Coinbase, a major US and global cryptocurrency exchange, has warned its clients that their credit card issuer is now charging them extra fees for purchasing cryptocurrencies with credit cards. Or at least the issuers that still allow this, that is.
In an e-mail sent by Coinbase to its customers on February 1, quoted by CCN, the exchange explains that a recent change in the MCC code for digital currency purchases may lead to an increase in the fees, by collecting “cash advance” fees. A cash equivalence fee is an immediate charge to a credit card that acts as proof of purchase of another secure financial instrument, such as foreign currency, travallers cheques, lottery tickets and now cryptocurrencies, as well.
Those fees, however, are not collected by Coinbase and the exchange says it does not know how much they can be. The platform advises its clients to switch to buying cryptocurrencies with a debit card, instead.
The news of the additional fee comes against the background of the decisions of major US and UK banks and financial services providers to stop their credit card holders from buying cryptocurrencies with a credit card issued by them.
A Merchant Category Code (MCC Code) is a four-digit designation of the type of services and/or goods a business provides and is used for retail financial services. In the US the MCC Code can also be used to determine whether a payment needs to be reported to the Internal Revenue Service for tax purposes. The MCC Code is assigned to a company by the respective card issuer once the company starts accepting payments with credit cards.
Coinbase is a major New York-regulated cryptocurrency exchange that offers its services in 32 countries across the world. A major convenience in using Coinbase is indeed the possibility to buy cryptocurrencies almost instantly with a credit or debit card.