Visa Moves to Close Meme Coin Credit Card Rewards Loophole

In brief

• Visa is moving to close a loophole in Crossmint-powered checkouts that let meme coin purchases made with credit cards be processed under a merchant code meant for digital media.
• The move follows a challenge from Chase, which said one Visa transaction was misclassified and shouldn't have earned rewards; the New York AG's office is also reviewing the matter.
• Meme coin purchases will continue but must be coded as crypto transactions, subject to Visa's rules; processors have a grace period expected to end next week.

Banks came away empty-handed in their bid for tighter restrictions on stablecoin rewards after the Clarity Act failed to advance in the Senate this week. But JP Morgan has scored a narrower victory in a separate fight over credit card rewards on crypto purchases, Crypto In America has learned.

Visa is moving to close an apparent loophole in checkouts powered by Crossmint, a crypto payments infrastructure firm, according to a source familiar with the matter. The workaround allowed meme coin purchases made with Visa credit cards to be processed under a merchant code intended for ordinary digital media.

The move comes after The Block published an investigation finding that users of the Robinhood Wallet and Fomo apps could purchase meme coins with credit cards through Apple Pay or Google Pay without completing a separate KYC process. The Block’s test purchases, powered by Crossmint and made with both Visa and Mastercard credit cards, were coded as “digital goods media,” a category typically used for e-books, movies and music, rather than as crypto transactions. That allowed customers to earn ordinary credit card rewards such as points or cash back on the meme coin purchases.