In order to make Bitcoin more appealing and accessible to everyday consumers, there have to be ways to purchase a digital currency with traditional payment methods. And what better way to do that than by using a credit card to buy Bitcoin? That was possible with services such as Google Wallet, but it looks like they have now revoked permissions to purchase Bitcoin with a credit card.
Buying Bitcoin With Traditional Payment Methods
The first report appeared on Reddit a few days ago, where a user was complaining how his transaction to buy Bitcoin with a credit card was declined. The user wanted to purchase Bitcoin on Circle, and pay with Google Wallet, as it is one of the accepted payment methods. However, upon completing the transaction, this user was greeted with the following message:
“Your transaction at Circle internet finance was declined. This was because this type of transaction is not permitted.”
At that time, it was hard to determine which factor caused the error message; Is Google Wallet effectively blocking users from making Bitcoin purchases? Or is there an underlying credit card issuer stirring up trouble by blocking certain retailers? One of the possible culprits being mentioned on Reddit is major US bank Chase, as they have been – allegedly – blocking people’s credit cards from being used on Circle.
However, you have to keep in mind that, if this was due to a certain bank blocking the transaction, it would not be the first time this happened. Several other banks in Europe and the US have been sending letters to customers informing them they will not process any Bitcoin-related transaction on their behalf.
Another option being mentioned in the Reddit thread is the way merchants mark a credit card transaction in their own system. For example, if Circle would mark buying Bitcoins as a “Cash Advance” transaction, it would not be supported by Google Wallet. If it was to be marked as a different type of transaction, you would be able to buy Bitcoins and get infinite bonus points/cashback/flyer miles on your purchases.
After going back and forth a bit, it turned out that Circle themselves have declined the transactions through Google Wallet, for an unknown reason. Or, at least, that is the explanation given by a Google Wallet support employee. Then again, they have a standard list of answers to give to people, as Google would rather not get mixed up in the power struggle between banks and Bitcoin enthusiasts.
The whole idea of being able to buy Bitcoin with a credit card is a bad plan to begin with. Credit cards incur high fees and are prone to chargebacks, which would leave a company like Circle with a loss in both Bitcoin and fiat currency funds. That being said, it is a very accessible and convenient way to attract novice users to the world of Bitcoin and digital currency.
It looks like we will need to come up with other ways of obtaining Bitcoin for everyday consumers, and preferably a method they can use from the comfort of their own home. Unfortunately, that is easier said than done, but hopefully some efforts will be made in this area over the next few months and years.
Images courtesy of Circle and Google Wallet