Worldpay and Visa in row over cryptocurrency charges
Adam Samson, Financial Times
Payments processing companies Worldpay and Visa are at the centre of complaints from cryptocurrency traders after erroneous charges were levied on their accounts.
Dozens of users of America’s biggest cryptocurrencies exchange, Coinbase, took to Reddit, the social network, late last week to complain about unexpected charges on credit and debit cards used to buy digital currency.
Some people claimed their bank accounts had been wiped out before refunds were applied, while others said they were hit with overdraft fees.
“I was charged four times and it completely drained my account,” claimed one user on Reddit.
Blame for the charges initially fell on Coinbase, which has grown rapidly over the past year as digital currencies such as bitcoin have hit the headlines.
Coinbase has in the past faced other payments issues, including earlier this year a bout of seriously delayed wire transfers. However, the group was not to blame for the erroneous charges this time.
Over the weekend Worldpay and Visa issued a joint a statement conceding that “this issue was not caused by Coinbase”.
Two sources with direct knowledge of the situation said that the problem related to the merchant category code (MCC) that the payment processers assigned to Coinbase. MCCs are crucial for transactions processing as they help card issuers assess the risk of accepting a transaction.
Coinbase claimed on Thursday that Visa had caused the problem, but Visa denied that it made “any systems changes that would result in the duplicate transactions cardholders are reporting”. In the past Visa has pointed out that it is up to the financial institution working on behalf of the merchant to transmit the MCCs to Visa’s payments system; they are also responsible for assigning the MCC code to the merchant. Worldpay fulfils this role for Coinbase, according to the two people briefed on the matter.
In a statement on Friday, Worldpay said that “we are actively working with and engaging all parties involved — including the card networks, issuing banks, other processors and Coinbase — to resolve this issue”.
Worldpay did not respond to further requests for comment.
One of the people briefed on the situation said that by Saturday evening, the “root cause” of the problem was still unknown.
The row is the latest example of the increasingly blurred lines between the rapidly growing crypto industry and the traditional financial sector, and illustrates the complex issues faced by the financial institutions as a growing number of individuals seek to pile into the cryptocurrencies market.
Regulators in countries including the US, Germany and France have spoken out recently about their concerns over a lack of clear rules for digital currencies, in contrast to the highly-regulated financial industry.