According to TechCrunch, Coinbase has implemented new functionality which allows users to instantly purchase cryptocurrency. Until now, purchases on Coinbase took 3-5 days to process.
Better than card payment?
Previously when Coinbase user wanted to buy cryptocurrencies via bank transfer, he had to wait for 3 to 5 days before the institution credited the purchase. Due to Bitcoin's volatility, the price could change drastically before the user has received coins. Even though the price was locked when buying cryptocurrency, users could either gain or lose on the processing time.
Instant payments will become a much more convenient option for users who don't use credit cards to buy cryptocurrencies. The transfer will be processed in a similar amount of time, but the fee for credit card purchases is much higher. For a credit card purchase, the user is charged 4% fee, comparing to 1.5% fee on bank transfer payments.
Another advantage of bank transfer payments is the purchase limit. Verified and trusted customers can buy cryptocurrencies for as much as $25,000, compared to few hundred dollars when using a credit card.
US only
The feature was rolled out today for US-based customers. The instant payment functionality was introduced to US bank only, with a plan to broaden the functionality to other regions as well. According to Coinbase, over 15,000 users will benefit from it today, and the total number of users eligible for the functionality will continue to rise. The more verified user is, the better functionality will be offered to him.
Coinbase trusts its users
However, there are concerns regarding frauds. Technically, Coinbase will still need 3-5 days to verify the payment. The user receives cryptocurrencies based on trust. It may come down to a situation where the user gets the coins he bought while Coinbase after 3-5 days finds out that user doesn't have sufficient funds. So the user practically gets his coins for free. That's why this functionality is introduced to the most verified users.
Since the user can withdraw as much as $25,000 worth of cryptocurrencies, it shows that Coinbase is pretty confident with their fraud prevention systems.
