Ether is the official token of Ethereum, an open-source and blockchain-based distributed platform that enables the streamlined development of decentralised apps and smart contracts. Proposed in late 2013 by an individual named Vitalik Buterin, Ethereum went live in July 2015.
Ether has been witnessing record highs lately, especially driven by the bullish run in the cryptocurrency market in early 2021. The token can be purchased through multiple payment methods, including a credit or debit card.
Debit cards provide a highly convenient means of investing in cryptocurrencies. In this detailed article, we will understand the different aspects of buying Ether and guide you on how to buy Ethereum with a debit card.
Why Should I Buy Ethereum With Debit Card?
It’s no news that a debit card is a globally accepted payment method that offers a great deal of convenience as it’s associated directly with your bank account. The process of buying Ethereum with a debit card, after you have successfully registered with a broker or exchange, is also pretty straightforward. However, this convenience comes at a small cost as debit cards don’t offer the most economical means of buying a cryptocurrency.
Furthermore, going through a brokerage can prove to be a more accessible, secure and economical channel against buying Ether from a crypto exchange which may involve exchange commission too. It’s worth mentioning that brokers normally offer a wider variety of payment methods to buyers and sellers, including debit cards.
Buy Ethereum With Debit Card Directly
A large number of new cryptocurrency investors fall for the mistaken belief that they can simply head to some Ethereum website and purchase ETH directly with a debit card, without the need of any intermediaries like an exchange or broker site.
Please remember that this is not possible. The only way you can buy/sell cryptocurrency is through such third parties. If you’re keen on buying Ether with a debit card, you would need to register an account with an exchange or broker website first, and then make the purchase. Furthermore, no two platforms are the same and hence it becomes extremely important to carry out sufficient research, before transacting on any of them. You must choose a platform based on its market reputation, regulatory compliance, customer reviews and other important factors.
Buy Ethereum Anonymously Using Debit Card
When you’re buying ETH using a debit card, the anonymity aspect automatically gets compromised as your debit card is attached to your bank account and would thus reveal your identity details. Hence, it won’t be wrong to state that you can’t anonymously buy Ethereum instantly using a debit card.
Anonymous ETH purchases can usually be done either through a cryptocurrency ATM or by using a peer-to-peer cryptocurrency exchange wherein you fund your purchase through an untraceable payment method. But both these may not be feasible for ‘anonymous’ debit card purchases, as a debit card would automatically leave a traceable record of the transaction.
Global Regulations for Buying Ethereum With Debit Card
Whenever you register with a regulated online broker or exchange, you will be asked to verify your identity, in compliance with the Know Your Customer (KYC) and Anti Money Laundering (AML) laws followed by the platform. Please keep in mind that these requirements may vary from country to country.
While the Financial Action Task Force (FATF), the global terrorist financing and money-laundering watchdog, offers a comprehensive list of 97 recommendations for countries to follow, most countries and regions also have their own respective laws to prevent such activities. For instance, 6AMLD (Sixth Anti-Money Laundering Directive) came into effect in December 2020, for better countering of cyber-crimes and terrorism financing in the EU. In general, it has become extremely important for all the crypto exchanges/brokers across the globe to stay compliant with all such old and new regulations.
It’s important to understand that these regulations are in place to protect the interests of crypto investors/traders, by keeping their funds safe from any anti-social elements.
KYC is a commonly followed process in most countries wherein a financial organisation implements certain steps to verify the customer’s identity, by asking him/her to furnish some government-issued identity documents. It is the initial customer due diligence carried out by the organisation, as a part of its AML process. These are the same regulations you may have to abide by when you open a bank account and avail of a debit card. Let’s tell you about how few of the most prominent regions of the world implement their own KYC/AML regulations when it comes to the use of debit cards for the purchase of cryptocurrencies.
United States
It’s the Bank Secrecy Act (BSA) which is the most significant anti-money laundering regulation in the United States, and is administered by the FinCEN (Financial Crimes Enforcement Network) of the country. All banks, financial institutions and cryptocurrency exchanges/brokers come under the regulatory scope of this act. FinCEN has made it very clear that cryptocurrency exchanges/brokers must comply with ‘Travel Rule’ and record-keeping requirements laid out in the BSA and share all information about the beneficiaries and originators of crypto transactions. If you chose to purchase ETH from any of these exchanges/brokers based out of the US, you’d need to abide by their regulatory steps in this regard, including KYC verifications.
European Union
All financial organisations in the EU, including the ones dealing in digital currencies, must comply with the new 6AMLD rules. These rules will make an integral part of an increasingly tough approach adopted by the EU countries with regard to AML procedures. Whenever you register at any EU-based crypto exchange or broker website, you’d need to provide a government-issued proof of address and photo ID as two compulsory KYC documents. It’s only then you will be able to purchase a crypto coin with a fiat currency, through a debit card or any other means.
United Kingdom
It’s the Financial Conduct Authority (FCA), a non-governmental and independent body, that regulates the financial services industry of the UK, including all the measures taken to combat money laundering and other unlawful activities. The UK currently has the Sanctions and Money-Laundering Act of 2018 implemented in the country, and also transposed the crypto regulation requirements detailed in 5AMLD and 6AMLD into domestic law. If you’re interested in buying Ethereum or any other cryptocurrency with a debit card in the UK, you’d need to comply with the KYC/AML requirements put forth by the exchange or broker in this regard.
Is Buying With Debit Card Available in My Country?
Debit cards being a widely accepted payment option in almost all countries of the world, there’s a high likelihood that you would be allowed to buy ETH with a debit card, as long as the crypto purchase is considered legal in your country. Ideally, you must check the cryptocurrency-related laws in your region, and then look for a good online platform to buy ETH with a debit card.
