MasterCard, Visa Holders Face Extra Fees When Buying Bitcoin
New coding rules make credit card purchases of cryptocurrency more expensive
Clients of US crypto exchange Coinbase, who want to buy Bitcoin or other cryptocurrencies by using their MasterCard or Visa credit cards, will pay significantly higher transaction fees, TechCrunch reported on Monday, quoting an e-mail the exchange had sent to its customers.
The higher fees, which could reach as much as 10% of the transaction sum, come as many of the major credit card networks have changed the Merchant Category Code (MCC) for digital currency purchases from “purchase” to “cash advance”. The reclassification allows banks and card issuers to charge additional cash advance fees.
Both MasterCard and Visa have confirmed for TechCrunch that the change in the coding of transactions involving digital coin purchases has been made some time ago. Visa has also pointed out that fees imposed to its cardholders are determined by the banks that issue the cards.
The only instant purchase of cryptocurrency presently can be done only through a credit or debit card. Another way is a bank transaction, but it takes several days to be completed, during which period the highly volatile prices of digital coins can change drastically.
Until recently, purchases of cryptocurrencies via credit card at Coinbase were charged a 4% fee, which is now rising to around 10%. In addition, the standard interest-free grace period will not apply for crypto purchases and the sum will start immediately accruing an interest, equal to as much as 25.99%.