Credit card companies ban the purchase of cryto currencies

[jman0war]

Credit card companies make money when people don't pay their bills on time.

How Credit Card Companies Make Money
https://www.investopedia.com/articl...0916/how-credit-card-companies-make-money.asp

-Credit card companies charge stores approximately 2% to 3% of each credit card purchase.
-A significant amount of card users do not pay their bills in full each month. The customer’s unpaid credit card balance starts to incur interest at rates as high as 12% or more, which goes to the credit card company.
-Credit card companies tag on a variety of fees in addition to their late fees

 

[tecate]

I accept that there is an upside for customers in this regard by being prevented from buying crypto on credit. However, it's very much a secondary outcome - this is not the purpose of the banks here. Their purpose is to smother crypto.

As regards chargebacks for being scammed, if they bought crypto through an exchange, there's no earthly reason why such a chargeback should be validated. In terms of such customers being more likely to default, wouldn't that be true of anyone faced with a loss...if I whipped out the visa card right now and put 2k on LikelyLad in the 2.30 at Haydock, maybe I wouldn't feel like paying my debt either? I can't see how there would be a distinction.
If the banks are getting altruistic on us (oxymoron), then they can come out and ban all credit card expenditure on gambling also.

 

[Brendan Burgess]

As regards chargebacks for being scammed, if they bought crypto through an exchange, there's no earthly reason why such a chargeback should be validated.

But how much time do you think that the bank is going to have to spend defending these complaints.

And these people will have lost their money so they will be grasping at straws.

I would not lend to anyone to buy crypto.

Nor would I lend to them to back Likely Lad.

Brendan

 

[jman0war]

Credit Card companies are happy when people are late with payment, that's one of the very ways they make money.
They stick the person with high interest penalties and fees.

 

[Brendan Burgess]

Yes, but one of the way they lose money is when people buy something which is no longer worth anything, they lose the wish to repay.

Brendan

 

[jman0war]

Shortly after the last economic crisis a story was in the IT about a guy that was giving talks to Banks regarding processes to get consumers to pay off their CC debt more quickly and efficiently. Basically with the goal of reducing delinquency. During his talk he became aware of discomfort in the room. Finally one of the bankers in the back spoke-up and said his speech was all well and good but that it was a waste of everybody's time.
He explained that late CC penalties comprise a significant revenue stream so they are not interested in changing anything.

But i don't have the link to hand.

 

[MrEarl]

I have not said that, in case you are attributing it to me.

No, I was not.

To be honest, I would have named you if intended to attribute it directly to you

They are doing it because

1) Customers will try to get charge backs claiming that they were scammed
2) Customers will be less likely to pay when the crypto they buy goes to nothing.

I do not understand how you conclude that customers will try and get charge backs, unless they were genuinely scammed.

Granted, there are websites which are claiming to sell Bitcoin and are not, but these are fraudsters. In these instances, the customer should be protected, just as someone should be protected if they try to buy a pair of boots online and the website that they purchase from looks legit, but is later found not to be and won't refund the money or supply the goods required.

As for the second point, I don't think it would be any more likely to occur than someone who ran up their credit card bill in Vegas gambling for example. How often does that happen, or prove to have much success with the card providers I wonder ?

The credit card companies are doing to protect themselves.

But, by doing that, they are doing their customers a favour.

Brendan

I agree entirely that they are taking steps to protect themselves. However, whether they are really doing their customers a favour or not is debatable and certainly, isn't their primary reason for taking such actions as refusing transactions that relate to crypto currencies.

 

[tecate]

But how much time do you think that the bank is going to have to spend defending these complaints

Where's the personal responsibility in that? It should be a case of a template response back IE. We acknowledge your complaint but preliminary review deems that the validity of your complaint is null & void.

 

[MrEarl]

Hi,

Does anyone know if you can pay for the Lotto or Euromilions online by credit card ?

 

[tecate]

@Mr.Earl: Yes you can.

 

[MrEarl]

Hi tecate,

Thank you for the reply.

I think this gives a very good example of where the credit card providers did not take action to protect their customers, or to prevent the risk of customers refusing to repay them when they lost the money gambling.

It would also be interesting to see if the Ombudsman received many complaints from credit card customers who lost their money gambling and felt the card issuer had a responsibility to cover such losses.

