Often referred to as the ‘Digital Gold’ or ‘Blue-Chip’ asset of the crypto world, Bitcoin (BTC) has been making waves ever since the boom witnessed in the cryptocurrency market in 2017. Its value has risen from $ 10,000 to $ 50,000 within a short span of 6 months and if experts are to be believed, BTC is all set to cross the $ 100,000 mark in 2021. That will not be surprising considering that it breached the $ 1 trillion market cap in 2021’s first quarter itself. With global bigwigs like Elon Musk and others putting their weight behind BTC, the $ 100,000 target may not be very far. Considering all these factors, it won’t be wrong to state that Bitcoin offers an excellent potential investment opportunity to anyone having the risk appetite and courage to ride the next crypto wave.
You can easily buy BTC at any of the reliable online platforms using your debit card or any other payment method. Debit card purchases offer a high level of convenience and are processed quickly compared to other modes of payment. In this detailed guide on how to buy Bitcoin with a debit card, we will throw light upon multiple aspects of such activity, starting with the importance of comparing the best platforms.
5 Steps to Buy Bitcoin with eToro Now
Buying any cryptocurrency with eToro is easy, simply follow the steps below:
1Sign up for free with eToro, entering your details in the required fields.
2Fill out the questionnaire, this is both educational for you and eToro.
3Click 'Deposit', you'll then be asked how you want to fund your account.
4Choose your required payment method, follow the simple steps to link your payment.
5Enter the amount you want to deposit and you're good to go!
Compare the Best Broker for Buying Bitcoin with Debit Card
While you may be able to buy BTC with a debit card at various online platforms, it’s recommended that you transact only at a regulated and fully compliant broker website. This will ensure a fair deal as well as the safety of both your digital assets and the critical information stored on the online platform. Dealing with an unregulated website can be a very risky affair, and can even lead to the loss of your crypto assets. In the end, make sure that you compare all the shortlisted services and come to a final decision based on regulation, reputation and unique services.
Why Should I Buy Bitcoin with Debit Card
Buying Bitcoin with a debit card makes a lot of sense as it is a widely accepted payment method in all parts of the world. A debit card offers convenience too as the funds are debited directly from your bank account and you don’t take any type of credit (from a bank or financial company) to make the purchase. Although you might have to pay a small cost for this convenience, in the form of a processing fee, it is well worth it. Additionally, using a regulated brokerage platform to buy BTC with a debit card, is a more economical, secure and accessible way of obtaining the crypto coin rather than going through an exchange site, which may charge a commission too.
Buying Bitcoin with Debit Card Directly
Amateur Bitcoin investors often fall for the myth that they can buy BTC off-the-shelf at some official Bitcoin website. This is far from the truth. In order to buy Bitcoin with a debit card, you will need to go through intermediaries like online crypto exchanges or broker websites. Furthermore, brokers are preferred over exchanges for such transactions as they are regulated and are bound to follow lawful practices. Simply put, buying Bitcoin with a debit card directly is not possible.
Buying Bitcoin Anonymously Using Debit Card
As soon as you use a debit card to purchase a cryptocurrency, the anonymity aspect goes out of the window. This is because a debit card will inevitably leave a traceable record of your transaction. Moreover, a debit card is directly linked to your bank account and, therefore, there is no way that you’d be able to keep your identity completely confidential when making such a purchase. Therefore, it would be fair to state that you cannot buy BTC anonymously with a debit card.
Normally, anonymous Bitcoin purchases can be done only through Bitcoin ATMs or peer-to-peer exchanges where you can buy BTC with some payment method that cannot be traced back to you.
Global Regulations for Buying Bitcoin with Debit Card
Cryptocurrency exchanges and broker platforms across the world follow the common practice of asking their customers to verify their identity, in line with their KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures, before providing them complete access to their platforms’ capabilities. Although these websites’ exact requirements may vary based on the country and the type of platform, you cannot avoid them if you wish to buy Bitcoin with a debit card or any other payment method.
FATF (Financial Action Task Force) is a global organisation that handles global issues related to the funding of terrorist activities and money laundering. It has provided all the countries with 97 recommendations which are critical for the prevention of such unlawful practices. Apart from that, all nations and regions have their respective domestic laws to further safeguard their citizens’ financial interests. To give you an example, European Union has something known as the Anti-Money Laundering Directive whose sixth update, 6AMLD came into effect in the month of December 2020. This legal framework is responsible for improved countering of terrorism financing, cyber-crimes and money laundering activities in the EU region. It’s important for regulated cryptocurrency brokers and exchanges throughout the world to comply with such regulations applicable in their respective countries.
