Visa, Mastercard to slow down the rush of Bitcoin and crypto investments

As a result, sometime in the last week Bitcoin investors started noticing additional fees on their bank statements, the online publication continued. 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, though Lloyds Bank has banned Bitcoin purchases using credit cards. Coinbase, a US-based cryptocurrency exchange, has long accepted debit and credit cards for instant buys, however, passing on to the buyer the standard 4% credit card transaction fee.

However, Visa and Mastercard have quietly reclassified the way Coinbase credit card purchases are processed on their networks. Coinbase transactions are now being labelled 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% fee took on by your credit card merchant, in addition to the 4% credit card transaction fee already passed on by Coinbase.

In an email to all customers 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 TechCrunch 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.”