VISA issuers and Mastercard make it harder to buy Bitcoin and other cryptocurrencies


#1

Sometime in the last week Bitcoin investors started noticing additional fees on their bank statements. It turns out that VISA issuers and Mastercard decided (how convenient!) to reclassify the way Bitcoin and other cryptocurrency purchases are processed on their networks. Incidents like this pose several challenges for the cryptocurrency industry short-term, but also show just how scared the incumbents really are.

Currently, if you want to buy bitcoin, ethereum or any other alt-coin instantly, the only option is to use your debit or credit card. Transferring funds from your bank has lower fees, but takes several days. Coinbase has long accepted debit and credit cards for instant buys, however, passing on to the buyer the standard 4 percent credit card transaction fee.

Now, it seems VISA issuers and Mastercard have quietly reclassified the way Coinbase credit card purchases are processed on their networks. Coinbase transactions (and presumably all other exchanges, as well) are now being labeled as a “cash advance” rather than a “purchase.” Fees will vary by institution, but what this means is that using a credit card will result in an additional 5 percent fee tacked on by your credit card merchant, in addition to the 4 percent credit card transaction fee already passed on by Coinbase.

Even worse is that cash advances do not fall under the standard interest-free grace period that consumers expect for other credit card purchases. The moment the Coinbase purchase goes through, the transaction accrues and compounds daily. If that isn’t bad enough, the interest rate is also higher for cash advances — an astonishing 25.99 percent in one case. Lastly, but equally as important for some consumers, these purchases will no longer qualify for earning credit card points.

For example, a $5,000 instant bitcoin purchase made on Coinbase using a VISA or Mastercard credit card will now result in roughly $500 in fees + interest too. For most people, losing 10 percent of your investment in fees means that the practice of using a credit card to buy cryptocurrency is effectively over. It will become more difficult for investors to purchase bitcoin and other cryptocurrency on their terms. Transferring funds via ACH takes three to five business days. In a world where cryptocurrency prices can swing wildly in either direction, a week feels like a nail-biting eternity.

In an email to all customers last night Coinbase confirmed the change, claiming “the MCC code for digital currency purchases was changed by a number of the major credit card networks” and will now allow banks and card issuers to charge “additional cash advance fees.” When asked for comment a spokesperson for Mastercard had this to say: “Over the past few weeks, we have clarified to acquirers — or the merchant’s bank — the right transaction or merchant category code to use for these type of transactions (cryptocurrency purchases). This provides a consistent view of such purchases for both merchants and issuers.”

If anything, this change makes things more complicated in the short term. Authorities are already divided on what bitcoin “is”: the IRS has already said bitcoin is not “currency” and treats it as taxable property, however, credit card companies are now telling us that buying bitcoin is the same thing as pulling cash out of an ATM.

Both things can’t be true. By reclassifying Coinbase (and presumably all other exchanges, as well), VISA and Mastercard are doing their best to make it harder, slower and more expensive for people to invest in cryptocurrency. Credit card companies believe it’s in their best interest to turn away millions in additional revenue in exchange for slowing the rush of investment into bitcoin. In many ways, that’s true. The rise of bitcoin and future cryptocurrency is tied to the eventual fall of financial middlemen like VISA and Mastercard. Maybe they just woke up to it.

"Visa allows credit, debit and certain prepaid Visa products to be used to purchase cryptocurrency, provided such transactions are legal in both the buyer’s and seller’s jurisdictions. Acquirers and merchants are responsible for ensuring that all Visa transactions are properly coded in the Visa payment system, so that issuers can rely on accurate and consistent coding when making authorization decisions. These codes have been in place for some time. Issuers make authorization decisions and determine cardholder fees, if any,” VISA said in a belated statement.


#2

Just watch. Next year will bring a large-scale international effort to either declare bitcoin illegal or to severely regulate it’s value.


#3

What makes you say that? This is not a good sign but that’s a big jump.


#4

Already happening in most Asia country, predominantly communist ones like China and Vietnam etc… Yes, I include Vietnam bc when things are outlawed in China, naturally, operations will move down south.


#5

A hunch. Following the very possible upcoming Stock Market Crash, Demonrat Congressional Sweep, and/or impeachment, something will be done with it soon. Possibly before next year. Do not keep it stored in an online account.

And yes…there is good evidence already in place by Asian countries who will dictate what other do on crypto - thanks @supperhey


#6

Why can’t we just have nice things…


#7

I don’t see the DNC sweeping elections. They think a recession will give them an opportunity because they are desperate, but what does the DNC offer?

More immigration and more globalism, that’s what.

If there is a surge in unemployment normies aren’t going to get excited about that platform.


#8

They will win, recession or not, if they are shrewd enough to make Bernie their 2020 candidate. There is no doubt they would have won in 2016 with that repulsive, loud-mouthed, shriveled old Communist, but they felt they owed the Queen her crown and narrowly blew it.


#9

I don’t see crypto being viable. It’s completely impractical to acquire and use.

There are fees out the ass, its slow as hell, funding delays, etc. Plus, there’s a million different coins now.

You can’t use that shit as money, people only buy them hoping they will go up.