Visa moves to end credit card rewards loophole for meme coin purchases

Visa is moving to close an apparent loophole that allowed meme coin purchases made with Visa credit cards to be processed under a merchant code for ordinary digital media, according to a source familiar with the matter. Visa told at least one industry participant in correspondence reviewed by Crypto In America that the digital goods media code is not appropriate for meme coin purchases. Visa also informed payment processors, including Checkout.com, that the code will no longer be accepted for those transactions, the source said. The processors received a grace period to wind down the practice, and that period is expected to end next week. Meme coin purchases will continue, but they must be coded as crypto transactions and will be subject to Visa's corresponding rules and restrictions. The change follows a report by The Block that users of Robinhood Wallet and Fomo could buy meme coins with credit cards through Apple Pay or Google Pay without completing a separate KYC process. The Block's test purchases used Crossmint and both Visa and Mastercard credit cards. The purchases were coded as digital goods media, a category typically used for e-books, movies and music, which allowed customers to earn ordinary card rewards such as points or cash back. Chase told The Block that one Visa transaction had not been flagged as a cryptocurrency purchase, had been assigned the wrong merchant category code and should not have earned rewards. Chase subsequently opened a case with Visa over the classification. The New York attorney general's office told The Block that it was aware of and reviewing the matter. Crossmint defended its approach by citing a 2025 SEC staff statement that described certain meme coins as akin to collectibles rather than securities. Visa and Crossmint did not immediately respond to requests for comment. The article also said banks failed to win tighter restrictions on stablecoin rewards after the Clarity Act failed to advance in the Senate this week, while JP Morgan achieved a narrower victory in the separate credit card rewards dispute. The source described Visa's position as a message for the crypto industry to use the appropriate codes.