Visa May Block Card Rewards for Certain Memecoin Purchases: What Will Change?
Visa is preparing to change the transaction classification that provides credit card points and cashback on memecoin purchases.
According to a report published by Crypto in America on Friday, Visa is implementing a new regulation to stop payment processors from representing memecoin purchases as digital media transactions. The change could close the loophole that allows users to earn standard shopping points or cashback on certain memecoin purchases made with credit cards.
The move follows an investigation published by The Block regarding Crossmint. Crossmint provides the infrastructure for credit card-based memecoin purchases on the Fomo and Robinhood Wallet applications. Checkout.com is used for payment processing.
Card reward era for memecoin purchases may come to an end
According to The Block’s investigation, these transactions were classified under the MCC 5815 code, normally used for products like movies, audiobooks, and similar items. This code doesn’t mean the transaction is economically a digital media purchase, but it changed how the purchases appeared on the card network, allowing them to benefit from standard reward programs.
According to information shared by Crypto in America, Visa plans to end the grace period granted to payment processors next week. After this period, transactions are expected to be processed as standard crypto transactions and be subject to Visa’s restrictions on crypto transactions.
During The Block’s investigation, Crossmint-supported memecoin purchases were available on both applications. Crossmint deemed the classification appropriate, arguing that some memecoins could resemble collectibles under the U.S. Securities and Exchange Commission’s approach. Payment experts, however, noted that SEC assessments do not determine the transaction codes used by card networks.
It has not yet been announced whether Mastercard has issued a similar instruction to payment processors. Visa also previously made no direct comment on questions regarding the matter.