Coinbase Overcharges to be Refunded by VISA and Worldpay
Customers of the major exchange and wallet Coinbase have noticed erroneous overcharges on their cryptocurrency purchases on February 15th. The issue has created quite a bit of panic among Coinbase users, which reported repeated charges worth hundreds of thousands of dollars. However, Coinbase has immediately responded to the complaints via their Reddit page, promising that all the erroneous charges will be refunded on behalf of the exchange.
The majority of overcharges and repeated transactions have happened to people purchasing cryptocurrencies with credit and debit cards. This led Coinbase executives into thinking that the charges were linked to banks and card issuing companies changing the merchant category code (also known as MCC) for cryptocurrency transactions around the same time. The MCC changed from instant buys (which charged the card a 4% flat fee per transaction) to cash advances, which charge an additional 5% in addition to the flat fee, plus a much higher interest.
To put it simply, the change implies that crypto payments are now being processed under a different category, meaning different fees. As the change took a bit of time to be properly implemented by all the banks and card issuing companies, some of the recent Coinbase transactions have first gone through as regular instant buys, but have not been properly approved by banks as they did not correspond to the correct MCC; this sent the transaction through one or multiple loops, charging fees every time the transaction was processed as an instant buy.
Coinbase has taken all the blame on themselves in the post they made on their Reddit pages, stating ‘Coinbase will ensure that each affected customer will be refunded in full for any erroneous charge. Our processor confirmed that any erroneous charges will be refunded over the next few days.’
VISA’s first move was to put the blame on Coinbase, as they denied making any changes to their protocol that could cause such errors. However, a later statement from VISA/Worldpay on the Coinbase blog states the opposite: ‘This issue was not caused by Coinbase. Worldpay and Coinbase have been working with Visa and Visa issuing banks to ensure that the duplicate transactions have been reversed and appropriate credits have been posted to cardholder accounts. All reversal transactions have now been issued, and should appear on customers’ credit card and debit card accounts within the next few days’, and assures users that every single erroneous transaction will be refunded by their bank or card issuing company.
Coinbase advice people who were affected by repeated transactions in January and February to report to the website’s customer support, or contact their banks or credit card issuers for refunds.