How to buy bitcoin on Yellow Card – is it safe?

Yellow Card is the latest bitcoin wallet allowing Africans to buy crypto. The US based app is available in a few African countries such as Nigeria and Kenya and more recently, in South Africa.

As most exchanges, such as competitors Luno, VALR and Binance, they consider themselves the easiest way to buy and sell crypto. Currently users are able to buy on Bitcoin, Ethereum and USD Tether on the app. South Africans only have Bitcoin.

To buy bitcoin on Yellow Card, follow these steps.

  • Download and register on the mobile or web wallet.
  • Make a bank deposit to Yellow Card’s local bank account.
  • Once approved your deposit will credited to your account.
  • You can now buy bitcoin with that fiat balance.
  • Optional: Withdraw your bitcoin.

Download and register

The Yellow Card app is a custodial type wallet and is available on web and mobile devices (both iOS and Android).

At the time of writing the app scored 4.3/5 on Android and 3.7/5 on iOS. I have experience with the web and iOS wallets and can confirm both are solid and easy to use. If you don’t want to use a mobile app, you are able to use web only. However, it is nice to be able to check your balance on mobile. I’m assuming in the near future Yellow Card will be available at merchants for payments, where the app can be used to scan QR codes to pay.

To register and start using the app you don’t need much: a phone number and a strong password. You’ll be asked to set a PIN to authorise transactions and you’re encouraged to set up 2FA (two factor authentication) to secure your wallet. I recommend going with Google Authenticator for 2FA as I have had problems with SMS OTP in the past.

Making your first deposit

Before you can buy bitcoin you will have to get money into your wallet. Currently Yellow Card does not support direct buy with credit cards, like Binance, so to get started you will have to do a bank deposit. In South Africa you have two EFT options:

OZOW instant eft (2 mins)

With this option you sign into your bank account during the process and make an instant EFT to Yellow Card. It works on top of their Prepaid24 integration and took 2 mins as advertised.

  • The fee for my ZAR 100 deposit was ZAR 10 (10%).
  • Fees for a ZAR 1000 deposit would have been ZAR 12 (1.2%).

EFT might be slower but you could save on fees.

EFT (2 – 15 mins *claimed)

With an EFT deposit you will have to enter YC’s bank details and make a payment to them via your bank account. You’ll specify a reference code and once the deposit has been received and checked by their team, you will be credited with the amount.

  • The fee for a ZAR 100 deposit stood at ZAR 4 (4%).
  • Fees for a ZAR 1000 deposit would have been ZAR 6 (0.6%)

Bottom line: if you want to make big deposits and have the time, use EFT.

Buying and selling bitcoin

Once your deposit reflects in your account, you are able to buy crypto, or “trade” as Yellow Card call it.

How to trade bitcoin on the Yellow Card iOS app:

  • On the app home screen, select the crypto you want to buy.
  • Tap the “Trade” button.
  • Select one of the options: “Buy Bitcoin with cash”, “Sell Bitcoin for cash”.
  • Enter a specific amount or tap “Max”.
  • Confirm your trade.

During my test I deposited R110 (R10 OZOW cost) and bought bitcoin for R100 @ 531,457.34 (15:20:35 on 2021-06-01). The Result: 0.00018864 BTC.

From the screenshot below, it appears there are no buy fees – where’s the catch?

15:20:35 on 2021-06-01 – Note the exchange rate used: 14.79

The official exchange USDZAR rate at that time was around 13.76. Which suggests conversion rate padding of around 7.5%. So while they may not be making any money from “fees” they are taking the 7.5% padding as the fee. At bigger amounts this could amount to quite a bit.

YellowCard follows a three tier system which determines your transaction limits. To increase your limits you will have to submit proof of address and advanced proof of identity.

Withdrawing your bitcoin – rather safe than sorry?

Last but not least, withdrawals. Why is this important? Yellow Card is a custodial wallet and thus control your private keys on your behalf. And as the mantra goes:

“Not your keys, not your cheese”

Bitcoin proverb

Essentially this means that if Yellow Card disables withdrawals they could prevent you from moving your bitcoin instantly. I’d imagine they would not do this voluntarily, as it would violate their users trust and harm business. But occasionally something could force them too: In Nigeria, the central bank recently banned all crypto transactions and as a result forced Luno and other companies to freeze withdrawals. I’m not sure how this affected Yellow Card’s Nigerian operations, but there are a lot of upset customers in that country right now unable to access their funds.

It is therefore very important to consider moving your purchased bitcoin to a more secure location. This rings true more for your HODL position than your trading funds. If you plan on keeping your bitcoin for the long haul, do yourself a favour and withdraw it. If you plan to trade between bitcoin and ZAR, the fees will likely not be worth it to constantly withdraw and deposit.

Yellow Card does not charge fees for withdrawals, but you do pay network fees

Above you can see the amount in fees it would have cost me to withdraw. These are network fees and vary depending on the volume of the network. As with deposits, it is more economical to withdraw larger amounts since the fee will be small in relation.

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