Cryptocurrency Exchange Coinbase Warns Users Of Cash Advance Fees Due To MCC Changes

Cryptocurrency exchange Coinbase has sent out an e-mail to users with a credit card on file warning them that Coinbase transactions might code as a cash advance. This is due to the fact that major credit card networks have recently reclassified the MCC code for digital currency purchases to code as a cash advance. Capital One has been flat out declining all cryptocurrency purchases as of late. Bank of America & Chase were also both looking at making changes to their policies as well. I don’t think buying cryptocurrency with a credit card was ever a good idea due to volatility and high fees (3%+), but now it’s even worse of an idea.
    William Charles
  • On February 3, 2018, 09:00

View Comments (18)

  • Any updates on this thread - are there any CCs that do not charge fees on these transactions?

  • Also be aware that banks charged foreign transaction fee when cc is used to buy in coinbase last year

  • Do you know which cards code Coinbase as a cash advance? I’ve been using a Citi AA card to buy crypto and hit the minimum spend.

  • Tough break for MS, but crypto is a bubble and banks don’t want to inherit the bust through credit debt. It needs to go away until its no longer called a currency... which is its least useful function anymore. People have no idea what they’re buying. It’s pump and dump penny stocks for millenial generation.

  • DOC, can you check on the legality of charging cash advances for crypto even though they are considered property in the US and it should not be considered a quasi-cash transaction?

    Though it seems Chase, BofA, and Citi now disallow crypto purchases altogether anyways with credit cards and this cash advance rule is now overruled by not allowing the purchases at all. Haven't tried anymore with my Citi Access More card since I kept getting denied anyways...thanks for the advice of seeing cash advance limits to 0 for all my cards. Goodbye negative cost lots and lots of Thank You points :(

    • It has to do with how the merchant, merchant's payment processor or bank, or payment network codes transactions from the merchant (and how merchant describes its business transactions). I thought Coinbase is like a money transfer agent firm? If so, it should code 6050: Quasi Cash-Merchant; NonFinancial Institutions.

    • I'd say that Chase, BofA and Citi's army of attorneys and lawyers are better handled to answer this question than I am.

  • I'm gonna miss the 3x points with the Citi Access More credit card buying cryptos. RIP sweet prince.

  • IMO this is honestly great news for the crypto market. There is no reason to use a CC to buy crypto if you actually have the money to risk in the market. Those buying with credit are going to have extremely weak hands and sell at the first sign of a dip, thus contributing to the continual huge dips.

    • If you can use credit card to fund a FOREX account or to buy gold, silver, and platinum, and count as a purchase, then you should be able with crypto?

    • The reason was not having to wait 7 days to be able to move your currency if you bought with a debit / credit card, of which it made more sense to use credit card as the fee is the same for either option but you wouldn't get any cashback / points using a debit card. Now the only option is to use bank transfer and pay 1.5% fee anyway and have to wait a week to be able to do anything with your purchase which is terrible.

  • Missing a P in the title.

    This virtually kills CC currency buys, with this and Robinhoods announcement they must be under tremendous pressure to find new income streams.

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