Indacoin: bitcoin by credit card

Tuesday 29 September 2015

Credit cards are convenient, but they’re a bad way to buy crypto - something Indacoin wants to fix.

Credit cards are the default way of making purchases online. There are various ways of moving money around, including bank transfers, but these take time to set up and it’s simply not practical to do for day-to-day e-commerce. Credit cards also offer protection from theft, since the banks will generally reverse a fraudulent transaction or refund you if someone manages to steal your details.

Unfortunately, that makes them a poor choice for buying bitcoins (along with PayPal). Credit cards are convenient but transactions are reversible. Bitcoin transactions are irreversible, since there’s no central authority (don’t bother trying to find the customer service department, either).

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Bitcoin's customer service department hasn't answered calls since 2009, so your odds of getting a transaction reversed are slim

In fact, bitcoin is the ideal tool for carders to spirit away their ill-gotten gains. Hackers can pay with stolen cards and leave merchants to face the chargebacks. In the US alone, card fraud totalled $8 billion in 2014. It’s a problem, because credit cards are fast and straightforward to use and would otherwise be the ideal way to buy BTC. That’s why London based Indacoin Exchange has started a programme to enable Visa & Mastercard payments for bitcoins and Litecoins.

Clever workarounds

Indacoin Exchange has developed a safe and secure way to let customers use their cards (rather than the extensive and invasive KYC that is usually involved). They request a code from an online credit card statement, and then another they send in an SMS. It usually takes no more that 30 minutes to verify the card and receive your coins. They start out small, with a minimum amount of $5 and a limit for the first month of $500. After 40 days the limit on card purchases is raised to $3,000.

‘While buying bitcoins with a credit or debit card is supposed to be the simplest way of getting cryptocurrency, only 0.1% of bitcoins that were bought in 2015 had been purchased using Visa or Mastercard,’ says Indacoin CEO Stanislav Kosorukov. ‘The discrepancy is explained by extremely complicated card verification procedures. In Indacoin we don’t request scanned copies of passports and utility bills, and don’t make people wait for several days before they can get bitcoins. Even our new clients can buy bitcoins within half an hour and for our loyal customers the process is instant. We hope that such easy way of buying bitcoins with a card will accelerate further market development and attract new fans of cryptocurrency.’

Moreover, Indacoin has close links with major European and American financial institutions, enabling it to identify whether a card has been stolen or not within half an hour. In most cases clients will receive a call from the bank to confirm that they really have bought bitcoins on Indacoin. ‘It’s a win/win collaboration both for Indacoin and banks, because we are helping banks to detect stolen cards and block them.’

The hope is that finding new ways to purchase bitcoins will reduce the friction for consumers and encourage more people to try them out.


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