Payment processors Visa and Mastercard have re-classified bitcoin purchases and will now view them as “cash advances,” a category that will bring an additional 5% fee to those virtual currency purchases on credit cards, as reported today by TechCrunch.
This fee would be in addition to the 4% fee a user takes when making a purchase on cryptocurrency network Coinbase, and other networks have similar fees for transactions. Additionally, as cash advances don’t have the same interest-free period as other purchasing methods, interest accrues daily for such a transaction.
While some have cited the move as a response to the fact that “the rise of bitcoin and future cryptocurrency is tied to the eventual fall of financial middlemen like Visa and Mastercard,” the re-classification comes after several banks, including Bank of America, JPMorgan Chase, and Lloyds, have all banned virtual currency purchases via credit card.
In an email sent to its customers, CoinBase noted (emphasis included by Coinbase):
Recently, the MCC code for digital currency purchases was changed by a number of the major credit card networks. The new code will allow banks and card issuers to charge additional ‘cash advance’ fees. These fees are not charged or collected by Coinbase. These additional fees with show up as a separate line item on your card statement.
These responses also come at a time when bitcoin’s valuation is falling rapidly, now hovering at $6,945 at 8:45am ET according to data from Coinbase.
UPDATE: Visa has stated that is has not made any changes to its bitcoin policies. Read more here.
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