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JPMorgan, BofA Ban Cryptocurrency Transactions on Credit Cards
- swiley 9y agoCredit cards and crypto currency never really mixed well anyway. If you sell crypto currency for a credit card payment you take a huge risk because the buyer can reverse the transaction but you can't. This typically means that (for credit card payments) the markup is unreasonably high or the seller is running some kind of scam.
- fludlight 9y ago"If it's too good to be true, the seller is probably using it to launder stolen coins." This theory gets floated frequently in the various crypto subreddits.
- deleted 9y ago[deleted]
- gervase 9y agoI'm not very familiar with restrictions on credit card purchases - are there other high-risk purchases that are routinely blocked on credit cards? I understand the stated reasoning, but if this is the first such restriction (again, I don't know if it is), it's a pretty remarkable deviation relative to most credit card policies, i.e. we will happily finance whatever ridiculous decisions you choose to make. I wonder if they are seeing spiking default rates?
- pyoung 9y agoNot 100% on this, but I don't think you can use a cc to buy lotto tickets.
- legohead 9y agoDepends on the State. In Oklahoma, it wasn't allowed. In California, you can.
- dragonwriter 9y ago> Depends on the State. In Oklahoma, it wasn't allowed. In California, you can. Aside from state rules, some cards prohibit it, much like this new restriction on cryptocurrency. Also, CA is one of the states which prohibits this.
- empath75 9y agoI’m guessing a shitload of people maxed out their cards and bought coins at $20k and tried to initiate charge backs.
- saryant 9y agoPurchasing high volumes of gift cards or other cash equivalents will often get you shut down. Do this too much with Chase and you'll end up blacklisted.
- pvg 9y agoReally? They're sold in volume for people to use in rewards and promotions programs, I'm assuming this doesn't involve showing up at the gift card mill with a chest of doubloons. How does that work?
- solotronics 9y agoits because of fraud. with crypto once you have the coin there is no equivalent of a chargeback. if you use a stolen credit card to buy something you have to have somewhere to ship it, therefore they can find the thief. with cryptocurrencies they just have to take a loss and open a new card. this is why credit/debit cards security model is absolute shit and should be illegal.
- TheSpiceIsLife 9y agoI don't understand how: > if you use a stolen credit card to buy something you have to have somewhere to ship it, therefore they can find the thief. with cryptocurrencies they just have to take a loss and open a new card. Necessarily results in: > credit/debit cards security model is absolute shit and should be illegal. Can you describe a comprehensive alternative that would, at least in theory, be better. As an analogy: if I come in to your house and steal your gold bullion while you're not looking, leaving little trace of my presence, does that mean the security model of houses is absolute shit and should be illegal?
- iaw 9y agoNope, but it does mean that your insurer will not be covering you for your lost gold bullion because there are limitations in place. The option for the credit card issuers is to: a) stop offering chargebacks for crypto purchases b) stop allowing crypto purchases They opted for 'b' because it's easier.
- pjc50 9y agoa) is illegal in most jurisdictions because of the way credit law works; the card companies can't collect on a debt to them for a product or service that wasn't delivered. (I suppose they could eat the cost themselves, but I can't see that happening)
- ceejayoz 9y agoGambling often has restrictions - it may be forbidden entirely, or processed as a "cash advance". Porn sites have a really hard time finding payment processors, due to the high rates of chargebacks.
- dragonwriter 9y ago> I'm not very familiar with restrictions on credit card purchases - are there other high-risk purchases that are routinely blocked on credit cards? Yes; some examples: https://www.bankrate.com/finance/credit-cards/naughty-things-credit-card-wont-buy-1.aspx https://www.bankrate.com/finance/credit-cards/naughty-things...
- pjc50 9y ago> other high-risk purchases that are routinely blocked on credit cards Normally the blocking is applied to merchants, rather than visible to the customers, but yes. Ironically this kind of thing used to be cited as a reason for bitcoin adoption.
- solotronics 9y agothe entire model of credit cards is so rife with fraud that they don't want to handle cryto purchases. sad.
- mulmen 9y agoThis seems like more of a condemnation of cryptocurrency than credit cards.
- solotronics 9y agoreally? you can't rely on others good will, your money should be cryptographically secure and require you to send it instead of anyone with a number being able to pull your money. its like having an API with no login or password on it. I totally agree with your previous comments on the EFF and peoples right to privacy and secure data. Shouldn't this extend to their money as well?