Please note, though these regulations, directives, laws etc. may sound very complicated, they’re all in place to protect the interests of traders and investors.
Know Your Customer or KYC is a process that is commonly followed in all major financial institutions like banks, regulated trading platforms etc. across the world. As per this process, the customers must provide a government-issued identity and/or address proof, before being allowed to use the offered financial services. KYC is also an integral part of the overall AML process followed by the establishments. Let’s now learn what kind of KYC/AML regulations are in place in some of the prominent regions/countries of the world.
Australian Transaction Reports and Analysis Centre (AUSTRAC) is a government agency that uses all kinds of financial intelligence and regulatory measures to check activities such as tax evasion, money laundering, terrorism financing etc. in Australia. You can easily buy Bitcoin with a debit card in Australia, from an approved crypto broker or exchange website, after you confirm your identity to the platform. For this purpose, you may be asked to upload a valid proof of address and identity document issued by a government authority.
Bank Secrecy Act (BSA), administered by the Financial Crimes Enforcement Network (FinCEN), is the most prominent anti-money laundering law operational in the US. All US-based crypto brokers, crypto exchanges, banks, financial establishments etc. must abide by this law. Additionally, crypto brokers/exchanges are required to share personal details of initiators and beneficiaries of all crypto transactions executed on their websites, with the government authorities. Therefore, you’d need to provide your personal details and confirm your identity before being able to buy Bitcoin with a debit card on any US-based platform.
All EU-based financial institutions, including the ones associated with cryptocurrencies, are required to comply with the latest and old AMLD rules, including 6AMLD. European Union adopts a very tough approach with regard to its anti-money laundering procedures. As a result, if you register at any crypto broker/exchange site operating from an EU country, you’d need to mandatorily verify your identity through a government-issued photo ID and address proof, as a part of the KYC process. Only then you’d be allowed to buy a cryptocurrency on the platform.
Is Buying with Debit Card Available in My Country?
A debit card is considered an acceptable payment in almost all countries across the world. If cryptocurrency purchases are considered legal in your country and you are legally allowed to buy Bitcoin from a domestic or offshore crypto exchange/broker website, you will be easily able to buy Bitcoin with a debit card in your country. However, make sure that you purchase BTC only on a regulated and fully compliant platform.
What are the Differences Between Bitcoin and Debit Card?
It’s a fairly common practice among people all over the world to use their debit cards for buying goods and services on the Internet as well as offline. Many countries even have online retail portals where you can pay for goods and services with cryptocurrencies like Bitcoin, Litecoin, Ethereum, Bitcoin Cash etc. It’s also common knowledge that while a debit card is an extension of fiat currency, Bitcoin is a digital currency based on a completely different concept. Let’s understand in detail below.
Bitcoin payments are based on a peer-to-peer system and can be likened to cash transactions or wire transfers where payment is made directly by one individual to another, without the involvement of any financial intermediary. The payment processing happens through a private computer network, with every transaction getting recorded on Bitcoin’s public blockchain. While you may have to provide your personal identification details to the platform you buy Bitcoin on, the actual transfer of BTC from the seller’s wallet to yours won’t require personal details like your name, address etc. Bitcoin transactions can take anywhere from 10 minutes to one day for processing, the reason why it’s not so actively used for buying/selling goods and services right now. Although the ‘Lightning Network’ does hold promise in this regard, it is yet to show its complete effect. Furthermore, Bitcoin transactions being peer-to-peer, are irreversible in nature, unless the payee agrees to refund your Bitcoin. Then there’s a transaction fee associated with Bitcoin transfers too, which was around $15 per Bitcoin at the time of writing this piece.
Compared to Bitcoin, debit cards have a far better penetration in the global commercial marketplace. Almost anywhere you go in the world, you can pay for goods and services with a debit card. When you pay with a debit card, you are essentially authorising the seller to pull a certain amount of funds from your bank account, which then passes through multiple financial intermediaries to reach their account. To give you an example, a regular Visa debit card transaction involves 4 entities—the debit card issuing bank, debit cardholder, merchant and the company facilitating the payment at the merchant’s point of sale. There’s a small fee also associated with debit card purchases, which is usually 0.5% of the transaction amount. In addition, debit cards offer buyer protection too, in a manner that you can always dispute an unauthorised transaction and have any such charges reversed. There’s no such option available in Bitcoin transactions. While debit cards are normally stored in a physical wallet, a crypto wallet is used to store cryptocurrencies like Bitcoin and others.
