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🏦 Stablecoins and Tokenization

• BlackRock-Backed Stablecoin Gains Traction: Projects like Ethena and Securitize are leveraging BlackRock’s involvement to pitch tokenized stablecoin solutions, aiming for a $1 billion market. Read more.
• Standard Chartered Predicts Stablecoin Growth: A report predicts stablecoins could account for up to 10% of U.S. M2 and foreign exchange transactions, highlighting growing institutional interest. Read more.
• Tether Ends Support for Euro Stablecoin: Tether has discontinued its EURt stablecoin, citing compliance challenges with Europe’s MiCAR regulations. Read more.
• Schuman Financial Launches Euro Stablecoin: A MiCAR-compliant euro stablecoin, Europ, has been introduced to enable secure and regulated digital euro transactions. Read more.

🌍 Global Regulatory Developments

• UK to Unveil Crypto Regulations in 2025: The UK plans to implement comprehensive crypto and stablecoin regulations by early 2025. This move aligns with its ambition to be a global crypto hub while addressing risks tied to digital assets. Read more.
• Brazilian Bitcoin Reserve Proposal: A Brazilian lawmaker has introduced a bill to establish a national Bitcoin reserve to mitigate economic risks. The initiative aims to position Brazil as a leader in crypto adoption. Read more.
• China’s AML Law Highlights Crypto Focus: China’s Supreme Procuratorate has underscored cryptocurrency-related anti-money laundering (AML) priorities in its latest legislation, signaling a tougher stance on illicit crypto use. Read more.
• Taiwan Tightens Crypto AML Rules: Taiwan has strengthened anti-money laundering measures following violations by a local exchange. The updated rules aim to enhance compliance and protect users. Read more.
• Morocco Plans to Lift Crypto Ban: Morocco is drafting regulations to end its crypto ban, signaling a shift toward embracing digital assets with a clear regulatory framework. Read more.

📈 Crypto Adoption and Market Trends

• India Explores CBDCs and Payments: India is examining the use of central bank digital currencies (CBDCs) for cross-border payments to enhance financial inclusion and efficiency. Read more.
• UK Crypto Ownership Reaches 7 Million: Over 7 million UK adults now own cryptocurrencies, reflecting growing mainstream adoption, according to the Financial Conduct Authority. Read more.
• Crypto Gains Aid Mortgage Approvals: Rising crypto investments are enabling lower-income households to secure mortgages, as digital asset gains boost financial stability. Read more.

🔄 Institutional Moves and Partnerships

• Ripple’s Tokenized Fund Launch: Ripple and Archax have launched the first tokenized money market fund on the XRP Ledger, marking a milestone in institutional crypto products. Read more.
• Partior Secures $80M in Funding: Blockchain-based payments platform Partior raised $80 million from Deutsche Bank and other backers to expand global operations. Read more.
• Robinhood Adds USDC in EU Markets: Robinhood has expanded its crypto offerings by enabling USDC trading in European markets, bolstering its global strategy. Read more.

🏛️ Legal and Policy Developments

• Chinese Court Bans Crypto for Wages: A Chinese court has ruled against using cryptocurrency for wage payments, citing its legal tender policies. Read more.
• Russia’s Digital Ruble Transition Period: Russia’s Ministry of Industry proposes a two-year phase-in period for its digital ruble adoption, aiming to minimize disruptions. Read more.

🚀 Emerging Projects and Innovations

• Coinbase Won't Support Celo Migration: Coinbase announced its decision not to support Celo’s migration to a Layer 2 solution, triggering a lot of emotion from the Ethereum and Celo community. Read more.
• Suriname Candidate Promotes Bitcoin: A Suriname presidential candidate has pledged to adopt Bitcoin as the national currency if elected, signaling progressive views on crypto. Read more.
• Indonesia’s Crypto Surge: Indonesia reported over $30 billion in crypto transactions in 2024, supported by 21 million traders, underscoring rapid adoption. Read more.

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What is the interchange fee?

You go into Starbucks and order. “That’ll be $7.89,” the cashier says. (Inflation!) You tap your card, the payment is authorized, and a minute later you’re sipping your latte.

It was convenient, fast, and Starbucks was happy you paid with a card and moved along rather than fumbling in your pocket for change. But the convenience of that card payment also costs Starbucks money, a little piece of the transaction that goes to the companies making the payment system work smoothly. One key part of that cost is called the interchange fee.

The interchange fee varies heavily depending on a variety of factors: the country in which the transaction takes place, the kind of merchant where a purchase is made (online vs. in person), whether or not it is a cross-border transaction, the type of card used (debit vs. credit, for example), and more. At Kulipa, we see that the average interchange fees on consumer purchases amount to:

• 0.2% in Europe
• 1.5% in Latin America, Africa, Asia, and the Middle East
• 2.0% in USA

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In money terms, that means the interchange fees would be:

• €0.20 on €100 in France
• R$1.50 on R$100 in Brazil
• $2.00 on $100 in New York

Who shares the interchange fees?

Interchange fees are divided among the different players in the transaction – with the exception of Mastercard or Visa, who have a different role that we’ll get into below.

