Reports indicate that Citigroup and Bank of America are conducting a review of policies which allow their customers to purchase bitcoin and other virtual currencies using credit cards. The reviews are being conducted about a fortnight after Capital One Financial announced that it had prohibited the purchase of cryptocurrencies.
TD Bank, a subsidiary of Toronto-Dominion Bank also confirmed that it had declined to process some bitcoin transactions due to security reasons. Since 2015 the purchase of virtual currencies has been prohibited by Discover Financial Services using its credit cards.
One of the concerns that the financial institutions may have regarding the purchase of cryptos using credit cards is money laundering. According to the chief executive officer of Discover Financial Services, David Nelms, buying of virtual currencies using credit cards is a headache for financial institutions as they are under legal obligation to monitor transactions with a view to curbing money laundering. At the beginning of the month payment services firm Visa Inc ended a partnership with WaveCrest, a virtual currency firm which lets customers turn their bitcoins and other cryptos into regular currency in the form of a prepaid card.
The move by Bank of America to review use of credit cards in buying virtual currencies comes in the wake of the bank getting rid of eBanking accounts. Bank of America has consequently moved holders of such accounts into products that have a monthly maintenance fee in situations where there is no direct deposit or where a minimum balance is not maintained. The program was unveiled eight years ago though it began being phased out a couple of years ago when the lender declined to enroll new members.
With the eBanking account customers had access to a checking account which did not charge monthly fees on condition that all transactions were carried out at ATMs or online. In the event that customers wanted to speak to tellers in person or have their statements sent by mail, they would incur a monthly fee of $8.95.
CoreChecking, the new account that holders of eBanking have been moved to, requires that customers maintain $1,500 in minimum daily balance or at least make one direct deposit of at least $250 per month. Failure to meet these requirements attracts a monthly charge of $12. Critics have said the low-income earners will be hurt the most.
“The debate over Bank of America’s accounts and fees points to a larger economic justice issue — people with less income pay more to get cash, make payments, and conduct their business,” said Woodstock Institute’s president, Dory Rand.