- mulmen 9y agoI'm only commenting on the context here. Your comment seemed to suggest that this decision was made due to the amount of fraud in the credit card industry. I don't think the article supports that position. I do think this article makes some good points about the current dangers of the cryptocurrency market, especially for credit card operators. To answer your question: Yes, I do think people deserve privacy and security in their personal finances. I'm not convinced that cryptocurrencies provide this. My reservations come mostly from the apparent (and I believe historically obvious) instability of an unregulated financial market.
- PeterisP 9y agoIf you can't rely on others' goodwill, then for any purchases you need a solid mechanism to ensure that you can reverse the transaction if you get cheated. Credit cards provide such a system, pure cryptocurrencies ("code is law") do not - for that you need at least a cryptocurrency plus a trusted escrow system, and even that doesn't give you equivalent protection since non-escrow payments are still possible, allowing you to lose your money if hacked. Credit cards isn't a system where "anyone with a number being able to pull your money" - merchants can ask for that money, but they're not certain to get it, you can veto that transaction, you'll get it reversed (with legal guarantees) if its fraudulent, and you can get it reversed if you were sold goods that aren't what you were promised. Not so with crypto, where once you send it to someone for whatever technical reason (including a compromised number) it's gone.
- iMuzz 9y agoAh, this is too bad. I successfully churned about 60K credit card points at the end of last year. (Buy $X + fees and sell when it covered the fees/principal)
- matt_wulfeck 9y agoSounds like an enormous risk to take on for credit card points.
- gruez 9y ago...unless you have some bitcoins already lying around. in which case you could simultaneously buy and sell at the same time, reducing your risk to almost 0.
- JumpCrisscross 9y ago> reducing your risk to almost 0 You have 100 Bitcoins. You buy 100 Bitcoins at $1,000 each on credit. You now have $200,000 of Bitcoins and $100,000 of debt. Bitcoin crashes 60% ($19k to $7.6k is a sixty percent crash). You now have $80,000 of Bitcoins and $100,000 of debt. You are insolvent. If you’re talking about buying and selling from yourself to milk points, that’s fraud.
- gruez 9y agoI don't mean buying those on margin. I meant if you already had some lying around. maybe you mined some back in 2010, maybe you already intended to hold some long term. >If you’re talking about buying and selling from yourself to milk points, that’s fraud. i'm not sure how that's fraud anymore than you buying goods with your credit card and immediately selling them to rack up rewards.
- ceejayoz 9y agoWhy? Buy Bitcoin on credit. Sell immediately. Deposit to bank account. Pay credit card bill. Repeat.
- pstrateman 9y agoThis has pretty much always been the case. The only difference here is that they're explicitly saying it's banned.
- Klathmon 9y agoI don't blame them in the slightest for this. The "immutable" (for lack of a better term) nature of many cryptocurrencies means that any purchases made on credit can't be easily taken back. And I'm pretty sure it's always been "technically not allowed" to buy another currency with credit cards (or it's technically allowed, but treated as a "cash advance")
- gruez 9y ago>And I'm pretty sure it's always been "technically not allowed" to buy another currency with credit cards. but you could always buy gold/silver and other extremely liquid and fungible goods, which is as good as money.
- deleted 9y ago[deleted]
- swiley 9y agoAs good as money is a bit of a stretch.
- Klathmon 9y agoYes, but if the act of buying any of those on a credit card became common enough that they started seeing the problems from them, I guarantee that they would be banned as well. They can't whitelist what you can buy with a credit card, so instead they blacklist things when they become big enough to matter.
- pjc50 9y ago.. subject to the usual processes, which require either a mailing address, an in-person transaction, or extended verification.
- hkmurakami 9y agoDidn't the SEC / IRS rule that crytocurrencies are an asset rather than a currency though?
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- croddin 9y agoMakes sense to me. You can't buy many cash equivalents with credit card and can't usually get cash advances from a credit card, so this is just correctly implementing that policy. Can you buy stock with a credit card?
- aianus 9y agoI've never had a credit card that didn't let me take out cash (at 20% APR of course).
- freeduck 9y agoFirst they ignore you, then they laugh at you, then they fight you, then you win. Mahatma Gandhi
- ceejayoz 9y agoThat works a bit better when your opponent is a failing empire that just finished fighting two World Wars and is now facing an insurrection by 400 million people in a land several weeks away by most viable transport methods. Believe it or not, many ignored/laughed-at people, movements, etc. throughout history wound up not winning.
- acct1771 9y agoI didn't realize you weren't talking about the US until the second block.
