encryption U card defeat

Written by: Shen Chao TechFlow

The once booming crypto payment card business ((U card) is now facing a shrinkage.

On June 17, Christine, co-founder of Infini, posted on X, announcing the cessation of the consumer-facing crypto U card business, while also elaborating on the reasons behind it:

Compliance costs are high, profits are thin, and the operational burden is heavy.

She admitted that the to C card business occupied 99% of the company’s time and costs, yet brought almost no revenue contribution. This announcement also marks Infini’s strategic withdrawal from the to C card business, shifting focus to wealth management and B-end services.

However, 1-2 years ago, the U Card was seen as a breakthrough innovation in the integration of cryptocurrency and traditional finance.

By supporting stablecoins like USDT and USDC for direct consumption, the U Card quickly attracted users in the crypto community; at that time, ChatGPT had just emerged, and many people wanted to experience subscription services, but due to the lack of overseas bank cards for payment, the U Card also became a new payment channel in this wave of AI enthusiasm.

Cash out and ChatGPT, the former represents the desire for channel security in the crypto space, while the latter activates new payment scenarios.

As it stands, with the development of the industry, it seems that neither of these two demands has a strong need for U cards. As more U card projects continue to fail, the difficulty of this business becomes increasingly apparent.

Not an isolated case

The exit of Infini is not an isolated event.

We can find numerous examples of U Card business being partially or completely shut down from public information, with some typical ones being:

In September 2024, OneKey announced the cessation of new registrations and recharge functions, officially discontinuing its U-card service on January 31, 2025. Although the official reason has not been detailed, industry speculation suggests that it is related to interruptions with upstream payment service providers or compliance pressures.

In December 2023, Binance terminated its card services in the European Economic Area and ended partnerships in parts of Latin America and the Middle East in August 2023. This adjustment is seen as a response to tightening regional regulations.

Tracing back to 2018, one of the world’s largest payment networks, Visa, terminated its partnership with WaveCrest due to compliance issues. The latter is an intermediary that provides card issuance and payment processing for cryptocurrency payment cards, responsible for connecting U cards to the Visa network. Visa’s sudden withdrawal directly caused WaveCrest to be unable to continue servicing its clients, including U card providers such as Bitwala and Cryptopay.

These cases point to a fact: the U Card business faces systemic dilemmas globally.

Upstream loss of control and high costs

From the perspective of an ordinary user, the U Card is a very simple product - what you see is what you get, ready to use; the only things to weigh and compare are the fees and wear.

However, from the perspective of making U cards, the root of the problem lies in its complex upstream and downstream logic and high cost pressures.

First, the operation of the U Card relies on multi-party collaboration: users recharge stablecoins like USDT, card providers (such as Infini) convert them into fiat currency through off-ramp cash-out, and payment networks (like Visa, Mastercard) settle with issuing institutions and banks.

However, the upstream segments—especially payment networks and banks—are not controlled by the crypto sphere. This makes U Card a “vassal” of the traditional financial system, with weak bargaining power.

But why can you see so many different brands of U cards?

The exchange issues cards, wallets issue cards, and the payment startup team also issues cards… Can anyone issue a crypto payment card?

When users see a card featuring the brand of a cryptocurrency exchange and bearing the VISA logo, the unknown reality behind it is the collaboration model between the issuing party and the technology provider.

For example, the VISA card from Coinbase was previously supported by the technology provider Marqeta, enabling it to issue crypto debit cards and provide users with real-time transaction authorization and fund conversion services.

Furthermore, due to the existence of the role of “technology provider”, the issuance process of crypto payment cards has become relatively simple.

Technology providers offer a capability similar to “card issuance as a service”: by providing organizations in need of card issuance with necessary security technology, payment processing systems, and user interfaces to support the issuance of crypto cards, currency conversion, and payments.

The demand side for issuing cards only needs to call the API or SaaS solutions provided by the technology provider to issue and manage crypto credit/debit cards.

At the same time, the “Card Issuance as a Service” offered by technology providers includes various functions such as transaction authorization, fund conversion, transaction monitoring, and risk management, helping issuers simplify operations and improve efficiency.

(For a clearer explanation, please refer to previous articles: “The Business Behind Competing Issuance of Crypto Payment Cards”)

In other words, the U card in your hand is actually the result of cooperation among multiple parties, including the issuer, technology provider, bank, and payment network.

