Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The MCC code changes made by the card issuers and the card networks resulted in charging extra fees to the customers.
One of the biggest cryptocurrency exchanges of the U.S ‘Coinbase’ is currently in the midst of a controversy after some of the users reported some unauthorized charges made to their bank accounts by the exchange. It was also reported that the digital wallet provider, in some cases, has drained out all its customer funds and charging them huge overdraft fees.
Several customers were seen posting on Coinbase subreddit and complained that previous withdrawals from their banks accounts were repeated multiple time. One user wrote: “My bank account went from very comfortable to a negative 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 [non-sufficient funds] charge for $25.”
Coinbase later confirmed that a bug present in its system started charging tons of customers repeatedly for the same previous purchases. It also assured its customers that the exchange is currently working on resolving the matter and will refund all its affected customers.
The exchange wrote: “We are actively investigating some reports from our customers about unexpected credit or debit card charges appearing on their statements from previous Coinbase purchases. We can confirm that the unexpected charges are originating from our payment processing network, and are related to charges from previous purchases.”
It further added that “To the best of our knowledge, these unexpected charges are not permanent and are in the process of being refunded. We are running joint investigations with all parties involved, and will provide updates as we receive them.”
In a further update on its Twitter handle, the exchange said that the issue is related to the MCC code changes made by the card issuers and the card networks that resulted in charging extra fees.
3/ Coinbase is actively working with major card networks to create a new MCC for digital currency purchases. For the benefit of consumers, we hope that this will not have additional "cash advance" fees. Cards provide wider access to digital currency than just bank accounts.
— Coinbase (@coinbase) February 16, 2018
The exchange further added that “We have identified a solution and any future purchases will not be affected by this issue. We will ensure any customer affected by this issue is fully refunded for any incorrect charge. We expect this to happen for customers automatically through their bank.”
In its latest update on the subreddit, Coinbase has clarified that “the erroneous credit and debit charges are the result of Visa reversing and recharging transactions.” Although many would assume that such changes would be applied only to the future transactions, it appeared that Visa, without issuing any warning, had reversed and recharged some transactions that took place between Jan 22 and Feb 11 that were further classified under the new MCC.
As reported by TechCrunch, “All of these transactions were refunded at the same time they were re-charged, meaning theoretically users shouldn’t have noticed anything besides the increased fee attributed to the new MCC code. But as anyone familiar with the payments space knows, banking and credit card systems rarely update instantaneously – especially for refunds which can take multiple days to reflect. This delay means that some users may be seeing the second charge come through before the refund, which without clarification would just appear as duplicate charges.”
Coinbase is currently said to be working with Visa to make sure that the refund is initiated soon and will also be working with people affected in this matter thereby asking them to make sure that their transaction history remains intact.