Coinbase is one of the most popular crypto currency exchanges of the moment. One of the main reasons is that the company supports both credit and debit cards, for the purchase of Bitcoin and other cryptocurrencies. Unfortunately, there seem to be some problems with these payment methods. Many customers have complained about the extra cost of using a credit card on Coinbase. These transactions are no longer considered as actual purchase, speculative securities but as a cash advance system comparable to a gambling system.
Visa and MasterCard add up to 3% additional fees for the purchase of cryptocurrencies
In the last few weeks, we have witnessed the crackdown on cryptocurrency activity at Visa and Mastercard. In fact, the suspension of debit cards issued by Wavecrest caused shock waves throughout the community. According to Visa, the company has no intention of facilitating or processing transactions related to the cryptocurrency world. It seems that this statement also applies to ordinary payment cards used on specific cryptocurrency purchase platforms.
More specifically, there has been a growing number of complaints from users of the Coinbase platform for nearly a week. Indeed, it seems that the purchase of bitcoin (and altcoin on coinbase), for one reason or another, can now cost 3% of the additional purchase price, even if the company Coinbase itself does not charge these expenses. In addition, Visa and Mastercard appear to have changed the "status" of Coinbase - and potentially other cryptocurrency exchanges - in their system.
According to a reddit comment, it is possible that Coinbase is now considered a "cash advance" site which would change the merchant category code of this company. This would make the use of a payment card considered "money game" and no longer "buy cryptocurrency sale". An additional charge of up to 3% will be charged in addition to customers who wish to buy cryptocurrencies. It seems that this outrageous taxation has been present since Wednesday, January 24, although the exchange has not made any official comment on these complaints.
When card issuers and banking institutions show their teeth
If Visa and Mastercard start charging additional fees for the purchase of cryptocurrency, it may slow down the enthusiasm of the general public for this new technology. Indeed, the majority of purchases in cryptocurrency by private individuals was realized until now by bank card. Not particularly by users' particular attachment, but this was the easiest and fastest way to buy crypto. Many people may be thinking about switching to wire transfer, but although there are many constraints (longer purchase period) it seems that banks are beginning to take action on this payment method for cryptocurrencies as well.
So far, it seems that Coinbase is not aware of this situation, but he could start investigating this case very quickly. Card issuers such as Visa and Mastercard could classify all cryptocurrency exchanges as "cash advance merchants", making the purchase of cryptocurrency more expensive worldwide.
It is not yet clear to see clearly in the form that takes this repression. Does this situation only concern certain financial instititons? It seems that Visa and Mastercard apply this new rule themselves and impose it on the banks, although there has been no clarification in this regard. No matter who made this decision it is obvious that the global crackdown on cryptocurrency activities is far from over. It is clear that this situation demonstrates the fear of these banking institutions of a potential express phagocytation of their service, but it shows more than the average users of these banking services actually do not have the total control when it is act to use their personal banking funds as they see fit.