U card business faces challenges, compliance costs and profit pressures are prominent

Recently, a well-known cryptocurrency payment platform suddenly announced the suspension of its U-card service, triggering widespread discussion within the industry. The company stated that, effective immediately, all types of cards will be suspended from use and new applications. The company promised to refund the card opening fees for users who have applied and ensure that the safety of user assets is not affected.

A senior executive of the company explained that the decision to exit the U-card business was primarily due to the extremely high compliance costs, thin profit margins, and enormous operational pressure. He pointed out that the U-card business currently consumes 99% of the company’s time and costs, yet contributes almost no revenue. In the future, the company will focus on wealth management and asset management, and consider exploring decentralized payment solutions.

Industry insiders analyze that the U Card business faces multiple challenges. First, the compliance risk is high; a single internal whistleblower or investigation may lead to huge fines, even exceeding the cost of the license. Second, U Cards are prone to abuse by criminals, and the platform needs to directly bear the risks on the retail side. In addition, card organizations and upstream banks often pass the fines for compliance loopholes onto the issuing entities, which further increases operational pressure.

From the user's perspective, the actual usage cost of the U Card is much higher than the surface transaction fee. In addition to the card opening fee and exchange loss, there are also hidden costs such as recharge fees. Without substantial subsidies, the U Card struggles to compete with traditional credit cards in small payment scenarios.

Nevertheless, the U card track has still attracted a large amount of investment. In March of this year, a certain payment platform completed a $40 million Series A financing, gaining support from several well-known investment institutions. At the same time, some large cryptocurrency exchanges are also actively laying out in the payment field, such as collaborating with traditional financial institutions to launch cryptocurrency credit cards.

However, compliance risks remain the biggest obstacle faced by the U Card business. Using the U Card may involve multiple legal areas such as foreign exchange management and cryptocurrency regulation. Users should be cautious when using it and understand the relevant regulations in their location to avoid breaking the law. At the same time, the idea of using the U Card for tax evasion is also unfeasible, as the international payment network and cross-border capital flow regulatory system allow transaction records to still be tracked.

Overall, although the U Card business presents both opportunities and challenges, the current situation of high compliance costs and thin profits may lead more platforms to reassess their strategic layout in this field.