Summary
- Visa is addressing a loophole in Crossmint-enabled transactions that allowed meme coin purchases via credit cards to be categorized under a merchant code designated for digital media.
- This action follows a complaint from Chase, which argued that a particular Visa transaction was misclassified and inappropriately earned rewards; the New York Attorney General's office is also investigating the situation.
- Meme coin purchases will still be permitted but must now be classified as cryptocurrency transactions, adhering to Visa's regulations, with a grace period for processors expected to conclude next week.
In a recent setback for banks aiming to impose stricter regulations on stablecoin rewards, the Clarity Act did not progress in the Senate this week. However, JP Morgan has achieved a limited success in a different dispute regarding credit card rewards for crypto transactions, as reported by Crypto In America.
According to sources, Visa is working to eliminate a loophole in transactions facilitated by Crossmint, a company specializing in crypto payment solutions. This loophole allowed meme coin purchases made with Visa cards to be processed under a merchant code typically used for digital media products.
Myriad: What will be Solana’s next move? Make your prediction here.This move comes after The Block reported on a finding that users of the Robinhood Wallet and Fomo applications could buy meme coins with credit cards through Apple Pay or Google Pay without undergoing a separate Know Your Customer (KYC) verification. In test purchases conducted by The Block, which utilized both Visa and Mastercard, transactions were mistakenly categorized as “digital goods media,” a classification generally reserved for products like e-books and music, rather than as cryptocurrency transactions. This misclassification enabled customers to earn standard credit card rewards like points or cash back on their meme coin purchases.
Chase informed The Block that one of its Visa transactions was not flagged as a cryptocurrency purchase, had the wrong merchant category code, and thus should not have qualified for rewards. Following this, the bank filed a case with Visa contesting the classification. The New York Attorney General's office also confirmed to The Block that it is aware of the issue and is reviewing it.
In defense, Crossmint highlighted a 2025 statement from the SEC that likened certain meme coins to collectibles rather than securities.
However, Visa does not seem to share this view regarding payment processing.
According to communications reviewed by Crypto In America, Visa has indicated to at least one industry participant that the merchant code for digital goods media is inappropriate for transactions involving meme coins.
Visa has also communicated to payment processors, including Checkout.com, that this code will no longer apply to such transactions, with a grace period for compliance expected to end soon.
While meme coin purchases will persist, the ability to earn credit card rewards on these transactions will likely cease. Future purchases will be processed as cryptocurrency transactions and will be governed by Visa’s established guidelines and restrictions.
“The message to the crypto sector is clear: avoid clever loopholes, adhere to proper classifications, and use the correct codes,” stated the source.
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