Visa Tightens Memecoin Payment Rules After The Block’s Crossmint Investigation 

Crossmint defends its practices as Visa moves to restrict digital media classifications for memecoin purchases.

Visa is reportedly moving to close a payment loophole that allows some memecoin buyers to earn credit card rewards. The card network has told processors to stop using a digital media category for these purchases, according to Crypto in America. The reported change comes after The Block examined Crossmint’s handling of memecoin transactions on Fomo and Robinhood Wallet. 

Visa Orders Payment Processors to Reclassify Memecoin Purchases

Visa is moving to restrict payment processors from using a digital-media merchant category for memecoin purchases, according to a report from Crypto in America. The classification allowed some users to buy memecoins with credit cards while receiving ordinary points or cash-back rewards.

The card service has reportedly told payment processors that merchant category code 5815 is no longer appropriate for memecoin transactions. The code is generally used for digital media purchases, such as streaming content, movies, and audiobooks.

Crypto in America reported that Visa has granted affected processors a grace period expected to end next week. After that period, memecoin purchases will have to be processed as standard cryptocurrency transactions and face Visa’s existing restrictions on such payments.

The move follows The Block’s Sept. 1 investigation into Crossmint, which processes memecoin purchases for Fomo and Robinhood Wallet through its Token Checkout product.  Its review found that memecoin purchases were being processed under MCC 5815, with no transaction indicators indicating that the payments involved crypto assets. 

As a result, some credit card users received standard rewards that generally do not apply to cryptocurrency transactions.

GENIUS and DEGEN Removed From Crossmint Checkout 

Crossmint has defended its classification approach. A spokesperson said the company remains in good standing with Visa, Mastercard, and its payment partners. Crossmint also said its procedures for processing digital goods have not changed, adding that it would update them if network guidance changes.

The firm previously argued that its treatment of memecoins was consistent with SEC guidance describing certain memecoins as similar to collectibles. Payments experts told The Block that securities guidance does not typically determine how card networks classify transactions.

In addition, the Block found that some tokens offered through Crossmint appeared to fall outside its own memecoin criteria. GENIUS, the native token of Genius Terminal, and DEGEN were later made unavailable through Crossmint’s Apple Pay checkout after The Block questioned their classification.

Mastercard has not publicly said whether it issued similar instructions to payment processors. Mastercard and Checkout.com also had not responded to The Block’s requests for comment at publication time.