Why Hardly Any Bitcoin ATM Takes a Debit Card

Do Bitcoin ATMs take credit cards? Here is why it is easier and more likely to buy bitcoins from a regular ATM than from a Bitcoin ATM using a debit card.

Do Bitcoin ATMs take Debit cards?
Courtesy of Flickr

Yes, you can buy bitcoins from a regular ATM using a debit card. More about that later. First, let’s find out why it is harder to find a Bitcoin ATM that accepts debit cards. 

Most of us do not carry a lot of cash around. At least not anymore. It is easy and more convenient to pay for things with a debit or a credit card.

So asking questions like ‘does a Bitcoin ATM accept debit cards?’ or ‘do Bitcoin ATMs take credit cards?’ is only natural. 

It would be easier to walk to a Bitcoin ATM and pay for bitcoins using your debit card or credit card. After all, conventional automated teller machines (ATMs), from which the idea of Bitcoin ATMs is borrowed, were designed to be used with cards. ATMs would not exist without credit and debit cards.

It seems obvious that Bitcoin ATMs should be taking debit and credit cards. But while the idea of Bitcoin ATMs was inspired by the machines by banks, debit cards, and credit cards, have not been a critical part of their designs. 

A search through coinATMRadar’s list of over 5000 Bitcoin ATMs installed in cities and towns around the world, and it is challenging to find one that takes debit cards. The standard Bitcoin ATM accepts only cash. 

But why is hardly any Bitcoin ATM accepting debit cards? 

There are several reasons for that. 

A Bitcoin ATM accepting debit card solves no pressing problem

Any successful innovation has to solve a pressing or seemingly pressing problem. It has to give users an option they do not have or make their lives easier.

Having a Bitcoin ATM that takes a debit card does not solve any pressing or seemingly pressing problem for the end user. If anything, it cancels out some of the benefits that users derive from using a Bitcoin ATM.

If you are asking yourself ‘how do I buy Bitcoins with a credit card instantly?’,  ‘where can I buy Bitcoin with my debit card?’ or ‘how do I fund my Blockchain wallet with a credit card?’ then a Bitcoin ATM should not be the first place you think about.

Your needs can be taken care of better on one of the many crypto exchanges online. It is easier to log on and buy bitcoins using your debit card from the comfort of your home. Visit 99Bitcoin.com and read their list of places online you can buy bitcoins using a debit or credit card. 

It costs more in time, energy and gas to drive around looking for a Bitcoin ATM that will accept a debit card. Even more, the rates you will find online might turn out to be more competitive and friendly as the operating costs might not be as high as those involved in running a Bitcoin ATM.

Many use a Bitcoin ATM because of anonymity 

Bitcoin is digital cash. It was the first ever electronic cash one could use without leaving a trail. It is supposed to be a digital version of the physical cash. 

When you give a cashier a $20 at your local store, your name or physical address doesn’t appear on it. Similarly, your name and physical address don’t appear on a bitcoin transaction you make.

But all debit card transactions you make are attached to your name and physical address.

It turns out, however, that your bitcoins transactions are anonymous as long as none of them is attached to your real-world identity. Using a debit card to buy bitcoins is often a sufficient entry for anyone who wants to track and analyze your activity on the blockchain (shared ledger where all transactions are recorded).

One of the strongest selling points of Bitcoin ATMs is the anonymity of the transaction. You can use anonymous money (physical cash) to buy pseudonymous digital cash (bitcoin). 

It is not easy for anyone to attach your identity to bitcoins you bought using physical cash. And that is why even if the debit card payment option is available on a Bitcoin ATM, many will prefer paying cash for their bitcoins because that preserves their privacy. 

For this category of clients, it is counterproductive to use a debit card or a credit card on the Bitcoin ATM. In fact, many would rather go to a regular ATM withdraw physical cash then head over to the Bitcoin ATM to buy their cryptos anonymously. 

The nature of Bitcoin transactions

In addition to being pseudo-anonymous, Bitcoin transactions are also not reversible. Once you send bitcoins to someone, you can not call them back. There is no customer support to complain to so that they can reverse the transaction for you. And there is no feature on your wallet for that purpose.

Meanwhile, debit card transactions can be charged back. You can send a request to the bank or the card company and disown a transaction, and they can then go ahead and reverse it.

This situation would put Bitcoin ATM operators at risk of a financial loss if they chose to accept debit and credit cards. Dishonest users could easily buy bitcoins then disown the payment they make. When that happens, the Bitcoin ATM operator will not be able to call back the bitcoins that were sent out.

The situation is made worse by the fact that most Bitcoin ATMs are operated by small businesses that might not have the capacity to absorb chargeback losses.

The treatment of Bitcoin transactions by most banks.

Bitcoin is a very potent competitor of banks. It seeks to make them obsolete, and as a result, most banks have not been enthusiastic in supporting or facilitating its spread.

Even more, transactions involving bitcoin are treated with a lot of suspicions because of the belief that the cryptocurrency is the money of choice by those involved in illegal activities-even though physical cash is better in this regard).

In many jurisdictions, especially in the United States, transactions involving bitcoins are treated as possibly linked to crime. Most bitcoin ATM operators are wary of being asked by their banks to account for transactions sent to them. 

But there is a way to buy bitcoins through an ATM

A few Bitcoin ATM manufacturers have added this feature even though there has not been much success. One brand that has attempted adding a debit card as a payment option is the Israeli based Mutocoin. A check on the CoinATMRadar, however, shows that the brand has not yet installed a working machine.  

But with a lot happening in the Bitcoin ATM space, it is possible to run into a Bitcoin ATM that accepts debit cards. But this is very unlikely.

An interesting fact though is that it is easier to buy bitcoins from a regular ATM than from a Bitcoin ATM. There are potentially more regular ATMs that can take a debit card than there are Bitcoin ATMs.

How is that even possible?

In 2016,Genmega, a company that manufactures, installs and maintains regular independent ATMs, announced a partnership with LibertyX, a company that has created a network of Bitcoin cashiers throughout the United States. The Genmega has given LibertyX potential to access over 100,000 machines in the country.

Subject to approval by the operator, Genmega provides a software update that facilitates the buying of bitcoins from LibertyX.

This is how a typical transaction goes.

You, as a bitcoin buyer, download and install the LibertyX application on your smartphone. You then signup with your email address. With an account, you get access to map on the app that shows you all the LibertyX cashiers or agents around you. The list includes independent Genmega ATMs with LibertyX user interface. 

Once you identify an ATM you can use, you initiate a transaction on your mobile phone, indicate how much bitcoins you want to buy and provide an address to which the coins should be sent. 

LibertyX then sends you a one time code to your app. Visit the ATM with this code and the debit card you intend to use to fund the transaction. 

When you reach the machine, select the LibertyX interface. The machine prompts you to enter the transaction code you received on your mobile app. You need to type it in as well as the amount you are buying. 

Once you provide these details, the machine directs you to make the payment, and that involves inserting your debit card and providing the personal identification number (PIN).

In a few seconds, it processes the transaction and the bitcoins are sent to the address you provided and the equivalent value is taken from your debit card. 

Of course, this is a solution for those who don’t mind giving up a little of their privacy. It is also for those, for whatever reason, find it easier to buy bitcoins using a debit card on an ATM than on an online exchange.



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