Visa to Clamp Down on Memecoin Rewards Classification

Visa is introducing changes to its transaction classification system, which will affect how credit card points and cashback rewards are earned on memecoin purchases. According to a report by Crypto in America, Visa plans to stop payment processors from representing these transactions as digital media sales. This move aims to close a loophole that allowed users to earn standard shopping points or cashback on certain memecoin purchases made with credit cards.

The current classification system uses the MCC 5815 code for products like movies and audiobooks, but this doesn't necessarily mean the transaction is economically a digital media purchase. Visa plans to end the grace period granted to payment processors next week, after which transactions will be processed as standard crypto transactions subject to Visa's restrictions.

Crossmint, an infrastructure provider for credit card-based memecoin purchases on Fomo and Robinhood Wallet applications, argued that some memecoins could resemble collectibles under the SEC's approach. However, payment experts noted that SEC assessments do not determine transaction codes used by card networks. It is unclear whether Mastercard has issued a similar instruction to payment processors.