Crypto cards are at a pretty interesting inflection point in my opinion.

They’ve quietly bridged the old and new payment worlds, letting you pay from a crypto wallet while the merchant still receives fiat through the same Visa or Mastercard rails they already use. To the shopper and the store, it feels like a regular card payment; the crypto part just happens behind the scenes.

What’s really changing is how the payment is settled on the backend - when and how value moves between crypto and fiat, rather than the front-end experience.

To understand what’s actually changing in the background, it helps to look at how these cards are structured today.

There are two broad setups that define how crypto cards work behind the scenes.

Prepaid cards convert your crypto or stablecoin into fiat before spending. You top-up a fiat balance first, and every transaction simply draws from that prefunded account, it's almost always debit.

On the other hand, real-time cards keep the funds in your crypto wallet until the moment of purchase. When you tap your card, the system checks your wallet, converts just enough into fiat, and approves the transaction instantly. This model can work for both debit and credit programs.

Every card payment still follows two clocks:

• a fast “approval” so you can walk away

• a slower “settlement” when actual money moves between the merchant’s provider, the network, and the issuer (usually the next business day or two).

Over time, we believe that some of these flows may eventually settle directly onchain in seconds, with an optional off-ramp to bank money.

In today's setup, the fee stack looks like the following:

→ merchant’s provider takes a service charge

→ issuers earn interchange

→ networks charge scheme fees

→ wallets or APIs earn a conversion spread when crypto becomes fiat.

The biggest near-term change is in business and cross-border payments, where stablecoins could potentially cut down the steps in the flow and help shorten settlement windows.

Each of these setups plays out differently when a payment actually happens: the difference lies in what gets converted, and when.

We’ll dive further into the crypto cards ecosystem in future blogs, but for now let’s look at each of the flows in this high-level chart.

1. prepaid flow (prefunded fiat; debit only)

In this setup, the user converts crypto or stablecoins into fiat before spending. The issuer approves payments against that prefunded fiat balance, and the merchant later receives fiat through normal card settlement.

• Before tap: convert crypto/stablecoin to fiat and load the card account

• Path: POS terminal → acquirer/PSP → Visa/Mastercard → issuer

• Issuer action: check prepaid fiat, place hold, authorize

• Settlement: via card rails (T+1–T+3)

2. real-time debit flow (linked wallet/API)

Unlike the prepaid model, here the user’s funds stay in their crypto wallet until the moment of purchase. At authorization, the program checks the wallet, locks the amount, converts it to fiat in real time, and approves the transaction. The merchant still receives fiat later through standard card settlement even though both sides can see the approval instantly.

• Path: POS terminal → acquirer/PSP → Visa/Mastercard → issuer/program

• Program API: check wallet → lock → convert to fiat → authorize

• Issuer approves based on that conversion and lock

• Visibility: instant (webhooks); settlement remains T+1–T+3 on card rails

3. real-time credit flow (credit line; wallet-referenced optional)

This is the credit variant of the real-time model. Here, the issuer approves the transaction against a credit line sometimes also referencing the user’s wallet balance as a risk signal or even collateral. The merchant still receives fiat later through standard card-network settlement, with all the usual credit-card economics at play.

• Path: POS terminal → acquirer/PSP → Visa/Mastercard → issuer

• Issuer action: check credit line (wallet may inform risk) → authorize

• Settlement: standard card clearing (T+1–T+3); credit economics apply

4. onchain settlement flow (future / limited pilots)

The next evolution removes card-network clearing altogether. Here, the payment is sent directly to a blockchain by the POS or payment gateway, and the merchant receives funds within seconds in their onchain wallet. There’s no Visa or Mastercard step for that transaction, it settles natively onchain. The merchant can off-ramp to bank money anytime if they prefer fiat.

• Path: POS/gateway → L1/L2 → merchant wallet (no card-network clearing for that payment)

• Outcome: seconds to finality, optional off-ramp, programmable rewards/tax/splits in-transaction

Now that we’ve mapped how each model works, the next question is which parts of this system will change first and where the biggest breakdowns might occur.

Where will the disruption really happen in our opinion? Key takeaways.

• b2b (bank to bank) get disrupted first

While consumer card programs are the visible layer, the earliest disruption likely comes in b2b and cross-border flows. These are still handled through backend bank connections and SWIFT messaging which are slow, opaque, and reconciliation-heavy. Moving them onchain would enable faster finality, fewer breaks, and cleaner treasury positions.

• Elimination of interbank card networks (visa/mastercard)

In the current setup, Visa and Mastercard behave like the interbank networks that almost everyone uses every day, and most crypto card payments still rely on them for clearing and settlement. If a payment is handled fully onchain end-to-end, that specific payment does not use card-network clearing and can feel like a direct bank-to-bank experience for both the user and the merchant with potentially eliminating the need for interbank operators like Visa or Mastercard for that flow.

• Settlement finance (the T+1/T+2 gap)

Traditional settlements take one to two days (T+1/T+2), so banks offer short-term financing to bridge that gap. If the payment leg settles onchain with finality in seconds, that gap disappears and the need for settlement-gap financing goes away.

• Merchant funding time

For merchants today, even when a crypto card approves instantly, the actual funds still arrive through card settlement a day or two later. If that same merchant (or its gateway) accepts an onchain payment for that transaction, the funds can arrive in seconds and card-network clearing don't be a part of that transaction.

• Product axis (prepaid vs real-time)

For card programs, the real axis is when crypto turns into fiat: prepaid converts before spending, while real-time converts at the moment of authorization. Custody mainly changes how the lock and conversion are done (an exchange hold versus a smart-contract allowance) rather than the path through the merchant, acquirer, network, and issuer.

• Two clocks in every payment

Every card payment follows two clocks: the “yes/no now” decision happens in seconds so the shopper can leave, and the “money later” movement happens after clearing so the merchant gets funded. A fully onchain payment can compress both steps into seconds for that specific transaction.

• Who captures economics

Economics follow control of conversion and settlement. Today issuers earn interchange, networks earn scheme fees, acquirers earn the merchant fee, and wallets or APIs earn a conversion spread when they convert crypto to fiat. As more flows run onchain, a larger share of value and data shifts toward whoever operates the onchain rail for that corridor, while a smaller share remains in card-specific fees.

All of these shifts point toward one simple reality that the experience at the front may stay familiar, but the rails beneath are the ones that'll change.

To summarise, in the near term, B2B and cross-border payments could see the biggest wins or disruptions: faster funding, fewer reconciliation breaks, and cleaner treasury positions.

Overall, there’s a really strong market potential, and we believe that crypto card and neobank models can, in general, deliver a better user experience than the existing web2 solutions.

Excited to dive deeper and compare the various cards and their offerings over the next few reports.