Visa’s April 2024 Rules Update: What Crypto Merchants Need to Know

Visa has just published the bi-annual update to its Core Rules. The Visa Core Rules consists of almost 1,000 pages in PDF format, containing the governing rules around acceptance, processing, risk, dispute resolution, fees and more. Visa publishes an updated version of the rules in April and October each year.

A substantial part of the recent update deals with the introduction of a ‘Digital Currency and Non-Fungible Token (NFT) Acceptance Policy Enhancements and New Ramp Provider Program Launch’.

These changes are a key aspect of formalizing crypto onramp, or the conversion of fiat currency into crypto assets via card payment. While card acceptance for crypto onramp is nothing new, these updates go a long way to provide clarity to all parties involved in this non-traditional use case - issuers, acquirers and merchants alike.

Key takeaways:

• The rules impose strict obligations on crypto onramp infrastructure providers (referred to in the rules as Ramp Providers), determining that they are financially liable for transactions, cardholder disputes, and other customer service-related issues that arise between their own customers (businesses) and their respective end-users (consumers).
• The rules also impose responsibilities on acquirers that service crypto onramp infrastructure providers, who must, among other things, conduct due diligence on the infrastructure provider’s business customers.
• One can draw parallels between this change and the massive scrutiny that Banking-as-a-Service providers have been facing recently by US regulators. The same principle applies - banks cannot circumvent their risk controls by placing an intermediary between themselves and the consumer-facing business.

What the changes mean for merchants

• Possibly increased scrutiny from their infrastructure partners
• New checkout and receipt requirements for Crypto and NFT transactions
• Limitations on aggregating crypto and non-crypto products, as well as multiple crypto currencies, under a single transaction.
• Clarifications on MCC classifications
• Some relief is introduced as far as disputes are concerned. For too long, merchants faced the burden of educating issuers about the nature of crypto onramp transactions, how they differ from more traditional purchases, and the limited role of the actual credit card transaction in the broader context of how the crypto asset is held or used after the initial conversion. Now, Visa is establishing the same principles in its rules. If disputes are your area of interest, you can skip to the last section.

What’s Changed 

Increased Scrutiny for Infrastructure Providers and Acquirers

What merchants need to know: Crypto infrastructure providers must be registered as Third Party Agents with Visa, need to establish adequate screening and risk controls when dealing with their customers, and be prepared to be liable for all end-user disputes.

Visa has introduced two definitions related to the entities involved in payment processing for crypto onramp.

Ramp Providers are third party agents responsible for converting transactions from fiat currency to non-fiat currency or vice versa. 

Conversion Affiliates are entities that utilize Visa payment services provided by Ramp Providers to offer payment services for converting transactions. These entities can include retailers, cryptocurrency exchanges, non-fungible token (NFT) marketplaces, or decentralized applications (dApps).

Ramp Providers are lumped-in with other intermediary entities that are defined within the Visa rules - Marketplaces, Payment Facilitators, and Digital Wallet Operators (DWO).

These entities are classified separately from regular merchants, and have additional obligations imposed on them, mainly - increased responsibility with regards to their role as aggregators of multiple businesses under one payment accepting umbrella (for the initiated, more information about these entities can be found in this resource that was recently published by Visa - Beyond the Acquirer: Additional Visa Acceptance Entities).

These responsibilities include:

1. When processing transactions for an affiliate located in a different country, ensure the legality of the transaction in such country.
2. Liability for all acts, omissions, cardholder disputes, and other Cardholder customer service-related issues caused by the Ramp Provider’s Conversion Affiliates.
3. Ramp Provider is responsible and financially liable for each Transaction processed on behalf of a Conversion Affiliate.
4. Not to transfer, or permit the Conversion Affiliate to transfer, its financial liability by asking or requiring Cardholders to waive their dispute rights.
5. Must not deposit Transactions on behalf of another Ramp Provider, Payment Facilitator or Staged Digital Wallet.
6. Must deposit Transactions only on behalf of Conversion Affiliates of goods and services that use the Ramp Provider’s services under a contract.
7. Must not knowingly contract with a retailer whose contract to accept Transactions was terminated at the direction of Visa or a government agency.
8. Must provide the names of principles and their country of domicile for each of its Conversion Affiliates and Transaction reports to its Acquirer and to Visa upon request.
9. Must ensure that its Conversion Affiliates comply with PCI, if the Ramp Provider delivers payment information to Conversion Affiliates.