At the same time, this also means that every party in the card issuance chain has a profit demand. Everyone wants to get a share of the pie, but the card issuance projects and brands standing relatively downstream of the entire chain can obviously gain very little benefit from it.

The income from U card mainly comes from transaction fees, but the 1-3% fees charged by the payment network, the additional costs of stablecoin conversion, and the bank account maintenance fees can quickly consume the profits of this business.

Revenue is hard to cover costs, but the bigger problem is that fixed costs cannot be cut.

Supporting the operation of the U Card is no easy task. Technical maintenance requires real-time handling of transactions and ensuring security, while customer support must address refund requests and inquiries—such as the 10 working days refund arrangement promised by Infini, which also requires accounting for the manpower and response involved.

On the user side, individuals may encounter problems due to various payment scenarios, but the project parties of the U Card business must address these personalized issues; moreover, due to the long upstream chain, when problems arise with technical providers or card organizations leading to service interruptions or anomalies, they often find themselves in a situation of being collateral damage.

Compliance Risk

In addition, the survival of the U Card faces strict compliance requirements. KYC and AML (Anti-Money Laundering) are the basic thresholds, and if doing business in North America and Europe, U.S. FinCEN registration and EU MiCA regulations further intensify the requirements.

USDT itself is also one of the assets favored by gray industries (such as money laundering and running scores), which naturally determines that U Card needs to spend more effort to address risk control issues.

Moreover, when companies in the U-card business operate under the model of “overseas registration, employees working domestically”, the unique nature of the cryptocurrency industry in the country makes this business more susceptible to certain legal risks.

Recently, there have been reports on social media about certain U card services being suspended. We cannot ascertain the authenticity and specific details of the event itself, but one thing is certain:

The efforts required for U-card services to comply with local regulations, as well as the risks brought about by other factors, are far greater than those for many on-chain businesses. Sometimes, it is not necessarily a problem with the card itself; the funds involved, the users, and the relatively tightening public opinion environment can all cast a shadow on the brand and perception of U-card services.

It is hard work with little reward, worrying without making money; this may be a common predicament faced by most U-card projects that are striving in the payment field.

The current U Card business may be more suitable for CEX. CEX does not rely on U Cards to generate profits and income. When the trading business can generate sufficient profits, managing customer loyalty through U Cards and using it as a brand differentiation service is a better choice.

For example, Bybit and Bitget currently still have corresponding U cards, while Coinbase recently stated at the State of Crypto summit that it will launch the Coinbase One Card in the fall of 2025, allowing users to receive up to 4% Bitcoin back on each purchase, with the card supported by the American Express network.

The card is indeed something everyone wants to issue, but in the end, it is more about testing compliance resources and risk control capabilities. From the current situation, the U card business is gradually moving towards oligopoly.

From vassal to independence

On one side, cryptocurrency is facing obstacles in traditional business, while on the other side, traditional finance is increasingly engaging in businesses related to the crypto space, which has become a trend.

Whether it is stablecoins, RWA, or the recent hot topic of crypto asset reserves from US-listed companies, traditional finance is leveraging its existing resources and compliance accumulation to “learn from” the crypto space and profit.

In the cryptocurrency sector, apart from the native crypto business and asset-related operations around trading and blockchain development, there is an increasingly strong feeling of being constrained when trying to gradually expand outward.

The predicament of the U Card business actually reflects the awkward situation of the entire cryptocurrency industry when interacting with the traditional financial system. As a “vassal” of traditional finance, the cryptocurrency industry has always been unable to take the initiative in the payment field.

Perhaps reducing dependence on fiat currency conversion, initiating transactions directly from wallets, and conducting transactions through on-chain settlement, bypassing traditional payment networks for transfers, is the original form of cryptocurrency technology. However, under the premise of compliance and embracing reality, this path seems overly idealistic.

However, if one tries to master the industry chain due to being constrained by traditional business, such as acquiring banks, payment channels, and technology providers, it is likely to further increase the cost of business, especially when it is unknown how many users will use the card.

Furthermore, looking at the contradictions reflected in the U Card business, they are not only present in the payment sector but also permeate the entire extraterritorial development of the cryptocurrency industry.

When innovation and enthusiasm can only continue in the native soil of cryptocurrency, the grassroots, independent opportunities for crypto to break out have still not arrived.