Visa Moves to Reclassify Memecoin Card Purchases as Crypto Transactions, Curbing Rewards Perks
Summary
- Visa has issued guidance requiring memecoin credit-card payments to be classified as standard cryptocurrency transactions rather than digital media, according to the report.
- As early as next week, Visa's cryptocurrency payment restrictions could also apply to memecoin purchases, potentially limiting existing points and cashback perks, the report said.
- Chase and the New York Attorney General's Office said they have raised or are reviewing the issue of how memecoin payments are classified by Visa, while any guidance from Mastercard has yet to be disclosed.
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Visa is moving to stop the practice of classifying credit-card purchases of memecoins as "digital media" transactions and instead apply the same standards used for other cryptocurrency trades, The Block reported.
On September 20, Visa told Crossmint and payments processor Checkout.com, which support memecoin payments, that treating memecoin purchases as digital media is no longer appropriate, according to the report.
Crossmint has provided payment services allowing users to buy memecoins with credit cards on platforms including Fomo and Robinhood Wallet. Those transactions were assigned merchant category code 5815, which is typically used for digital content purchases such as streaming movies or audiobooks.
Because of that classification, memecoin purchases were not processed as standard crypto transactions. That allowed users to earn points or cashback on those card payments just as they would on ordinary purchases. The transactions also did not appear to carry a separate indicator showing they were tied to cryptocurrency payments.
Visa has given payment companies a grace period and could require memecoin purchases to be classified as standard crypto transactions as early as next week, the report said. That would also bring the transactions under Visa's restrictions on cryptocurrency payments.
Crossmint said it maintains normal relationships with card networks including Visa and Mastercard and that there has been no change to its current process for handling digital-goods payments. The company added that it would revise its procedures if the guidance changes.
Earlier, Chase determined that applying a digital-media merchant code to memecoin purchases was inappropriate and raised the issue with Visa. The New York Attorney General's Office also said it is aware of Crossmint's related product and is reviewing the matter.
It has not been disclosed whether Mastercard has issued similar guidance to payment companies.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.