For Acquirers engaging with Ramp Providers, the following criteria must be met effective April 13, 2024, in various regions globally (AP, CEMEA, Europe, LAC except Brazil, US), and from October 19, 2024, in Canada and Brazil:

1. Maintain good standing in all Visa risk management programs.
2. Demonstrate financial stability as determined by Visa.
3. Ensure Ramp Providers do not engage with Payment Facilitators or Staged Digital Wallet Operators for transaction processing.
4. Register Ramp Providers as Third Party Agents with Visa.
5. Conduct due diligence on Conversion Affiliates, implementing risk management controls to:
   1. Prevent illegal transactions in the Ramp Provider's, Conversion Affiliate's, or Cardholder's location.
   2. Prevent the sale of counterfeit or infringing products.
   3. Establish a process for handling rights-holder complaints.
6. Ensure activities do not harm the Visa brand and comply with anti-money laundering and anti-terrorist financing laws and regulations.
7. Ensure Ramp Providers comply with Visa Rules for Merchants unless stated otherwise.
8. Obtain a unique Ramp Provider identifier from Visa and assign it to each Ramp Provider for transaction processing.
9. Ensure each Conversion Affiliate receives a unique identifier from the Ramp Provider.
10. Include the Ramp Provider and Conversion Affiliate identifiers in Authorization and Clearing Records.

In a Ramp Provider agreement, an Acquirer must include provisions to enforce the Ramp Provider’s responsibilities, and the Acquirer’s right to exert its influence where required.

New Website and Receipt Requirements

What merchants should know: Merchants should make sure their purchase flow and transaction receipt are compliant with Visa’s requirements.

Effective April 13, 2024, in various regions globally (AP, CEMEA, Europe, LAC except Brazil, US), and from October 19, 2024, in Canada and Brazil, for transactions for the acquisition of non-fiat currency or NFT, a merchant’s website or application must include all of the following on the payment page:

• Description of the item being acquired or purchase, either:
  • For non-fiat currency, the type of currency/coin
  • For an NFT, a description of the NFT
• Total cost of item acquired or purchased, including all applicable fees, charges, taxes or other costs, represented in the applicable fiat currency of the Transaction
• Confirmation of the destination wallet address to which the non-fiat currency/coin or NFT will be delivered
• A statement that the item’s value may fluctuate or be volatile
• Any restricted return, refund or cancellation policy, if applicable, as specified 

The same details must be included on the transaction receipt.

Limitations on Transaction Aggregation

What merchants should know: Merchants that offer complex products like NFTs that are bundled with physical products or a multiple-coin purchase based on a single fiat transaction, need to prepare to process these transactions separately to be compliant with Visa’s rules.

Effective April 12, 2025, transactions for the acquisition of non-fiat currency must not be aggregated with purchases of other items. 

Additionally, if the Cardholder purchases multiple types of non-fiat currency, the purchases must not be aggregated into a single transaction.

Technical Processing Requirements

What merchants should know: Merchants should contact their acquirer or processor to ensure the correct MCC and other indicators are used in their transaction processing, according to their use case. The MCC can affect things like approval rates, interchange fees, fraud prevention, dispute performance and more.

Certain processing requirements with regards to MCC and certain other technical indicators are detailed in the table below.

These changes are effective January 20, 2024 through April 11, 2025. Effective April 12, 2025, certain modifications apply that are detailed in the Visa rules, mostly regarding different indicators for different cryptocurrency categories (CBDC, tokenized deposit, stablecoin, blockchain native token).

Chargeback Disputes

What merchants should know: Merchants should ensure that the relevant data points listed as Allowable Evidence are stored and are available for integration with internal/external dispute management systems. Merchants should also make sure that their rebuttal letters properly describe their business model and address the new rules. If you are working with Justt, we got you covered.

Changes were made to certain dispute reason codes, to properly address the unique nature of crypto onramp transactions.

The gist of these changes is this - disputes are generally limited to the transaction whereby fiat currency is converted to cryptocurrency, and the cardholder’s complaint cannot extend to later stages, like the fluctuation in the cryptocurrency’s price, or what the cardholder has done with it.

These changes will enter into effect on October 19, 2024.

* Other MCCs are listed, but they are outside of the scope of this article.

Conclusion

Crypto has been around for a while, and incumbents have wanted a piece of the pie, albeit a small one. For too long, the parties involved in processing these payments had to carve out the path, with limited guidance from the networks.

Visa's April 2024 rules update is an impressive body of work, and a step in the right direction of enabling financial innovation while adhering to the robust frameworks that have existed for generations.

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