Five Major Credit Cards Are Now Blocking Cryptocurrency Purchases (cnbc.com)

An anonymous reader quotes CNBC: J.P. Morgan Chase, Bank of America and Citigroup said Friday they are no longer allowing customers to buy cryptocurrencies using credit cards. "At this time, we are not processing cryptocurrency purchases using credit cards, due to the volatility and risk involved," a J.P. Morgan Chase spokesperson said in a statement to CNBC. "We will review the issue as the market evolves."

A Bank of America spokesperson also said in an email that the bank has decided to decline credit card purchases of cryptocurrencies. Citigroup said in a statement that it has "made the decision to no longer permit credit card purchases of cryptocurrency. We will continue to review our policy as this market evolves." Earlier in January, Capital One Financial said it has decided to ban cryptocurrency purchases with its cards. Discover Financial Services has effectively prohibited cryptocurrency purchases with its credit cards since 2015.

Comments

Chargebacks

[Anonymous Coward]

They are probably worried about chargebacks. Both for legitimate cases where the consumer got ripped off, and for cases where a stolen card is used to buy crypto. If the CC banks can't stick it to the vendor, they have to eat the loss to stay on the right side of their promises and consumer protection laws. And in this case, they must have seen enough abuse to decide to shut down that vector.

Nothing is actually better than the current model

[Presence Eternal]

I recently made a purchase from a place that offered a bitcoin discount. I said "Ah hah, I'll be clever." and bought some on coinbase with my credit card to make the purchase.

Holy hell did I ever get shafted up the ass with fees. Ten bucks for buying a "cash equivalent", two bucks for "foreign transaction", five bucks to buy the bitcoin on coinbase, and another five bucks to send the coin with coinbase. The discount was big enough to eat most the fees, but I still lost out. Lesson learned I guess.

You're giving bitcoin too much credit

[rsilvergun]

the major banks could easily take it over. Hell, there's tons of evidence that the price has been heavily manipulated by the various exchanges, and they have a fraction of the power of a bank. They're not afraid, they don't want to deal with the risk of disputed transactions (especially in jurisdictions where disputes are tightly regulated).

The best antidote to banks controlling a cashless future is government regulation. Somebody has to be in charge of the money supply or it'll become unstable and wreck the economy. But giving somebody that power inevitably results in a strong concentrations of power. The only effective counter balance to that is Democracy. This is one of the reasons the left has been pushing for mandatory (and anonymous) voting. It really is a civic duty at that point.

What this is really about

[rockmuelle]

This is not about volitility or any other type of consumer protection. This is about protecting their points programs.

Basically, people were buying crypto coins on their credit cards, getting the points for the purchase, then immediately selling the coins and paying off the card. The points more than made up for the transaction costs.

Since all these cards were being paid off before any interest accrued, the credit card companies were losing a lot of money on the transactions in the form of reward payouts.

The CC firms will never admit this publicly, but given the number of people I knew who were doing this, I’d bet this is the real reason they’ll disallowing the purchases.