Crypto Payment Cards Offer Up to 20% Cash Back as Customer Acquisition Costs Squeeze Profitability

Crypto payment card providers are using rich cash-back offers and double-digit deposit yields to attract customers, but the cost of those rewards is weighing on profitability.

CoinDesk reported on November 1 that crypto payment firms are trying to expand market share by offering as much as 20% cash back and double-digit yields on deposits. But some are operating at a loss because rewards paid to customers exceed the revenue generated by the underlying business.

Stablecoin financial platform KAST, which issues Visa-based payment cards, is a leading example. KAST offers annual yields of 8% to 12% on deposits depending on membership tier, but the actual yield generated from assets under management is around 3.5% to 4%. Chief Executive Officer Raghulan Pathy said the company had slipped from near break-even into the red as spending on customer acquisition rewards increased.

Bleap, which offers Mastercard-based payment services, has a similar structure. The company provides as much as 20% cash back on some purchase categories and yields of up to 15% for holding crypto assets. Eduards Timofejevs, Bleap's Latvia chief executive, said customers who use only the card payment and cash-back benefits may generate no profit for the company.

Companies are therefore trying to steer card users into trading, lending and paid financial services to secure long-term revenue. KAST has identified memberships, corporate finance services and tokenized stocks as new revenue streams. The company, which raised $80 million in March, is prioritizing market-share growth over near-term profitability.

Still, some firms are beginning to scale back the incentives they had offered to attract customers. Bybit's European unit changed its cash-back program in August from 2% to 10% for regular members to an uncapped 1%. Bleap also cut its base cash-back rate to 1% from 2% and reworked the program to offer higher rewards only in specific payment categories.

Another challenge is that interchange fee income alone makes it difficult to sustain such high reward rates. The European Union caps interchange fees for covered consumer debit cards at 0.2% of the transaction amount. In the US, the average interchange fee on debit cards not subject to the federal fee cap was 1.21% in 2024, lower than the cash-back rates offered by some crypto cards.

Across the industry, companies are also expanding business models that combine card payments with lending, staking and asset management. Ether.fi operates a card that lets users borrow against staked assets to make payments. Whether customers drawn in by high rewards continue using the service after those perks are reduced will be a key factor in determining the long-term profitability of crypto payment card businesses.