Visa Takes Steps to Close Credit Card Rewards Loophole for Meme Coins

Visa Takes Action on Meme Coin Transactions

Visa is moving to close a loophole that allowed purchases of meme coins using credit cards to be misclassified under a merchant code meant for digital media products. This decision follows a complaint from Chase, which flagged a transaction that improperly earned rewards due to its misclassification. The New York Attorney General's office is also investigating the matter.

The changes will require meme coin purchases to be categorized explicitly as cryptocurrency transactions, aligning with Visa's regulations. A grace period for payment processors to comply is expected to end next week, after which the ability to earn credit card rewards on these transactions will be curtailed.

Reports indicate that this loophole was exploited through transactions facilitated by Crossmint, a crypto payment solutions provider. Users of applications like Robinhood Wallet and Fomo were able to buy meme coins with credit cards via Apple Pay or Google Pay without going through the standard Know Your Customer (KYC) checks. Test purchases revealed that these transactions were incorrectly labeled as “digital goods media,” which allowed users to accrue rewards typically associated with purchases of items like e-books or music.

Chase's concerns were substantiated when it found that one of its Visa transactions was incorrectly categorized, leading the bank to contest the classification with Visa. The New York Attorney General's office has acknowledged the issue and is currently reviewing it.

In response, Crossmint referred to a 2025 SEC statement that categorized certain meme coins as collectibles rather than securities. However, Visa has indicated that it does not consider this classification suitable for payment processing. The company has communicated to payment processors, including Checkout.com, that the merchant code for digital goods media will no longer apply to meme coin transactions.

As a result, while purchases of meme coins will continue, they will be processed under stricter cryptocurrency guidelines, eliminating the previous rewards structure associated with these transactions. A source stated, “The message to the crypto sector is clear: avoid clever loopholes, adhere to proper classifications, and use the correct codes.”