Visa is moving to close a loophole that allowed meme coin purchases made with Visa credit cards to earn rewards by being processed under a merchant code intended for digital media, according to sources familiar with the matter.
The issue came to light after an investigation found that users of the Robinhood Wallet and Fomo apps could purchase meme coins with credit cards through Apple Pay or Google Pay. These transactions, powered by Crossmint payment infrastructure, were coded as "digital goods media"—a category typically used for e-books, movies and music—rather than as crypto transactions. This classification allowed customers to earn standard credit card rewards such as points or cash back.
Chase challenged the practice after identifying a Visa transaction that had been misclassified and opened a case with Visa over the merchant category code. The New York attorney general's office also indicated it was reviewing the matter.
In recent correspondence, Visa informed payment processors, including Checkout.com, that the merchant code for digital goods media is no longer appropriate for meme coin purchases. Processors have been given a grace period to discontinue the practice, expected to end next week.
Meme coin purchases will continue but must now be processed as crypto transactions and will be subject to Visa's corresponding rules and restrictions on cryptocurrency payments.