What Are the Differences Between Ethereum and Debit Card?
A great multitude of people own debit cards which they use frequently to pay for goods and services online/offline. Some also frequently use cryptocurrencies like Bitcoin, Ethereum etc. to make such purchases nowadays. However, both these payment methods are very different from each other.
ETH is used primarily for two purposes—trading on crypto exchanges like any other cryptocurrency and used on the Ethereum blockchain network, to run decentralised applications. Though it’s also actively used to buy goods and services on the internet and offline, ETH has a long way to go before it catches up with the market penetration enjoyed by conventional fiat currencies and debit/credit cards.
You can liken ETH payments to wire transfers wherein the payment is made directly by one party to the other, without any financial institution involved in the middle. The transaction gets recorded on the public Ethereum blockchain. The time taken to execute an ETH transaction can be anywhere from 30 seconds to 5 minutes, with the transaction fee in the vicinity of $20 per Ether (at the time of writing this piece).
Debit cards on the other hand are a far more convenient and widely accepted means of payment throughout the world. Debit card transactions involve a buyer authorising the seller to withdraw the concerned amount of money directly from their account, passing through a few financial intermediaries during the process. For instance, a normal Visa transaction may involve 4 different parties—the debit cardholder, the issuer (cardholder’s bank), the merchant establishment and the acquirer (which facilitates the payment at the merchant end).
Although there might be a processing fee associated with the purchases made with a debit card too, it’s normally around 0.5% of the transaction value. However, most importantly, debit cards are a far more established payment method compared to Ethereum or any other cryptocurrency.
Please note, both debit card and Ethereum transactions come under the purview of financial laws prevailing in the concerned country. Hence, you may be asked to complete certain KYC requirements before being able to make product/service purchases with ETH at any online/offline platform.
What Limitations Exist for Debit Card While Buying Ethereum?
When you buy Ethereum with a debit card on a crypto exchange or broker website, you may be able to purchase only a limited amount if your account hasn’t been completely verified yet. Some platforms may not allow you to buy anything at all before the completion of the verification process.
Additionally, despite the fact that debit card is an extremely popular and widely-accepted payment method at crypto exchanges/brokers, you’d still need to confirm that your choice of platform does accept it as a valid payment method. Then you may also need to shell out a debit card processing fee of around 4%, apart from the usual Ethereum transaction fees (which was around $20 at the time of writing this piece).
What Fees Are There?
Even though debit cards are counted amongst the most convenient and popular means to purchase cryptocurrency, this convenience does come at a cost. The majority of the exchange portals and brokers will charge you anything around 4% as the processing fee for debit card transactions.
Please note, this fee may vary depending upon the jurisdiction, bank and specific broker/exchange platform you are transacting in/on. Please also remember, if you buy ETH with a debit card, on an offshore platform, a foreign transaction fee may also come into play, which can possibly increase your overall cost of purchasing Ether. Please check for all such fees before you go ahead with the ETH purchase.
What Are the Pros and Cons When You Buy Ethereum With Debit Card?
Using a debit card to buy ETH has its own drawbacks and benefits. Debit cards are favoured by a large number of investors for their crypto purchases. Let’s look at some of the pros and cons of buying ETH with a debit card.
Pros
Debit card transactions offer a high degree of convenience.
The transactions are processed much more quickly as compared to other payment methods.
A large majority of crypto exchanges and brokers accept debit cards as a valid payment method.
You receive an additional protection layer as you can always lodge a dispute for any unauthorised transactions.
Cons
As a debit card is directly linked to your bank account, it is a more vulnerable payment mode.
Some exchanges/brokers may charge an additional convenience fee for debit card purchases.
Your crypto transactions are no longer anonymous as soon as you use a debit card.
Is Buying Ethereum With Debit Card the Best Method?
Whether you buy ETH with a debit card is the best method or not would depend entirely upon your personal preferences. While debit cards have their own cons, they offer the quickest and easiest way to buy ETH in the market today. As an alternative, you can also use the bank transfer facility commonly offered by brokers and exchanges. It works out to be much cheaper than other payment methods.
In a nutshell, there is no best or worst payment method for crypto purchases, it’s just about whether you want to pay the lowest possible fees, or would rather prefer convenience and simplicity instead. In that respect, debit cards are the easiest and wire transfers the cheapest. You can also check out other alternatives like eWallets, Paypal etc.
Further Tips for Buying Ethereum With Debit Card
Selecting a safe and secure platform to buy ETH with a debit card should be your first step. Thereafter, you must figure out where you would like to store your coins, whether in a hot or a cold wallet, and online or offline. Leaving them in an exchange wallet can be a risky affair.
When you choose a broker website or an exchange to buy ETH, make sure it is regulated by a reputed authority. Doing so will ensure that any confidential data you provide to the platform will stay in secure hands. Dealing with random brokers/exchanges can expose you to phishing attempts, and possibly cause huge financial losses. A good way to avoid such portals is by doing ample research before selecting any platform.
Conclusion
With the major bull-run witnessed in the crypto market in early 2021, Ethereum along with Bitcoin has emerged as a highly profitable investment option for a large number of investors throughout the world. In this detailed article on how to buy Ethereum with a debit card, we went over multiple aspects of it, including why you should use a debit card to buy ETH, global regulations, differences between ETH and debit card, limitations and fees.
For other ways to buy Ether check out our other guides. Find our buying Ethereum with credit card page here and our buy Ether with Paypal here and for an overlook on all aspects of purchasing ETH our buy Ethereum guide page.
