Tests reviewed by The Block found that users of Robinhood Wallet and Fomo could buy memecoins with Visa and Mastercard credit cards through Apple Pay or Google Pay, with transactions coded as “digital goods media” rather than as crypto purchases. The payments were powered by Crossmint and, in those tests, also earned standard credit card rewards.

The setup appears to let users complete some token purchases without going through a separate identity verification flow. That has drawn scrutiny from payments and compliance experts, with Chase saying one Visa transaction was not identified as crypto and that it had opened a case with Visa. New York’s attorney general’s office said it is aware of the issue and is reviewing it.

How the purchases were processed

Crossmint’s Token Checkout product is integrated into the Robinhood Wallet and Fomo apps, allowing users to buy memecoins and have them delivered directly to wallets in those apps after checking out with Apple Pay or Google Pay. According to the report, the process often did not require a separate KYC flow.

In tests, users were able to purchase tokens including dogwifhat, or WIF, as well as memecoins such as “testicle” and tokens using the ticker “ASTEROID.” Crossmint has described the product as a way to reduce friction for consumers by embedding checkout inside mobile apps and managing the Apple Pay and Google Pay payment flow.

Why the coding matters

The issue centers on how these purchases were categorized inside the card system. The tested memecoin buys were coded as “digital goods media,” a category associated with electronically delivered content such as audiobooks or digital films. One reported WIF transaction used merchant category code 5815.

By contrast, direct cryptocurrency purchases are typically expected to use merchant category codes such as 6012 or 6051, along with crypto-specific indicators on Visa and Mastercard networks. Payments specialists cited in the report said that even if a token sits in a regulatory gray area, card-network requirements are a separate question from securities analysis.

Crossmint’s position and the dispute around classification

Crossmint said it stands by the classification used for the transactions. The company pointed to the SEC’s view that some memecoins can be treated as collectibles in a securities context, arguing that certain tokens sit between digital collectibles and digital commodities.

That interpretation is not universally accepted. The report said Visa and Mastercard have not clearly endorsed Crossmint’s approach, and the broader question remains whether memecoins sold through this flow should be treated as collectible-like digital goods or as crypto transactions for card-network purposes.

Rewards, compliance and next steps

Because the purchases were not flagged as crypto in the tests, users were able to receive ordinary credit card rewards. Chase said the Visa transaction it reviewed was not identified as a cryptocurrency purchase and warned that rewards may not apply if a transaction is misclassified.

The report said there is also debate over who bears responsibility for compliance: the acquiring banks that process the payments or the merchants and partners, including Crossmint. For now, the clearest confirmed developments are Chase opening a case with Visa and the New York attorney general’s office reviewing the matter, while questions around KYC, consumer protections and network rule compliance remain unresolved.

Source: www.theblock.co