Visa Moves to Shut Down Meme Coin Credit Card Loophole

Visa and major U.S. financial institutions are tightening compliance controls over Web3 payment integrations. The move targets a transaction-coding workaround that allowed consumers to purchase speculative meme coins with credit cards under the guise of digital media.

Every transaction processed through major payment networks like Visa and Mastercard is categorized by a four-digit Merchant Category Code, or MCC, defined under the international ISO 18245 standard. The code tells the card-issuing bank what type of business is receiving the funds.

An investigation previously found that users of the Robinhood Wallet and Fomo applications could purchase meme coins through Apple Pay or Google Pay with Visa and Mastercard credit cards. Because Crossmint managed the checkouts, those purchases were routed under MCC 5815, designated for “Digital Goods: Media.” Crossmint is a cryptocurrency infrastructure provider.

Using the wrong merchant classification allowed the transaction flow to bypass traditional bank restrictions on credit card-funded cryptocurrency purchases. Buyers could also accrue standard credit card rewards and avoid costly cash advance fees.

Under standard financial rules, cryptocurrency purchases are supposed to use specific financial services codes, including MCC 6051, “Non-Financial Institutions – Foreign Currency, Money Orders, and Account Funding,” or MCC 6211, “Securities Brokers and Dealers.” When transactions are flagged under those crypto-related codes, major credit card issuers—including JPMorgan Chase, Citigroup, and Capital One—typically block them or process them as cash advances.

Cash advances carry immediate interest charges and do not receive the standard interest-free grace period for retail purchases. They can also incur flat processing fees of up to 5% and are strictly excluded from earning loyalty points or cash-back rewards.

The misclassification gave buyers two advantages: they could purchase digital assets without undergoing separate Know-Your-Customer (KYC) identity verification processes, while also earning retail credit card rewards on highly liquid digital assets.

The practice was disrupted after JPMorgan Chase flagged a Visa transaction processed through the pipeline. Chase determined that the transaction had received an incorrect merchant code, failed to trigger the bank’s internal cryptocurrency filters, and improperly awarded rewards points. The bank subsequently filed a formal dispute with Visa challenging the transaction’s classification.

The New York Attorney General’s office is also reviewing the payment processing workaround. The office has repeatedly targeted cryptocurrency firms for compliance failures and unregistered offerings under the state’s Martin Act.

Crossmint defended its routing methodology by pointing to a 2025 SEC staff statement. That statement characterized certain meme coins as sharing structural similarities with digital collectibles rather than traditional financial securities. Crossmint argued that the coding was appropriate because collectibles are routinely categorized as digital goods.

Visa has rejected that interpretation. In private correspondence sent to industry participants, the payment network clarified that the digital media merchant code is not acceptable for transactions involving meme coins. Visa has instructed major payment intermediaries, including London-based processor Checkout.com, to stop processing those transactions under the digital goods category.

Processors have received a brief grace period to adjust their routing software, and that period is expected to conclude next week. After it expires, meme coin purchases made through these integrations must use standard cryptocurrency MCCs, subjecting them to standard card issuer restrictions, cash advance fees, and reward exclusions.

The policy enforcement comes amid ongoing friction between the traditional banking sector and decentralized finance platforms. Commercial banks recently lobbied to insert strict limitations on stablecoin rewards programs into the Clarity for Payment Stablecoins Act, a bill that ultimately stalled in the Senate. Financial institutions are increasingly using payment network rules and card brand standards to enforce compliance boundaries outside of the legislative process.