Visa Closes Meme Coin Loophole, Ends Credit Card Rewards

Visa has announced that it will close a loophole in its checkout process used by Crossmint, a crypto payments infrastructure firm. This move comes after an investigation by The Block found that users of the Robinhood Wallet and Fomo apps could purchase meme coins with credit cards through Apple Pay or Google Pay without completing a separate KYC process.

The workaround allowed customers to earn ordinary credit card rewards such as points or cash back on meme coin purchases. However, Visa has informed payment processors that the merchant code used for digital goods media is not appropriate for meme coin purchases and will no longer be accepted for those transactions.

According to a source familiar with the matter, Visa has given payment processors a grace period to wind down the practice, which is expected to end next week. This move is seen as a victory for banks, who had been trying to tighten restrictions on stablecoin rewards through the Clarity Act, although that failed to advance in the Senate this week.