How Bitcoin-Linked Card Payments Actually Work
BTC-linked credit cards allow you to spend bitcoin anywhere cards are accepted — but the real process involves conversion, spreads, timing windows and settlement choices. This guide breaks it down clearly.
Compare crypto-friendly cardsWhat Is a Bitcoin-Linked Credit Card?
A bitcoin-linked card lets you spend BTC like fiat, but behind the scenes the issuer converts bitcoin into local currency at the moment of transaction. The merchant always receives fiat — BTC itself never travels through card networks.
These cards effectively combine:
- bitcoin balance → converted to fiat,
- a standard Visa/Mastercard payment rail,
- reward logic (sometimes in BTC), and
- exchange spreads that affect real value.
BTC-to-Fiat Conversion Behind Each Purchase
When you tap your bitcoin-linked card, the issuer triggers a conversion process:
- Authorization: card network checks if funds are available.
- BTC check: issuer checks your linked BTC balance.
- Conversion: bitcoin is sold at a quoted rate (spot ± spread).
- Fiat hold: issuer places a fiat authorization for the merchant.
- Settlement: transaction clears in fiat, just like any normal card transaction.
Some issuers convert instantly per transaction (“just-in-time conversion”), while others preload fiat from prior BTC sales (“pre-converted balance”). Each model affects volatility exposure and fees.
Merchant Settlement — Always Fiat
Even though the cardholder spends bitcoin, merchants receive the same settlement they would for any normal card transaction. They never handle BTC directly.
Merchants see:
- a standard card authorization,
- a standard card clearing,
- normal interchange & processing fees.
BTC only affects the cardholder’s side of the transaction, not the merchant’s payment flow.
Bitcoin Cards vs. Traditional Cards
| Aspect | Bitcoin-Linked Card | Traditional Card |
|---|---|---|
| Source of funds | BTC (converted to fiat) | Bank account / credit line |
| Volatility | BTC price affects real cost | No crypto exposure |
| Rewards | Sometimes paid in BTC | Cashback / points / miles |
| Merchant settlement | Always fiat | Always fiat |
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