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Wells Fargo Bans Cryptocurrency Purchases On Its Credit Cards (bloomberg.com)
An anonymous reader quotes a report from Bloomberg: Wells Fargo customers hoping to use their credit cards to buy Bitcoin will have to look elsewhere. While putting a prohibition on such cryptocurrency purchases for now, Wells Fargo "will continue to evaluate the issue as the market evolves," Shelley Miller, a spokeswoman, said in an emailed statement. Wells Fargo joins Citigroup, JPMorgan Chase and Bank of America, which limited cryptocurrency purchases on their credit cards in February, citing market volatility and credit risks. Lenders have said they're worried they'd be left on the hook if a borrower lost money on a digital currency bet and couldn't repay. A study conducted by LendEDU last year found that roughly 18 percent of Bitcoin investors used a credit card to fund the purchases. Of those, 22 percent couldn't pay off their balance after buying the digital coin.
As someone who's interested in the crypto market and believes it does gave future, I applaud this decision.
Generating debt by buying cryptocurrencies is stupid.
...gis sdrawkcab (usually not responding to ACs; don't bother posting as AC)
The #1 way to get bitcoins for cash right now is one of the many "in person" local bitcoin sales services. It's like craigslist but for purchasing bitcoins for cash. So meeting some sketchy dude in a Denny's parking lot is the preferred, most reliable method for buying bitcoins. This is why people don't respect bitcoins.
I don't want a private company telling me what I can or cannot buy with my money.
If you're using a credit card, it's not your money.
This is true, and a key thing for people to remember.
A credit card is borrowing money from someone else, and paying them at a later time with a touch extra as interest.
It's nothing more, and it's a privilege.
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most banks have quite a long list of what they won't allow you to buy. In the end it is their money not yours so they get to decide what they will or will not allow you to borrow from them to buy directly. Perfectly legal as it is their money.
Ahh, but the tulips...that's...that's where I had them. They laughed at me and made jokes but I proved beyond the shadow of a doubt and with...geometric logic...
If 22% of TV purchasers defaulted, leaving Wells Fargo to pay the bill, you bet your ass Wells Fargo would stop paying for TVs.
The problem is people think they can later resell the Bitcoins in order to pay back Wells Fargo, so they buy more than they can afford to pay back from the paycheck. When Bitcoin prices drop to half of what they were a few months earlier, people can't pay the bill. People don't buy TVs with the thought they can resell it later and thereby pay off the debt.
Didn't anyone read about the tulips?
The tulips were zero sum. For every buyer, there was a seller. For every loser there was a winner.
Cryptocurrencies are different because much of the money is drained out of the system to pay for power. It is negative sum, with more (or bigger) losers than winners.
Generating debt by buying cryptocurrencies is stupid.
More stupid than using your credit card for gambling? Why ban just cryptocurrencies and not all other forms of gambling?
Wells fargo is not alone in banning cryptocurrency purchases. BofA, Chase, Citi, Discover, CapitalOne, Lloyds, and TD already have bans on cryptocurrencies...
FWIW, I seem to remember visa and mastercard already banned charges from known gambling sites after the UIGEA passed... Also several states have laws against buying securities/stocks using credit cards.
The same laws that allow you to determine what you do with your money. It is THEIR money, they get to choose what they do with it not you. A credit card is in effect you asking them for an unsecured loan which they are well within their rights to refuse.
complete idiot thinks that blanket credit denials for an entire category of spending involves any risk assessment.
Well then I'm an idiot, because I think it's a smart decision to deny all "cryptocurency" purchases. The risk is that you're loaning money to somebody really dumb, to buy something else, really dumb, that is illegal in some places, and will probably become illegal in more places as time continues..
I don't respond to AC's.
My credit rating is 800 and all my accounts are on full monthly autopay. They are nothing more than intermediaries that take a cut from every transaction. Even aside from that, only a complete idiot thinks that blanket credit denials for an entire category of spending involves any risk assessment.
FWIW, right now the big banks are also considering a restriction and/or ban on using credit cards to purchase guns as well. Citigroup has already required all of their corporate customers that sell guns limit sales of bump-stocks and high-capacity magazines.
Also, the New York Comptroller is pushing for BofA, Chase and other banks to reclassify merchants that sell guns as high-risk merchants on par with those that sell drugs like opiods. Merchants considered high-risk have to pay significantly more to payment processors and are generally subject to tight limits on chargeback ratios leaving many to abandon accepting credit cards for purchases because of the risk that the "intermediaries" won't pay the charges that their customers will rack up...