My bet (pun intended ) is that the Ombudsman and credit card companies received very few, if any complaints, from those who lost their money gambling in this fashion.

 

[TheBigShort]

Yes, but one of the way they lose money is when people buy something which is no longer worth anything, they lose the wish to repay.

This is stretching things a bit isnt it? If it was as easy as 'losing the wish to repay' to actually get out of paying then the cc industry would collapse.
The reality is, regardless of the 'wish' to repay or not, if debts are incurred, that debt will follow you wherever you go until you have repaid it.

 

[Firefly]

I think this gives a very good example of where the credit card providers did not take action to protect their customers, or to prevent the risk of customers refusing to repay them when they lost the money gambling.

I would imagine that the vast majority of bets people put on the Lotto are a small fraction of what people have bet on Bitcoin..

 

[MrEarl]

I would imagine that the vast majority of bets people put on the Lotto are a small fraction of what people have bet on Bitcoin..

Hi Firefly,

I would agree.

However, I would also expect that lottery transactions would be far more frequent then the number of crypto trasactions, so over time the amounts at risk for gambling with the lottery competitions could be far greater.

Anyway, for me it's the principal of the matter

 

[Firefly]

Hi Firefly,

I would agree.

However, I would also expect that lottery transactions would be far more frequent then the number of crypto trasactions, so over time the amounts at risk for gambling with the lottery competitions could be far greater.

Anyway, for me it's the principal of the matter

At least with the Lotto you have some chance of winning

 

[MrEarl]

At least with the Lotto you have some chance of winning

Take a look at the volatility in the price of the various crypto currencies and tell me how you can't ever win by investing (and getting out) at the right time ?

The odds are far better betting on cryptos than the lottery. When you put your money on cryptos, the prices either goes up or down... with the lottery, the odds against you picking the correct numbers are far higher.

 

[Pexus1976]

You would want to be daft to use credit to invest in any investment vehicle never mind Crypto.

 

[MrEarl]

You would want to be daft to use credit to invest in any investment vehicle never mind Crypto.

I'm not sure I'd go as far as saying any investment vehicle, but certainly borrowing to invest in crypto would be a very bad move.

The ability to get funds into an exchange like Coinbase instantly via credit card, is the main advantage here. If the credit card is in credit (i.e. pre-funded), then there's only the cash handling fee to consider, which might justify it as a payment method if you want to do something quickly.

 

[jman0war]

Here is news of a digital currency exchange startup in Israel that has been denied having a normal Deposit account by all Israel banks.

Bitflash LTD, a new Israeli company which was established to provide digital currency trading services based in Acre, has asked the Tel Aviv District Court on Sunday to order all 11 banks in the country to open a current account without credit for it. The company claims that the banks’ refusal to open an account for it is in violation of the law and shows lack of good faith, as some of them manage similar accounts for competing companies.

According to Bitflash, since its establishment over a month ago, it approached a number of branches of each Israeli banking corporation for the purpose of opening an account, but was outright refused on the grounds that its business in digital currencies is not to the liking of branch managers. In some of the branches the company was told explicitly that “the bank’s policy is not to open accounts for those who deal with digital currencies, regardless of the nature of the business.”

https://news.bitcoin.com/israeli-bitcoin-company-sues-banks-for-not-letting-it-open-accounts/

The cartelism of private banks is really glaring, and it's basically hurting economic activity.
Is this really the purpose of banks - To pick and choose winners and losers?

 

[TheBigShort]

Here is news of a digital currency exchange startup in Israel that has been denied having a normal Deposit account by all Israel banks.
https://news.bitcoin.com/israeli-bitcoin-company-sues-banks-for-not-letting-it-open-accounts/

The cartelism of private banks is really glaring, and it's basically hurting economic activity.
Is this really the purpose of banks - To pick and choose winners and losers?

Exactly the point I was making elsewhere. The whole concept of free trade is the right to transact and do business all within a set legal framework of course.
Unless, by law, crypto currencies are declared illegal, then the bank has no business denying anyone to trade with anyone else, assuming the traders are operating legally. Otherwise I think it would be questionable, if such an occurrence took place in EU, whether that bank should be afforded its license.