Card issuers take the largest part of the pie in exchange for coordinating the activity among all these players. If the transaction’s card issuer has a BIN sponsor, that sponsor is also paid out of the portion of the interchange fees that goes to the issuer.

(A BIN sponsor lends their financial license to a card issuer, acting as the issuer’s guarantor with the relevant financial authorities. It is, of course, also possible that no BIN sponsor is involved if the card issuer itself has gone through the regulatory process, as for example Kulipa has done in multiple geographies.)

Interchange fees are paid by the acquirer of the transaction to the issuer (for definitions on these, check out our article on How card payments work).

How is the interchange fee calculated?

This is where Mastercard or Visa come in, as they are the ones tasked with defining and facilitating the system of interchange fees.

There’s only one place in the world where it’s quite easy to define the interchange fee: Europe. For transactions in Europe, the interchange fee is fixed by regulation for domestic transactions at 0.2% (for debit cards). 

In the rest of the world, however, it’s very complicated to understand how much the interchange fee will be, today, for a given transaction happening in a given location. It can, and does, vary based on a variety of circumstances. 

Final interchange fees are calculated with an Interchange Rate Designator (IRD), which is essentially a set of rules that covers pretty much any combination of potential factors to come up with the final number for a given transaction. 

The range of IRDs is, frankly, wide. Here, it’s enough to say that an IRD is impacted by the type of card used, the type of merchant where the purchase is made, the geographic location of everyone involved, the technology used to complete the transaction, and the time when the transaction is submitted.

What does this all mean for a crypto wallet that issues payment cards?

Interchange fees have the potential to be an attractive new revenue stream for crypto wallets. But due to the complicated calculations involved, there’s also a certain opacity that opens the door to salesmanship in the industry. 

Specifically, because it’s natural to start dreaming when thinking about the benefits of a new revenue stream, some card issuers try to sell a dream. We’ve talked with clients who have told us they were promised up to 90% of the net interchange fee on a transaction. The thing is that this flashy number is often standing in front of hidden costs, or is actually not true. 

At Kulipa, our stance is that clarity and openness is better. That’s why our contracts spell out how we’ll keep somewhere between 20-50% of what we’re actually getting, depending on transaction volume, while being up front about what that number is.

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That leads to one big conclusion: Wallets should be aware that while interchange fees can indeed be a great new revenue stream, they aren’t really enough to be the foundation of a thriving business. The bottom line is that payments can be a great new use case that leads to happier customers; in exchange, interchange fees are a good incentive for providing these services.

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Want to learn more about how to enhance your crypto wallet with a branded debit card? Check out kulipa.xyz and reach out to set up a call to talk about your specific needs.

🌍 Global Developments in Tokenization and Stablecoin Use

• Germany’s Bundesbank Joins Project Guardian: The Bundesbank collaborates with Singapore’s Project Guardian to explore financial market tokenization, focusing on cross-border use cases and distributed ledger technology. This highlights increasing global interest in digital asset integration. Read more.
• Tether Completes USDT Crude Oil Transaction: Tether executes its first USDT-based crude oil trade in the Middle East, signaling a major step in stablecoin adoption for commodities trading. Read more.
• Tether Unveils Hadron Tokenization Platform: Hadron aims to simplify asset tokenization by offering a framework for tokenized securities, enhancing access to blockchain-based financial services. Read more.

🏦 Institutional Moves in Crypto Adoption

• Intesa Sanpaolo Expands Digital Assets Desk: Italian bank Intesa Sanpaolo, a Ripple partner, broadens its crypto offerings to include spot trading, reflecting the rising institutional demand for digital assets. Read more.
• BlackRock’s BUIDL Extends Blockchain Integration: BlackRock expands its blockchain-focused platform BUIDL to include Aptos, Arbitrum, Avalanche, Optimism, and Polygon, signaling its continued commitment to decentralized finance (DeFi). Read more.
• Coinbase Acquires Utopia Labs: Coinbase acquires stablecoin payment processor Utopia Labs, enhancing its capabilities in stablecoin transactions and enterprise crypto solutions. Read more.

📈 Expanding Crypto Accessibility

• Revolut Launches Crypto Exchange in 30 Markets: Revolut extends its cryptocurrency exchange services to 30 new markets, emphasizing its strategy to scale crypto adoption globally. Read more.
• Sling Money Now Available in the US: Sling Money, a crypto remittance platform, debuts in the U.S., allowing users to send money internationally with lower fees and improved access. Read more.

💰 Stablecoin Regulation and Legislation Updates

• UK to Introduce Stablecoin Rules: The UK announces plans to regulate stablecoins and exempt staking rewards from capital gains tax, fostering a more crypto-friendly regulatory environment. Read more.
• US Stablecoin Legislation Gains Momentum: The Digital Chamber advocates for clear US stablecoin laws, emphasizing their importance in maintaining dollar dominance and global competitiveness. Read more.

🌐 Regional Crypto Trends

• Russian Bank Sber Tests Crypto Payments: Russia's Sberbank announces a pilot for crypto settlements, demonstrating the growing role of digital currencies in international transactions amid sanctions. Read more.
• Underbanked US Households Rely on Crypto: An FDIC report reveals that underbanked American households are adopting cryptocurrencies at higher rates than fully banked ones, citing easier access and utility. Read more.