SwissBorg launched a European card offering high cashback. They pay this reward exclusively in their proprietary token, BORG. This technical choice is a legal requirement.
What we know: Regulatory asymmetry
Payment cards rely on interchange fees paid by merchants. The US has no cap, allowing issuers to offer 1% to 3% cashback. European regulations cap debit card fees at 0.2%. Issuers cannot fund high rewards with these margins.
What we do not know: ESMA's reaction
European issuers print tokens to reward users. We do not know how long regulators will allow this. The MiCA regulation could classify this as market manipulation or require strict liquidity guarantees.
What we deduce: Unbacked models fail
Free crypto cards in Europe generate net losses without alternative revenue streams. Proprietary tokens are a temporary fix to maintain user engagement without spending fiat.
Decision impact
European issuers must not copy US business models. Rely on subscription fees for premium cards or tightly controlled tokenomics. Otherwise, you will run out of capital.
Source: SwissBorg Blog