Bitcoin Debit Card Fees

Nermin Hajdarbegovic
Aug 4, 2014 at 21:05 UTC
Updated Mar 6, 2015 at 14:22 UTC

UPDATE (5th August 00:15 BST): This piece has been updated with statements issued in a new Xapo blog post. 


xapo, debit cardCalifornia-based bitcoin wallet provider Xapo is facing community backlash following the release of its latest product, the Xapo Debit Card.

Xapo started shipping the cards on 30th July, roughly one month after its original estimated launch date. Yet the news has largely been overshadowed by the company’s recently published fees and limits schedule.

The schedule eventually found its way to reddit, evoking a strong response from customers who were upset to find the product would be more expensive than they originally believed.

Xapo has now formally responded to the situation via a company blog post, stating that the fee schedule is the product of its partnership with the third-party issuer of the cards. This partner, Xapo says, requires a monthly service fee, card replacement fee and currency conversion fee, among other additional charges.

The post reads:

“The Fees & Limits Schedule we posted is from the existing third-party program under which we are currently able to have the cards issued.”

Further, Xapo said that it did not intend to deviate from its original announcement, and that it will, in some cases, reimburse customers for fees incurred, adding:

“We do not intend to charge monthly fees or fees for everyday spending. If our users are charged a monthly service fee, Xapo will reimburse that amount in bitcoins. So, if you use the Xapo Debit Card and are charged a monthly service fee by our third-party provider, we will directly reimburse your Xapo Wallet.”

Xapo concluded the blog post by providing information on how customers could opt out of the card offering, and stating that it is working to bring the cards to India and the US, areas where the product is not currently available.

Bitcoiner uproar over hefty fees

When it announced the card, Xapo promised a $15 one-time shipping and handling fee, but the company did not reveal any information on other associated costs.

The fee schedule, however, revealed the following card charges:

  • A monthly service fee of $4.95, or £3.95/€3.95 for European customers
  • An international ATM transaction surcharge
  • Declined transactions costs of $1, or £1/€1
  • Domestic ATM transaction costs of $3.50 per transaction, or £2.50/€2.50 in Europe.

xapo-debit-card-fee-schedule

The company did not release a fee schedule prior to launch. However, it suggested costs would be limited to a one-time charge of $15. On its FAQ page, the company said that the initial fee covers the cost of issuing and shipping the card.

“Merchants will pay all fees just as they do for debit and credit cards but there won’t be a fee for the customer,” Xapo stated.

Unfortunately, the ambiguous wording of Xapo’s statements led many customers to conclude there would be no additional fees for using the card, an opinion evidenced by the strongly negative response to the company’s update.

Xapo has since stated that it did not factor ATM fees into its original statements, as it did not believe it would offer such a service, stating:

“When we announced the card, we indicated that the card would not work at ATMs, so we didn’t address ATM fees. We have worked hard to make this functionality available for the Xapo Debit Card, but there are charges associated with ATM usage, similar to ATM fees currently associated with your bank-issued debit card.”

Failure to communicate

A potential driver of the strong consumer backlash was that the release of additional pricing information came after many users had already signed up to receive the card.

The result was that a number of separate reddit conversations arose to address the topic, with individual posts highlighting the card’s specific pricing policies and availability eventually giving way to more general posts criticizing the company’s overall marketing of the product.

Further, message board comments ran the gamut from overwhelmingly negative to sympathetic, with a small number of users noting that Xapo’s final product was likely influenced by poor US regulation and the difficulties inherent in the company’s bid to acquire a traditional financial partner to support the offering.

Ongoing issues

Xapo’s Debit Card has been a source of strain for the company since its initial announcement.

At the time of the launch, Xapo had indicated to news sources including TechCrunch and CoinDesk that MasterCard’s payment network would supply the rails for the debit card transactions.

MasterCard quickly moved to separate itself from the offering, telling CoinDesk:

“MasterCard does not have a relationship with Xapo. There is no card program currently available.”

However, Xapo told CoinDesk that it had secured a partner for the card offering as of early July, and that the delays in the shipment were purely product-based.

A spokesperson for Xapo said on 3rd July:

“We took a bit of extra time with early testing to make sure the experience is as smooth as possible for our customers.”

Image via Xapo

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