VISA and MasterCard have made it more difficult for users to purchase Bitcoin and other cryptocurrencies. Both multinational financial services corporation decided to reclassify the process of buying cryptocurrencies.
VISA and MasterCard to stamp out Bitcoin purchases
Recently, Bitcoin investors started to examine the additional fees on their statements. It turns out that, VISA and MasterCard are making it hard for people to trade Bitcoin and other cryptocurrencies by adding taxes on transactions.
According to the TechCrunch report, both VISA and Mastercard have reclassified the process of Coinbase credit card purchases on their networks. However, they two are not classifying Bitcoin and altcoin purchases as “cash advance” rather than a “purchase.” It means that using a credit card will result in an additional 5 percent fee charged by your credit card merchant. Therefore, it adds to the 4 percent fees charged by Coinbase.
Coinbase allows both credit and debit card cryptocurrency purchases.
Coinbase wrote to customers last night confirming that there was a change in the MCC code by different major credit card networks. This would allow them to charge “additional cash advance fees” according to the email.
“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,” a spokesperson from Mastercard said.
Additionally, there is no standard interest-free grace period for cash advances as would be for all credit card purchases. The transaction accrues and compounds daily after it goes through at Coinbase.
Mastercard and Visa are charging a higher interest rate (25.99 percent in one case) for these cash advances. Also, excluding the purchases from earning credit card points.
ACH funds also take three to five business days. However, investors may be forced to wait for a full week.
Accordingly, its flow after a profusion of banks decided to ban cryptocurrency purchase via credit cards. Thus, Bank of America and JPMorgan also recently halted Bitcoin purchases using credit cards. The UK Banking giant Lloyds Bank Ban Bitcoin purchase. Capital One Financial Corp. and Discover Financial Services were not supporting these investments. Citigroup is studying its policy.
All these changes come even as many regulators are divided on how to treat cryptocurrencies.