By now I’m sure you have heard about the issues with Coinbase customers being charged more than once for their original crypto purposes. The whole problem started when the credit card companies changed the way crypto purchases are classified. Instead of being straight purchases, they were classified as a type of cash advance, which brings higher daily fees. However, it appears as though according to Visa, they went back and re-charged old transactions under the new classification, but left the original charges as well. Visa claims this was just a technical error, but I think a closer inspection shows how that is almost impossible and it’s very likely Visa did this as way to damage Coinbase and crypto purchases in general.
As I have written about before here and here, I am 100% convinced that the recent move by banks to deny credit card purchases involving crypto was a hostile move, and not one to protect consumers. I also believe this current “glitch” was also done with the same hostile intention.
So let’s look at the situation. Nobody knows credit card transactions and how they work more than Visa. I find it highly unlikely that they didn’t know that re-charging people and refunding the original charge would cause huge problems for consumers.
Most of us have probably returned goods that we purchased on a credit card. We all know it takes several days for the refund to appear, it is never instant or the same day. Pretty much everybody who has used a credit card knows this simple fact. Yet, we are to believe that Visa didn’t know that re-charging people and refunding the original charge would cause people to have extra funds unavailable in their account? Of course Visa knows that refunds take several days, we all know that. So if you put through a charge on the same day as the refund, there will be extra charges and people will have their accounts showing a much lower balance than they expect, or even overdrawn. And this is exactly what happened.
Bottom line, Visa knows exactly how long it takes charges to get reversed, so they were well aware that adding a duplicate charge while the original one was waiting to be refunded would cause huge issues for most customers. There is NO way they did not know this would happen. It simply defies common sense.
Not only this, Visa knows they won’t get the blame for it, even if they admit it as they now have. The damage to Coinbase has already been done. If a customer buys something from a store and notices they got charged extra, do they blame the store or do they blame Visa? Even if the store tells them it’s Visa’s fault days later, they still blame the store as the charge is from them.
Maybe a few people who are avid crypto people will follow this story until the end to realize Visa is at fault. But the thousands of casual customers will only blame Coinbase, and Visa knew this is exactly how the situation would play out.
Next, Coinbase is opening a rival service to that of Visa and the credit card processing industry called Coinbase Commerce. It allows merchants to accept crypto currencies on a very easy and low cost platform. Coinbase is a big player in the crypto space and them opening up this service is the first shot at traditional online payment gateways. Visa is well aware of this and it doesn’t look like they want to play nice.
But the worst thing about what Visa has done is it has given the banks plenty of ammunition to stop all transactions involving crypto, including wire transfers. This week thousands of customers have called their banks to complain about Coinbase. Major banks can simply block wire transfers and use the excuse that there have been so many complaints and overcharges with Coinbase that they can no longer work with them. It doesn’t make a difference if Visa says it’s their fault. The banks can say the purchases originated from Coinbase and this hasn’t happened with any other merchant they deal with. In fact, this is a scenario I predicted not long ago after the banks banned credit card purchases. So don’t be surprised if you hear about a few banks in the coming weeks refusing to let customers do any business with Coinbase.
As for now it is impossible to know how all this plays out. But it is becoming more an more evident that Visa and the credit card companies are acting outright hostile towards crypto. The banks will most likely survive a crypto revolution, but I think the credit card companies believe they will be the ones with the most to lose if crypto payments become more and more popular.