Credit card issuers may deny that cryptocurrencies present a credible threat to their business models, but these legacy payment firms have begun to circle the wagons following bitcoin’s recent ascendance.
The latest move affected customers of Uphold’s popular Virtual Mastercard (VMC) service, which allowed customers to use bitcoin and other cryptocurrencies to fund prepaid debit cards that were denominated in fiat currency and could be spent at any store that accepts Mastercard.
Without warning, WEX — the company that Uphold had contracted with to issue VMC cards — closed Uphold’s account and invalidated all outstanding cards. The action was so abrupt that pending transactions were cancelled, and Uphold said that it was not given notice until after its account had already been closed.
“On Friday, January 19, and without notice until late Monday morning, WEX, the service provider Uphold uses to issue Virtual debit card products, closed our account in response to similar actions taken by Visa and its processors against cryptocurrency companies,” the company said a notice. “This means any and all VMC cards have been canceled and any pending transactions may be rejected.”
Uphold said that it is actively “working to finalize an alternative that will bring better service and options” for customers, but this product is unlikely to be available by late Q2 or early Q3 of this year.
In the meantime, Uphold is in contact with WEX about refunding customer balances, but the firm reports that the card issuer has said it could take four to five weeks to complete the process, leaving customers bereft of their funds.
As alluded to in Uphold’s notice, this is not the first time in recent weeks that a credit card issuer has abruptly canceled service to a bitcoin debit card provider.
Earlier this month, Visa terminated its relationship with WaveCrest, a Gibraltar-based service provider that had issued Visa-branded bitcoin debit cards to European customers of BitPay, Cryptopay, and Bitwala. In this case, however, the clampdown was restricted to WaveCrest cards, and other Visa card issuers continue to issue cryptocurrency-based debit cards.
Discover and Capital One, meanwhile, have recently said that they will not even allow their cards to be used to purchase cryptocurrencies on brokerage platforms like Coinbase.
Featured Image: Virtual Mastercard | Uphold