Visa Cracks Down on Meme Coin Credit Card Purchases, Ending ‘Digital Media’ Classification Loophole

A notable “loophole” that allowed users to purchase specific meme coins with credit cards and earn traditional rewards points, often circumventing full Know Your Customer (KYC) verification in some instances, is reportedly being closed by Visa. This development follows revelations that certain cryptocurrency transactions were being miscategorized within traditional payment systems.

Previously, reports by foreign media, including The Block, highlighted that platforms like Robinhood Wallet and the social trading app Fomo facilitated the purchase of designated meme coins through Crossmint’s checkout service. Users leveraged credit cards, often integrated with Apple Pay or Google Pay, to acquire tokens such as dogwifhat (WIF). Crucially, these transactions often bypassed the rigorous, additional KYC verification typically associated with crypto purchases, and users successfully accrued standard credit card points or cashback.

The Misclassification: “Digital Media” vs. Cryptocurrency

The core of the issue lay in how these transactions were categorized. The Block’s tests revealed that when purchasing Solana meme coin WIF via Robinhood Wallet and Fomo using Visa and Mastercard credit cards through Crossmint, the transactions were tagged with Merchant Category Code (MCC) 5815, designated for “Digital Goods Media.” This is a stark contrast to the standard MCCs typically used for cryptocurrency transactions.

Because the banking system processed these as general digital goods, users were able to earn regular credit card points or cashback. Essentially, buying WIF with a credit card was, for a period, appearing to banks more like purchasing “digital content” rather than engaging in a cryptocurrency transaction.

Visa’s Directive: Reverting to Proper Classification

According to a September 19 report by Crypto In America, Visa has now instructed relevant payment providers to cease classifying these meme coin purchases as “digital media.” Instead, they are to revert to the appropriate transaction categories designated for cryptocurrency. Sources close to the matter indicate that Crossmint’s payment partner, Checkout.com, has already received this directive.

This move aligns with Visa’s own guidelines. The official Visa Merchant Data Standards Manual explicitly states that cryptocurrency purchases should typically be processed using MCC 6012 or MCC 6051, accompanied by relevant crypto or quasi-cash tags. The use of MCC 5815 for digital media is inconsistent with these established rules.

The discrepancy was also flagged by major financial institutions. JPMorgan Chase, upon reviewing one of The Block’s test transactions, determined that the classification was incorrect and that, under its credit card reward policies, points should not have been awarded. Chase subsequently escalated the matter to Visa.

Impact on Users and the Crypto Ecosystem

Robinhood Wallet’s involvement in this situation stems not from its own MCC settings, but from its reliance on Crossmint for certain credit card crypto purchase functionalities. Consequently, if Visa’s directive compels Crossmint and its payment processors to reclassify these transactions, users of Robinhood Wallet and Fomo utilizing this payment channel may no longer be able to earn points or cashback by treating meme coin purchases as general digital consumption.

It is crucial to note that this action by Visa does not equate to a ban on purchasing meme coins with credit cards. Rather, it signifies a push to ensure that such transactions are accurately classified within the traditional financial system. Visa is reportedly requiring payment providers to discontinue the use of MCC 5815 for these types of transactions, ensuring they adhere to the established rules for cryptocurrency transactions.