April's AMA Recap: The Nexo Card

April was special at Nexo as among other developments, the Nexo Card was released. Suitingly, it was the topic of the month’s Ask-Antoni-Anything session, where Nexo Co-founder and Managing Partner, Antoni Trenchev hosted the event alongside Product Manager Silvi Angelov with both answering questions about the Nexo Card from our community.

How does the Nexo Card work, its advantages and the various payment options it brings are just some of the points discussed, so watch the full AMA video or read on below for a summarised recap.

As the first crypto-backed payment card, how will you onboard non-crypto users? Are there any perks when I refer friends to get the Nexo Card?

Silvi: From a product perspective, we have the best from-zero-to-crypto process in Nexo. We’ve made entering the crypto space a super-easy, quick process. I can proudly say you can buy your first crypto by using your debit or credit card with just 7 clicks on our Nexo app or web platform with 0.5% back in rewards and that crypto will immediately start earning you daily compounding interest.

At the same time those assets automatically open you an Instant Crypto Credit Line, which can be accessed via the Nexo Card. The Instant Crypto Credit Lines at Nexo start at 0% APR. There might be some people who ask “How can I access the Instant Crypto Credit Lines with the Nexo Card”. It’s simple – just swipe your Nexo Card in any of the 92 million merchants worldwide that accept Mastercard. And all of that without the need to sell your crypto and lose its upside potential.

Antoni: To wrap up and directly answer the question – now you can start your journey at Nexo by buying your first crypto with a card. What we call internally “Nexo 360 degrees” is that every need of yours can be catered for by the Nexo offering, whether it is exchange, earn, store, pay, transfer between accounts, take out loans, spend, you name it – we have it. And this is the way I have always believed large-scale adoption will come – when we give the same tools that the people know, such as the Mastercard.

Will there be full debit card functionality in the future where we can pre-load it with stablecoins or fiat instead of using a collateral loan?

Silvi: This was one of the most asked questions since the launch. The short answer is “Yes, of course there will be a Nexo debit card”. The only difference is that unlike the traditional financial institutions, Nexo has only one card – the Nexo Card.

It is the first card in the world that can be used as a debit card and as a credit card at the same time. And you have the ability to switch between both functionalities by clicking one single button in the Nexo mobile app. You can do this before each transaction. To give you more details around the debit card, at the beginning we will start with stablecoins and fiat currencies and then we will add every asset that is supported on the Nexo platform.

There are a lot of crypto debit cards on the market and all of them are actually selling your crypto on the back end. And what we know is that most people who are in crypto believe in the upside potential of that asset class and they’re willing to hold their digital assets for longer periods of time. That was one of our main assumptions, that we were working with when creating the Nexo Card.

Can you please explain in detail how much the algorithm puts in the credit line for each purchase? And how is the crypto chosen?

Silvi: Everything on the Nexo Card is fully automated and it works in the same way like the regular crypto credit line we have on the platform. It uses the same assets for collateral, the same loan-to-value ratios. Let’s say you have only Bitcoin in your Nexo account. The current loan-to-value ratio is 50% and this means for every dollar of your Bitcoin, you can spend up to $0.50 with the Nexo Card. If you have $10,000 worth of Bitcoin, you can spend up to $5,000 with your Nexo Card.

Crypto is volatile and we’ve built a sophisticated algorithm that manages the prioritization of those assets. But if you have any specific assets that you want to be used as collateral, you can manually move the asset you prefer from your Savings Wallet to your Credit Wallet right before the transaction. The automated rule will move assets by priority only after you don't have enough assets in your Credit Wallet.

Antoni: And the beauty of it all is that it works out-of-the-box. You don’t have to make these decisions and considerations, unless you absolutely want and need to, because our algorithms are really sophisticated, they have stood the test of time. These are the same algorithms that work for our crypto-backed loans for close to 4 years. Nothing in the traditional financial world has been tested like this.

What are the benefits of the Nexo Card versus similar offerings?

Antoni: Here is where the world-first comes – it is the first card that allows you to take out the loan with the swipe of the card or the touch of the phone versus selling your crypto. It is tax-efficient, it is HODLER-friendly, it is tapping into your liquidity, which allows you to keep your crypto assets longer. It’s the flexibility, the different settings that you can have with the Nexo Card. It’s the ability to soon-switch between a credit and a regular debit card. A lot of functionalities are still coming.

Any plans of integrating automatic loan repayments associated with the card that you could choose when they occur, for example – weekly or monthly?

Silvi: The thing with automatic loan repayments is that it clashes with our concept of never charging you monthly repayment fees. That’s the main concept we have even with the regular Instant Crypto Credit Line. We don’t want to have a minimum monthly repayment fee and we will not have it at all. That is one of the main advantages that makes the Nexo Card and the Instant Crypto Credit Lines a unique product.

Can we expect similar reliability with the Nexo Card as with any conventional credit card?

Antoni: It’s even more reliable than your traditional card, because it’s the Nexo Mastercard! Kidding aside, it’s reliable as it is, it’s a Mastercard, it gets accepted at 92 million merchants worldwide. It works the same from the plastic and from Apple Wallet or Google Pay. Order it and see that it is even more reliable than the traditional credit card.

Any plans to allow for loans in the same currency as the card, so we don’t have to pay the FX spread when our EUR charge is converted to USD?

Silvi: Let’s make this clear. There is no FX spread at all, because we’re using the best interbank exchange rates. However, there are some FX fees that are for converting between the card currency which can be in EUR and GBP and the merchant’s currency. There are some FX fees there, but they are entirely covered by Nexo for up to 20,000 EUR per month.

Antoni: It’s good to have Nexo Tokens in your portfolio because it boosts up your tier and that comes with additional perks. I cannot stress how important that is.

Do card repayments have any impact on our credit score? I want to build my credit score but I have always avoided traditional credit cards.

Antoni: Of course they don’t. The Nexo Card doesn’t affect your credit score and this has always been the beauty of our products – that they are agnostic. As soon as we know that you’re not a terrorist and that you’re not a money-launderer, and you have the collateral, you’re good to go. We don’t need to know what your income is and what your background is. Our offering is very open, transparent and inclusive and it does not affect your credit score, because this is securitized lending.

How does the card work if you have not taken out any loans before?

Silvi: In absolutely the same way as if you take a loan. The only difference here is that you’re carrying instant access to your credit line. You don’t need to wait days for the bank transfer to settle. You just get instant access to your credit line with your card.

This brings us to a close in April’s Ask-Antoni-Anything session. Make sure you watch the full video and get ready for the next edition with your questions on all things Nexo.