- exogen 9y ago"anything that gets banned must be righteous" (you know, like scamming people)
- dang 9y agoPlease don't post snarky dismissals here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- dang 9y agoPlease don't post unsubstantive comments here. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- chrisco255 9y agoThis is highly amusing to me. IRS rules that crypto currencies are not, in fact, currency, but commodities and treated like property for taxation purposes. A couple of banks are now saying, "we won't let you purchase said commodities with credit cards". It's an arbitrary restriction. It goes to show you just how much control large centralized banks have over our purchasing decisions...which, to me, just reinforces the need for decentralized financial technology. A lot of folks on here are proponents of net neutrality. I think banking should be neutral, too.
- dmitrygr 9y agoProtecting people from themselves is a USA tradition. Ask the SEC. I assure you once bitcoin trading has the protections that SEC adds to stocks, JPMorgan & BofA will once again allow credit card purchases of them.
- spookthesunset 9y ago> Protecting people from themselves is a USA tradition. Um.... they aren't protecting people from themselves. The bank is are protecting themselves from their customers -- both from fraud the bank becomes liable for and god knows what legal regulations. BofA doesn't give a fuck about you, they are doing this to cover their own ass.
- jhwang5 9y agoWho knows? Maybe they were losing money to frauds / chargeback claims that haven't been plublicized.
- EpiphanyMachine 9y agoThey are not blocking purchasing of these from all accounts, just credit accounts. You can still purchase via ACH and debit. What they are doing is not allowing you to use their money to buy: >The move doesn’t affect debit cards, according to Betty Riess, a spokeswoman for the Charlotte, North Carolina-based lender. >Allowing purchases of cryptocurrencies can create big headaches for card lenders, which can be left on the hook if a borrower bets wrong and can’t repay. There’s also the risk that thieves will abuse cards that were purloined or based on stolen identities, turning them into crypto hoards. Banks also are required by regulators to monitor customer transactions for signs of money laundering -- which isn’t as easy once dollars are converted into digital coins.
- koolba 9y agoThe news for me was that until now they were allowing these transactions.
- tptacek 9y agoWell. Surely, this is what cryptocurrencies are for: to route around the evil monopoly banks. One assumes the way that cryptocurrency exchanges handle this will reveal once and for all the true utility of cryptocurrency in the modern economy.
- adamnemecek 9y agoHow about go fuck yourself, this train isn't stopping. God, I hope they burn.
- jhwang5 9y agoCool story
- dang 9y agoI appreciate the many wonderful story submissions you've made to Hacker News over the years, but if you continue to break the rules in comments here, we're going to end up banning you. It wouldn't be fair to other users otherwise. So could you please (re-)read https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and post civilly and substantively, or not at all, from now on? Just like every HN user needs to.
- fady 9y agoI think they know some will make 15-20% on their transaction thus being able to pay off debt faster. If they ban crypto tranactions, they keep things as is. Why do they care where you spend your money? If they allow one to buy some collectables on ebay that will generate no value, then they should not care about crypto, especially since long term investments see great returns. Think about it. Wide adoption at the end of 2017, bit licenses, crypto-funds, etc etc. Look at the data. It does not lie. It's a good investment and they see some consumers using this as tool to reduce their debt faster. Again, buying some plastic toys on ebay is ok, but crpyto is bad? It's bs. They want $.
- wozer 9y agoWell, nobody should get into debt to buy crypto. But I'm not sure what the motives are here. I'm pretty sure banks like it when their customers get into debt?
- maxerickson 9y agoA credit line is pretty much just a loan. They price the credit line (set the interest rate) based on some level of expected risk. If they believe an activity will cost them more in bad loans (and whatever else) than they will earn in interest, they will adjust the terms of the loan to forbid that activity.
- mulmen 9y agoI think banks like it more when customers pay their debts.
- dogma1138 9y agoDon’t most large exchanges disallow credit cards anyhow?
- nodesocket 9y agoHeads up. I recently added funds into Coinbase using their instant debit card option via a Chase checking account debit card. Lord behold a few days later I had a $5.00 cash advance fee in my checking account. I called Chase and they reversed the fee, but they suggested that I contact Coinbase because indeed they are not doing a debit card debit, but a cash advance. Moral of the story, stay away from Coinbase if you can avoid them.
- sangnoir 9y agoThe payment provider Coinbase uses to transfer to/from US bank accounts (Plaid) asks for your online banking credentials and scrapes your data (income, historical balance data and more) for resale[1]. 1. see "Products" on https://plaid.com https://plaid.com
- kjullien 9y agoJPMorgan timeline : 1. "Bitcoin is used only for fraud and by criminals" 2. JPMorgan proved to be money laundering. 3. "Bitcoin is actually not all that bad... We are going to look into it." 4. JPMorgan "bans" cryptocurrencies.