Major credit card brands and issuers are refusing to accept cryptocurrency transactions. Some credit card company executives have gone on record with their refusal.
“We at Visa won’t process transactions that are cryptocurrency-based,” Visa Alfred Kelly told CNBC on January 17, 2018. “We will only process fiat currency-based transactions.”
“My take is that bitcoin is much more today than a commodity that somebody could invest in; and honestly, somewhat of a speculative commodity,” Kelly said. Visa is refusing to process cryptocurrency transactions; because Kelly and others view cryptocurrency as a speculative commodity, rather than a true currency.
Visa Shuts Down Cryptocurrency Debit Cards
Thousands of prepaid Visa cryptocurrency currency cards issued by several companies shut down on January 5, 2018, and the cards, mostly held by Europeans, stopped working because Visa canceled WaveCrest’s license to issue cards and the WaveCrest lost its’ Visa membership. The affected cryptocurrency cards include BitPay, Bitwala, Cryptopay, TenX, and Wirex.
The cards involved were not credit cards, but debit cards that converted cryptocurrency into fiat currency such as euros.
The cards only allowed users to make purchases with cryptocurrency held in a digital wallet. The wallet was designed to sell the cryptocurrencies for euros which were used to cover payments made with the card.
Visa Cards Can Still be used for Purchasing Cryptocurrencies
It is still possible to buy cryptocurrency with Visa and MasterCard at exchanges; such as CEX.IO and wallets like Coinbase. CEX.IO was still accepting Visa and MasterCard credit card payments on 26 January 2018. Coinbase is still accepting credit and debit card payments but does not mentions any specific brands.
US Credit Card Companies Refuses to Process Cryptocurrency Purchases
Discover Financial Services is refusing to let holders of its Discover brand credit cards buy bitcoin. Discover stopped allowing bitcoin purchases in an attempt to comply with laws against money laundering, CEO David Nelms told Bloomberg Technology. Nelms gave no specific reasons for the prohibition, but he had nothing good to say about bitcoin.
“It’s crooks that are trying to get money out of China or wherever, Or if someone steals our credit card numbers they’re going to ask for payments in bitcoin. Those are the only use cases I’m actually seeing today.”
But still, it is not clear whether Discover is refusing to allow purchases of other cryptocurrencies with its cards. The Discover-branded credit cards are only available in the United States. Discover also owns Diners’ Club International, one of world’s oldest credit card brands.
Capital One Financial Corporation, which issues Visa and MasterCard branded credit cards in the United States, has stopped processing cryptocurrency purchases. A press release from the bank said the decision was made because of “elevated risks of fraud, loss, and volatility” associated with cryptocurrencies.
However it should be noted that blocking credit card transactions is not same as blocking debit card transactions because credit cards are always associated with risk where the customer might max out the credit card and because of uncertainties in the market, find himself unable to repay the amount.
Two other major US credit-card issuers, Bank of America and Citibank, are reviewing cryptocurrency purchases. Those banks do not have any new policies towards crypto transactions.