Credit Card Companies Now Charge You Fees for Purchasing Cryptocurrencies
To say that is an unexpected move is not accurate. The fact that credit card companies will now charge individuals for buying crypto assets means that card issuers will finally treat such activities as money advances.
On 1 February 2018, Coinbase, the most popular cryptocurrency exchange currently operating, sent an e-mail to its users, notifying them that fees would now apply for these transactions. Higher interest rates would also apply, the announcement stated.
However, it has not been confirmed which companies will participate in the move. Investopedia, a respected provider of financial tools and encyclopaedia of financial knowledge, spoke to a MasterCard representative.
In an e-mail exchange, the person mentioned “consistent view of […]purchases for both merchants and issuers.”
Investopedia reached out to other companies, including Visa. Visa denied having anything to do with this, according to the information revealed by the website. Indeed, the company argued that “it would be up to an issuer” to introduce such fees whereas Visa, a spokesperson said quoted by Investopedia, was not into that business.
Meanwhile, Coinbase explained that all purchases will be charged and a new MCC code for digital currency will apply. However, Coinbase reminded that none of the proceedings are gathered by the company itself.
In case you are wondering what MCCs codes are, they are short for merchant category codes and they help companies distinguish between types of vendors. To put things in perspective, credit card issuers will charge you more money if you are doing cash advances. And if the interest rates are above normal, similar rules will apply.
The more pressing question as of this moment remains why card issuers would consider to do so? There are several good reasons for that to be the case. With the downswing of the Bitcoin market, some companies may be expecting a series of defaults, which is driving them towards treating cryptocurrencies not as a speculative tool, but rather a hard asset from which benefits can be drawn. Before it’s too late it seems.
Another worrying trend is that people are actually mortgaging their real estate, even homes, to buy bitcoin are disconcerting to say the least. We have reported on the topic here and we are rather petrified by the implications.
Meanwhile, from the standpoint of credit card issuers, it actually makes sense. But also, charging people who are readily indulging into bitcoin without having collated sufficient information may actually save a few lives from financial ruin.
Hopefully, by introducing more fees to an asset that is already rather volatile, people would be less endorsing of splurging money so readily into something so ephemeral.
This opens another interesting question and if coin exchanges should adopt more payment methods that are on the lines of traditional. Naturally, such exchanges are quite neatly open for people to snap up crypto assets. However, buying through debit or credit cards, especially in the West could take days to clear, which is against the grain of the impatient lot that are crypto investors.
It is not exactly the latest news in the world of cryptocurrencies, but it is well worth noticing that there have been quite a few developments in the recent past that may influence the future of crypto assets, for better or for worse
Curious into purchasing crypto assets? You can always swing by an ICO! However, you will do well to remember that those are highly-speculative asset-acquisition strategies that could turn ill more often than not.
Watch out though, unlike Initial Public Offerings (IPOs), you are not guaranteed any benefit from purchasing the digital assets of a company that has decided to launch its own ICO. The world of cryptocurrencies can eventually lead to top dollar, but you will be ill-advised to give up everything and chase the proverbial crypto token in the bush. Turns out home ownership may just be better.