It’s important to note that both Bitcoin and debit card transactions are covered by the financial laws of the country. In that respect, you will need to fulfil certain KYC requirements prior to making any purchase of goods/services with Bitcoin, on the internet or offline. On the other hand, debit cards are issued only after the completion of such KYC formalities at the account opening stage.
What Limitations Exist for Debit Card While Buying Bitcoin?
The first and foremost limitation you may face while trying to buy Bitcoin with a debit card is a limited number of crypto exchanges/brokers accepting the latter as a valid payment method. In general, most of the regulated broker platforms are welcoming of debit card deposits. Certain transfer limits may also be imposed on your account with an exchange/broker, depending upon whether you’ve verified your identity or not.
What fees are associated with Debit Card?
Despite the fact that a debit card is as good as a credit card in terms of the convenience it offers for online/offline payments, when it comes to cryptocurrency purchases, this convenience comes at a cost. Most of the brokers and exchange platforms may charge you anything in the vicinity of 4% as a processing/convenience fee for debit card purchases. A foreign transaction fee may be levied too if the concerned crypto broker or exchange is located outside of your country.
What are the Pros and Cons of Buying Bitcoin with Debit Card?
Buying Bitcoin with a debit card has its own pros and cons. Let’s look at some of the prominent ones below:
- In terms of convenience, debit card transactions are right at the top with credit cards.
- Debit cards are accepted by many cryptocurrency brokers and exchanges on the internet.
- Debit card users receive additional protection in the form of disputes which can be opened for unauthorised transactions.
- A debit card transaction is processed far quicker than other payment methods.
- Debit card transactions cannot be anonymous.
- A steep debit card convenience/processing fee may be charged by the crypto exchange/broker.
- A debit card being an extension of your bank account is a risky mode of payment.
Is Buying Bitcoin with Debit Card the Best Method?
It’s the individual preferences that determine whether buying Bitcoin with a debit card works out to be the best method for someone or not. Even though debit cards provide a lot of convenience when it comes to Bitcoin purchases at crypto brokers/exchanges, there are other payment methods too that work very well and are less expensive. For instance, bank transfers are preferred by a great multitude of crypto investors. Alternatives such as Paypal and eWallets are also worth checking out.
Further Tips for Buying Bitcoin with Debit Card
There are certain best practices you must follow if you are going to buy Bitcoin with a debit card. The first and foremost is that you should use a regulated and reputed cryptocurrency broker/exchange to make the purchase. Secondly, make sure that you store your Bitcoin in some safe place, preferably a cold hardware wallet. Steer clear of unreliable crypto platforms as using them can often lead to irreversible loss of your Bitcoin. In addition, guard yourself against phishing attempts via emails and unscrupulous websites. You can protect yourself by always double-checking the website you are providing your confidential information to and never replying to any email with your financial details.
With the Bitcoin market cap breaking the $ 1 trillion barrier and the coin itself breaching the $50,000 mark in 2021, there’s a high likelihood that BTC will cross the $100,000 threshold too very soon as per expert investors. Hence, many experts believe that this is just the right time to invest in Bitcoin. Debit cards offer a highly convenient means to buy Bitcoin, and keeping that in mind we covered various aspects of Bitcoin purchase with a debit card, including global regulations, pros & cons and fees.
Frequently Asked Questions
Bitcoin transactions are processed in anywhere from 10 minutes to 24 hours.
No, you will not be at any risk as long as you buy BTC with a debit card on a regulated platform.
As per experts, cold hardware wallets are a very good place to store your Bitcoin. Check out our best wallets for Bitcoin guide.
Yes, the purchase of Bitcoin or any other cryptocurrency is considered legal in many countries of the world, including the US and UK. Nevertheless, it’s always better to check with your local laws.
You may need to pay income tax on gains made from such activity. Please check your local tax laws to confirm.
Bitcoin is by far the safest cryptocurrency in the market today but no system is perfect. Protect your account by using 2FA and other security options.
In general, debit cards issued in collaboration with Visa or MasterCard are considered the best for buying BTC. This is mainly because of their wider acceptance, in all parts of the world.
A regulated crypto exchange or broker will most likely ask for identity verification before allowing you to purchase Bitcoin with a debit card. Please note, this is a part of the mandatory KYC procedure and is in the best interest of investors only, as it keeps anti-social elements away from such platforms.