Visa Cracks Down on Robinhood's Memecoin Loophole

Visa's rules for crypto purchases on credit cards require merchants to use specific codes, but Robinhood Wallet has found a loophole. The company allows users to buy memecoins like Dogwifhat (WIF) directly with Visa, Mastercard, or Apple Pay without undergoing a separate Know Your Customer (KYC) check.

Crossmint processes the transaction as 'digital goods' instead of crypto, allowing users to earn credit card rewards. However, this practice may be in violation of Visa's rules, which require merchants to use codes 6012 or 6051 for crypto purchases and carry a quasi-cash flag that strips reward points.

Chase Bank has taken issue with the practice, stating that the correct code was not used and is now disputing the rewards earned by one of its customers. The case has been escalated to Visa, which can choose to recode the merchant, warn it, fine it, or claw back fees, all of which would kill the rewards.