I can already smell the scam: Get a credit card, buy cryptocurrency, tear up credit card and refuse to pay. Technically, all you have is 'tokens' that're not legal tender in any government. They are technically worthless, so they can't be seized by a court.
And even if by some twist of logic, some court did decide to rule Cryptocurrency isn't a token, but it is in fact a legal tender, or commodity, or whatever.. still, you're going to have a real tough time trying to extract cryptocurrency from any individual.
The normal collections methods are not going to affect cryptocurrencies in any way, shape or form. In REALITY, cryptocurrency coins are literally NOTHING.
But I imagine a clever criminal will find a way to mask the purchase to make this work out, anyway. So .. no solutions here, nothing more than a: Good luck with that!
Their money, Their rules. A credit card is not a guarantee of funds for anything you desire. You sign up to terms and conditions for an unsecured loan and part of those conditions are rules that determine things they will not extend credit for. Also part of those rules you agree to is they can change that list anytime they deem fit. This is status Quo for pretty much all credit cards, While I don't deal with Wells Fargo I imagine they are the same.
No, you're not paying for that money. You're promising to pay for that money at a future date. And if the bank fails to collect at the future date, the "money" wasn't exactly "paid for" was it?
Explain to me how the weird fucking language of even putting that into words doesn't give this whole ridiculous pretense away?
He who has the gold, makes the rules. This could have been one of the original commandments, but stone is expensive and carving is hard on the wrists, and Moses was going "God, everyone already knows that, or finds out real quick" and God was going "ah, I suppose so, I guess you're right."
I doubt banks really care about 'new currencies', but do care about fraud and reversed transactions.
Do you know what kind of specific percentages high risk merchants have to pay payment processors? I didn't even know it was a formal category before just now. Is there a legal reason buyer credit rating isn't used to determine eligibility when purchasing from a high risk merchant, or is it a cultural thing?
A merchant is not allowed by visa/mc to know the credit rating of the card holder. Basically a merchant is required by the visa/mc rules to take payment or deny payment on a non-discriminatory basis (in fact they aren't even supposed to ask for your id).
A payment processor is contracted by the merchant to accepts charge request from the merchant and clears them (usually by contacting the issuing bank through the visa/mc network). The bank who does know the credit rating and charge history of the card holder and presumably knows whether it should accept or reject the request based on credit limit or fraud detection metrics.
However, there's always a risk of a chargeback (the cardholder claims that the charge was fraudulent, or that they didn't get the merchandise or service they paid for), and then it gets into a dispute resolution. At some point, since the payment processor cleared the original charge with the bank and credited the merchant's account, the bank and the payment processor need to fight it out if the card holder refuses or cannot pay. Because payment processors operate on slim margins (the banks are gettting the interest payments from the card holder, the payment processors have to split the transaction fees with visa/mastercard/amex), and they have already paid-out to the merchant account they want to mitigate their chargeback risk, so instead of providing payment processing services to anyone, they rank the merchants they do business with and set their rates based on how many chargebacks they are likely to have to eat if the merchant goes belly up and can't refund the money that the payment processor advanced them and they set their merchant fees accordingly.
For "high-risk" merchants, payment providers may also have contract terms that limit payments to merchant that exceed certain chargeback percentages so the merchant doesn't get any money until the bank pays (so the payment providers don't have to waste lawyer-budget fighting with the bank and/or card holders) so the payment processor can withhold payments to the merchant. As you might suspect merchants in this situation might not want to accept too many credit cards...
Similarly with "low-risk" small-payments, payment processors have different merchant terms (e.g., you don't have to sign for small payments at a coffee shop or lunch counter, and they clear charges at a lower merchant fee rate).
Do you really think Wells Fargo's 10,000 accountants can't do basic arithmetic? Well Fargo makes money when people use their cards, then pay off the purchases, with interest. Wells Fargo WANTS people to use their cards, as much as possible. That's why they spend millions on marketing, to get people to use their cards.
If Wells Fargo doesn't want their cards uses for X, it's because they are losing money on X. This isn't a company that takes the moral high ground, ever.
Balance transfer is so they can take the profit from your previous credit card company. That's why they're often in the form of "interest free" for the first six months or whatever. They're counting on you still not paying it all off, and then they can collect interest that you would have been paying to their competitor instead. They also often have a straight fee associated with them.
If you want to take a cash advance on your card and use that to buy crypto, you could, but cash advances are not only subject to interest, but usually have an upfront fee added in as well. And are likely to have much lower limits than your regular credit limit. They might also be subject to a higher rate than normal credit purchases.
Lesson: if you want to put crypto on your card, take a cash advance. It will cost you more, but the bank can't tell what you're buying with your cash.
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