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article imageVisa and banks cause problems for Coinbase customers

By Ken Hanly     Feb 19, 2018 in Technology
San Francisco - The credit card issuer Visa has been the cause of Coinbase's multiple problems with its users' cryptocoin accounts that have included reversed transactions, unauthorized withdrawals and unexplained fees.
Coinbase
Coinbase is a cryptocurrency exchange with headquarters in San Francisco, California. So far, they broker Bitcoin, Bitcoin Cash, Etherium, Litecoin and now perhaps Ripple. Coinbase operates in about 32 countries and offers bitcoin transactions and storage in 190 countries.
Coinbase issues an incorrect explanation of what happened
Last week, Coinbase said that a change in the way that credit card companies classified digital transactions was responsible for the glitches and that it had identified a solution to the problem.
Later on Friday, Coinbase claimed that it was VIsa that actually reversed many weeks' worth of transactions under what it called a new merchant category code or MCC. This code is used to classify businesses by the type of service provided and it helps determine how the Internal Revenue Service (IRS) deals with taxes for the service.
Coinbase claimed that Visa had switched to an MCC “that allows large banks and card issuers to charge consumers additional fees,” with the result that there were charges that looked erroneous.
Coinbase said that it was actively working with major card networks to devise a new MCC for purchase of digital coins that hopefully would not involve additional fees.
Visa denies any MCC changes
Visa issued a statement saying: “Visa policies with respect to the correct coding of transactions have not changed. Cryptocurrency transactions must be properly coded so that issuers can rely on accurate and consistent information when making authorization decisions. We recently sent a communication to clients to explain the existing requirements, but there were no changes or reclassifications. It is inaccurate to say Visa made recent changes to the MCC code.”
Later Visa issued another joint statement with the payments processor Worldpay that handles the transactions with Coinbase saying: “This issue was not caused by Coinbase.” It is not clear what the dispute is between Coinbase and Visa but Visa admits it is the cause not Coinbase. The statement noted that some clients may have had duplicate transactions posted to their accounts when there should have been only one.
The statement goes on to note that Worldpay and Coinbase were working with Visa and the banks to make sure the duplicate transactions were reversed and appropriate credits posted to accounts. It claimed all reversals had been issued and should appear within client's credit and debit card accounts within the next few days. The statement advises those who continue to have problems and issues related to card fees or charges to contact their card issuing bank.
SItuation still unclear
Coinbase customers complained that there funds were still being tied up by both card issuers and banks. Visa claims it is refunding, yet insists that the onus is on parties who had their accounts drained to pursue the appropriate party and determine what to do.
Neither Coinbase, Visa or some banks come out of this without some blame and it seems they are not working well together to handle cryptocurrency trading.
Examples of problems
One user claimed on Reddit to have bought Bitcoin, Ether, and Litecoin on Coinbase worth $300. A few days later the user found that his account was charged with five transactions of $300 worth $1,500 which together with fees emptied his account. The user exclaimed: “My bank account went from very comfortable to negatives balance, not to mention extra $5 charges, and overdraft fees. As a result my rent check bounced, and my bank went further into negative for a NSF charge for $25. My landlord is not a nice person and is on my CASE and I have nothing to offer him. I am FREAKING OUT.”
Pete Kingree a Coinbase client from Virgina said there were unauthorized additions to a Coinbase trade of $931 dollars plus $7.45 bank fees. He said he was writing the Coinbase CEO and the Governor of Virginia. Numerous other complaints are listed in this Verge article.
More about Visa, Coinbase, cryptocurrencies
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