The price of buying Bitcoin just went up! If you use your credit cards to buy cryptocurrency on Coinbase (or any other exchange) expect to pay at least 10% more in fees.
Using credit cards to buy cryptocurrency is over
Both Mastercard and Visa have decided in the past week to change the way cryptocurrency purchases are processed.
Most of us who use cryptocurrency exchanges pay with either a credit or debit card for which we are charged the standard 4% credit card transaction fee.
From now on though when doing business on Coinbase or whatever exchange you may use be prepared to pay a 5% fee to your credit card merchant as well as the 4% service fee to the exchange.
Transactions to purchase Bitcoin and all other cryptocurrency are now considered cash advances and therefore subject to the ‘varying fees’ that come with that.
Adding insult to injury cash advance transactions are also subject to interest from the moment your purchase goes through and these interest charges are higher than those for purchases, as high as 25.99 in one reported case.
This means that charges applied to any cryptocurrency purchase using your major credit card will equal 10% plus interest. Not many investors are willing to take a 10% hit on the initial investment.
The alternative of using Bank account transfers which can take up to a week in order to buy your cryptocurrency is not a viable option for most investors when the market can fluctuate so greatly in a day.
So is cryptocurrency money or what?
Coinbase informed investors in a bulk email about the change in charges “the MCC code for digital currency purchases was changed by a number of the major credit card networks”.
“Over the past few weeks, we have clarified to acquirers — or the merchant’s bank — the right transaction or merchant category code to use for these type of transactions (cryptocurrency purchases). This provides a consistent view of such purchases for both merchants and issuers.”
Said a Mastercard representative.
The IRS (another institution with a lot to lose in the Crypto-future) has been fervent about labeling cryptocurrency as taxable property, not currency. So is it cash, or property or what?
It’s actually pretty transparent what is happening. Credit card companies are trying to make it slower, harder and more expensive to invest in cryptocurrency. It could be a case of the money loaners trying to put the brakes on what they see as the eventual downfall of their racket or at least a way to squeeze out what they can of a dying industry.