Reviewed: Xapo's Bitcoin Debit Card

 
 Important info

    Wallet Type:  Web
    Verification:  Trusted Server
    Multisig:  No
    Open source:  No
    Privacy :  Poor
    Crypto supported:  bitcoin
    Vulnerability to malware:  Vulnerable
    Private key stored:  server side

Pros

    Insured wallets
    Famous cold-storage solution
    Issues debit card
Cons
    Horrendous support
    Might not value your privacy as much as you do
    Difficult and intrusive set up

Summary

Xapo likes to do things big. They brand their cold storage “deep” cold storage, and provide it free to customers. They describe a network of armed guards and and biometric scanners across diverse locations, each serving to guard private key fragments. They chat about sending part of their security structure into low orbit, to ensure that only cosmonautically-inclined hackers would have a chance of breaching Xapo’s server. They have a debit card that is connected directly to user’s account, and so they provide both security and an easy bitcoin off-ramp.

Where they fail, and miserably in our opinion, is in their management of the little things, and by little things we mean their customers. Of every bitcoin service we have reviewed Xapo has the absolute worst support. The internet is flooded with stories from customers of their inability to breach Xapo’s wall of silence. This author himself written four separate emails to Xapo, in the capacity of both of an interested customer as well as the owner of a bitcoin review site, and has never received a response. This, combined with a really poor debut for their debit cards, rife with hidden fees and bugs, draws a picture of a company with its head in the clouds and feet suspended somewhere mid air.

According to CEO and founder Wences Casares, Xapo aspires to be the Bank of America of digital currency. It’s financial backing and infrastructure gives this wallet company as good a chance as any. However, all gripes about Bank of America aside, they demonstrate a modicum of respect for the customers who entrust them their money. It’s a lesson Xapo would do well to learn.

Security

Famous for its "deep cold storage", Xapo boasts a network of offline servers and paper wallets protected by biometric scanners, radio-wave blocking cages and armed guards.  These "vaults" are distributed across multiple geographic locations ensure that, even if a government were to bypass the cryptographic and physical security measures employeed, all other vaults would remain intact.   More importantly, the vaults are insured by the Meridian Insurance Group, so even in the unlikely event of a breach, customer funds are protected.  Xapo has recently been making waves with a plan to locate specific elements of its security architecture in a low Earth orbit satellite. Lest you immediately think that this smacks of a publicity stunt, Xapo explains that the satellite possesses a piece of data that can never change, absent a physical breach of the satellite. If there is a security breach back on Earth, the way in which the satellite communicates will change, thus instantly raising the alarm bell.

Entrance to the vault requires inputting your password, and you can choose to set up two factor authorization as well, which is recommended. Additional users can be granted access to your vault as well to implement multiple signature functionality. Minor irritant - every additional click forward or backwards through the vault requires an additional password input, which seems redundant and interrupts user flow.

 
Transferring money into the vault requires inputting address and ID number, and depending on your location, they might refuse service. US and European customers should be fine.  Vault withdrawals are time delayed by 48 hours, during which time a series of authentication measures are undertaken to ensure request integrity.  The progress of this authentication procedure can be followed in a users transaction history.
 
The Product

Xapo has a beautifully designed website with intuitive navigation and integrated, step by step directions for all the Xapo features offered.  Debit card management, vault and hot wallet access, and all accounting features are available on both desktop and excellent iOS and Android mobile solutions.

The Xapo Debit Card

The online wallet can be likened to a checking account, meant only to hold day-to-day funds. And as is custom with checking acccounts, Xapo offers debit cards issued by Visa, but these come in EUR, USD and GBP varieties. Unlike for instance e-coin, which operates like a prepaid card which must be filled with currency prior to usage, the Xapo card pulls bitcoin directly from your online hot wallet, quickly makes an exchange on bitstamp, and the merchant - or cash dispenser - pays out in fiat.

Please find below the fee schedule and limits.

Fee                                                     Description                 Amount
                                                                                           USD        EUR         GBP
Odering fee                              Includes standard shipping       $20.00     €18.00     £13.00
Annual Fee                                First year free                        $12         €10         £7
Withdraw cash                          ATM domestic                        $2.50       €2.25      £1.75
                                               Declined transaction               $1.00       €1.00      £1.00
Non-local currency transaction    Currency conversion               3%           3%          3%
Point of Sale charge                                                              0             0            0
Services                                   Card replacement                  $5.50       €4.50      £4.50
                                               Removal of unused funds        $10.00      €10.00    £10.00

Xapo Debit Card Limits

The Upgrading of limits requires submission of proof of identification and address.
                                                     Standard Limits                 Upgraded Limits
                                                     USD         EUR        GBP    USD        EUR         GBP
Purchase limit (per purchase)           $2,500     €2,500     £        $10,000   €10,000    £8,000
Purchase limit (per day)                   $2,500     €2,500     £        $20,000   €20,000   £16,000
Purchase Limit (lifetime)                  $2,500     €2,500     £        NoLimit  NoLimit   NoLimit
ATM Withdrawal (per transaction)     $200        €200        £        $1,000     €1,000    £800
ATM Withdrawal (per day)                $400        €400        £        $2,000     €2,000    £1,600
ATM Withdrawal (lifetime)               $1,000      €1,000     £       NoLimit   NoLimit  NoLimit

There was much customer dissatisfaction with high fees that were not properly disclosed by Xapo, but Xapo explained that this was due to miscommunication with the third-party card issuer, and there isn't much reason not to take them at their word. They were honorable in refunding monies to affected customers. Additional technical hiccups don't detract from the potential of this service.

Bitcoin account management
Xapo offers users the ability to create multiple wallet addresses, each with custom administrative permissions.  When first setting a wallet, an admin can add users and set permission levels, including their ability to make transfers from the account, designate users as transaction approvers, and set their approval threshold.  While this can be useful for a family account - as debit card-linked accounts can be allocated to children, for instance, with designated spending levels - for institutional clients it allows robust accounting and fund allocation between teams or departments, client investment accounts, savings accounts, spending accounts, etc.  A partnership with bitwage allows full payroll management directly from Xapo, with employees receiving funds into debit-card enabled accounts instantly. 

In a sign that Xapo is looking to become a one-stop bitcoin shop, wire transfers are now accepted to fund Xapo accounts. Aside from client-side bank charges and any applicable conversion fees, Xapo charges a 1% fee, and the bitcoin should appear in customer accounts within 2-5 days.

Mobile

Xapo offers the full functionality available on its desktop client through ios and android applications. Transactions are synced in real time across all user devices.  Users can send payments via email, QR code or vault address, and debit card are manageable directly from the app interface.

 

Bottom Line

We could be looking at a future titan of the digital currency market.  Xapo combines insured, bank-grade savings account security with easy access and usability for spending cash.  We would like to see bitcoin's status as cost-free interlocutor between currencies leveraged for lower debit card fees.  Keep an eye on Xapo's actions in Mr. Casares' home country of Argentina, where Xapo has disruptive potential.