Krak, the payments app affiliated with crypto exchange Kraken, launched a Visa $V debit card in the United States on Tuesday, offering cashback rewards and the ability to spend directly from crypto holdings.
The Krak Card pays rewards of as much as 2% in cash or bitcoin, with the percentage tied to how much a customer holds on the platform, according to CNBC. Rewards are paid as money rather than points and are credited to a user's account once a transaction settles, the company said.
Through the card, customers can draw on more than 600 currencies and crypto assets, with the selected holdings automatically exchanged for dollars when a purchase is made, according to CNBC. Cardholders can choose which assets are tapped first and, if they wish, divide a single transaction among several different balances.
The card is available to eligible residents in most U.S. states. It is not available in New York, Maine, Massachusetts, or Indiana, the company said. There are no subscription, monthly, or annual fees. A virtual card is available immediately upon approval and can be added to Apple $AAPL Wallet or Google $GOOGL Wallet, while a physical card typically arrives within 14 days, the company said.
With the card, Krak enters into closer rivalry with consumer finance platforms such as Block $SQ's Cash App, PayPal $PYPL's Venmo, SoFi, Robinhood, and Chime.
"People have lost trust in how the financial system treats them, in the rates they're paid, the fees they're charged, and how rewards actually work," Arjun Sethi, co-CEO of Kraken parent Payward, said in a statement. "The Krak Card turns whatever people choose to hold into money they can spend anywhere, and pays the value back as cash, not points."
Krak said the card grew out of a nationally commissioned survey of more than 2,000 U.S. adults, which found that 63% of respondents feel financially behind, and that 60% would move to a debit card that delivers real rewards without asking them to borrow money to get them.
The opportunity for Krak extends beyond interchange revenue. Federal caps on debit interchange fees apply to the partner bank that issues the card, leaving too little transaction revenue to cover a 2% reward through swipe fees alone. The card is more likely a tool to retain deposits and keep more customer assets on the platform.
Kraken, which is moving forward with a U.S. initial public offering, holds a Wyoming bank charter and earlier this year made history as the first crypto firm to obtain a Federal Reserve master account.