Coinbase admits of overcharging- blames VISA for the glitch
Feb 17, 2018 Posted / 3300 Views
Coinbase since last few months is facing a great number of technical issues which seem to have risen with time. However, the Coinbase have reported that the latest one is not their fault.
Earlier today, there were posts flooding in social media and Reddit that Coinbase is charging their customers enormously on their credit cards and debit cards. Many users reported that they were double charged for their past transactions and some reported being charged as excessive as 17 times, while others saying they were hit with 50 duplicate charges.
Notably, many users freaked out as they saw the fees being maximised multiple times with overdraws on the banks and max outs on the credit cards. However, it is still unclear what was the matter behind it, Coinbase has come out and confirmed that account holders were overcharged and clarified as to what had happened.
Coinbase says that the issue resulted out of the credit card processing rails and Visa was to be blamed for the matter. It seems like that Visa was reversing and recharging for the past transactions as there was still anonymity as to whether they can classify Coinbase transactions as "Cash advances".
Last week many banks and credit card issuers altered the Merchant Category code for Coinbase, which means that all transactions would now be classified as cash advances, and it specifically proposed that your bank charges a higher fee. It is noteworthy, that any fee hikes will not go to Coinbase and will likely lead to a decline in users purchasing cryptocurrency with their credit cards.
The Coinbase users were expecting that the charges would be applied to the future transactions and Visa charged the network without any prior warning. The transactions between the period of January 22 and February 11 were reversed and recharged as the new classification was adopted. However, all the transactions were refunded at the equivalent time they were recharged, which means the user should not have found about the matter. But as the Banking payment rarely provides instantaneous payments, it reflected in the statements.
However, Coinbase issued this statement to the users some hours back.
We’ve reached out to Visa for comment and will update this post when we hear back. Coinbase gave TechCrunch the below statement:
“Based on an internal investigation into the issue, we determined the credit and debit card charges were a result of Visa reversing and recharging transactions. We are working closely with Visa to ensure affected customers are being refunded as soon as possible, as well as notifying all customers that made transaction during the past few weeks that they might be impacted.
The issue stemmed from a recent decision by large banks and card issuers that card networks change the Merchant Category Code (MCC) for purchases of digital currency. Visa changed the MCC for digital currency purchases to a code that allows large banks and card issuers to charge consumers additional fees.
Coinbase is actively working with major card networks to create a new MCC for digital currency purchases. For the benefit of consumers, we hope that this will not have additional “cash advance” fees as we believe that cards provide wider access to digital currency than just bank accounts.
We take this very seriously and are taking all necessary steps to resolve this issue as soon as possible.” – Dan Romero, VP and GM of Coinbase.
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