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Comment by AVTizzle | Hacker News Reader

The specific callout of restricting "cryptocurrency purchases" in the title is click-bait.

Actual context from the article:

>And according to Reuters, it will also come with a ban on purchasing cash advances and cash equivalents, with the latter including cryptocurrencies, casino chips, and lottery tickets.

>>It would seem neither Apple nor Goldman Sachs has anything in particular against cryptocurrencies, but Bitcoin and other digital tokens would seem to fall under the cash equivalents umbrella.

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This is to protect from a loophole of getting a 1% Apple Cash over cash purchases, which you could theoretically do unlimited times

No, this is a fairly standard clause in credit card contracts to limit risk. Crypto currency values are extremely volatile. Not everyone can handle gambling (have you ever watched a card counting video on YouTube? Mostly bellyaching because some other player got “their” card). Cash advances are always loan shark rates (though I’m not clear how cash is considered high risk and a consumed meal is not). You’ll find similar clauses in many card agreements these days. Everyone is hungry for Apple Card details or this wouldn’t be news.

There is a separate clause where Apple reserves the right to close the account of anyone reselling or gaming the system (doing something Apple didn’t think of).

The cash advance penalty is to protect the system cut. When you pay $50 for a meal the credit card system takes a 2-6% (some countries/regions limit this to sane amounts like 0.5-1%, eg EU countries and Australia) cut depending on the card, split between the network (visa, MasterCard etc) and the source and settling banks.

If you take a cash advance for $50 you only see $50 on your statement and the network doesn’t get its cut. If there’s no penalty for using a cash advance you’d find many businesses would have an in-house ATM so you could pay in cash and they could avoid the cost of accepting cards.

You actually see this in places like New Zealand where we have unregulated credit/debit card interchange rates but also have an established fee-free(ish) card system. Almost all smaller retailers accept EFTPOS card transactions but not credit/debit cards.

What is a way to get money from a card into a bank account?

Or conversely, is there a way to have a virtual "bank account" that is accepted by credit cards as a source of payment (e.g. via Plaid or whatever) but is actually backed by a credit card?

I am asking because being able to use credit cards to pay off credit cards, without taking cash advances, can provide a lot more options for a person or company.

Obviously you can have two companies controlled by the same entity that each purchase a product from one another, paying only the merchant fee. But does that violate the credit card issuer's policy, or do they really care?

Disclaimer: if you're in a situation where you're paying credit cards with other credit cards, you're actively courting financial ruin.

That said: in the US, credit cardholders are inundated with balance transfer offers. Frequently, this involves the credit card company mailing checks to their customers. These checks work just like they are attached to a checking account, but they are backed by the underlying credit card. I am aware of a few companies that juggled credit card offers in this way to get off the ground.

I would disagree. Ive made it through college by just transferring balances to 0% interest cards and get a new one every 15 months or so. I pay 2% balance transfer fees or so everytime. Which is a better rate than the big Banks get from the fed.

In the UK this is known as Stoozing. Some credit cards will give you a 0% interest rate (APR) if you do a balance transfer. That's usually to pay off another credit card.

Some allow for "Super Balance Transfers". They let you do a balance transfer into a current account. Ostensibly to pay off your overdraft - but they've no way of knowing.

Et voilà! Cash from your credit card.

The downsides? There's usually a balance transfer fee of a couple of percent and if you don't keep up with repayments, the APR can revert from 0% to 20%+.

Not that I know of. You can certainly take advantage of balance transfer offers that some card providers have to bounce the credit around, but most only do that for new accounts.

What’s wrong w my suggestion of having a friend’s company charge you and then do a wire?

Sounds pretty close to wire fraud to me.

https://en.wikipedia.org/wiki/Mail_and_wire_fraud#Elements

In many/most places this would trigger a loss of a significant amount of money to sales tax, income/revenue tax etc.

I think part of the concern or risk around cash is that the CC company cannot 'undo' the transaction or get their money back the way they can in other transactions.

Good to know. Unfortunately I've had to use a CC or two via TransferWise to help me out during cashflow issues especially when a large expected tax return was delayed.

JP Morgan Chase currently lost their motion to dismiss a lawsuit against their policy of treating cryptocurrency purchases as cash advances

But their terms of service didn't spell out cryptocurrencies, lets see how it plays out

I’m betting cryptocurrency purchases will begin accurately falling under a consumer goods framework sooner rather than later, indistinct from buying a cryptographic accesstoken for any saas product which powers your user session.

> JP Morgan Chase currently lost their motion to dismiss a lawsuit against their policy of treating cryptocurrency purchases as cash advances

Just a note for people reading this who might not understand the nuances of the American tort system: this merely means that JPM's lawyers tried to "short circuit" the process by asking a judge to decide the case has no merit, and throw it out before going through the whole process. The judge disagreed, thinks there might be merit to the case, and wants to see it go to trial (or, more likely, see JPM settle with the plaintiff).

Why wouldn't they be treated as cash equivalents? Do you believe cryptocurrency is not currency?

No, currency has a specific definition:

(1) a system of money in general use in a particular country.

(2) the fact or quality of being generally accepted or in use.

Cryptocurrencies satisfy neither definition and are therefore not currencies. They may be cash equivalents for the purpose of this definition, however. More like a gift card whose value fluctuates wildly and is primarily used for narcotics, money laundering and at best, speculation.

When you are being encouraged to purchase Bitcoin (for example), it's the currency of the future. When you are trying to use a credit card to purchase Bitcoin (for example), it's not a currency. When you are facing a tax bill, I can't remember whether the claim is that it's a currency or a security.

They are hashes secured by repeatable cryptography which are stored on a distributed database

The monikers are skeumorphs to be more relatable to a nearest prior elementary concept

Some of those hashes are used for payment, some of those hashes are used for a record of fractional ownership of an enterprise, some of those hashes are used to access a good or service. A credit card company would therefore be misapplying their policy, when there isnt enough information in their transaction detail and also no rationale for charging higher fees for this type of transaction. If any actual risk was higher they should make a third category. Otherwise treat a crypto transaction like any purchase of consumer goods.

Contracts and law generally tend to see through the technical details. It is functionally like cash, therefore it is a cash equivalent.

This is the sort of "laws work like computer code" thinking that gets you "I don't recognize this court because it has a fringed flag" sovereign citizen types.

A judge is not going to see it this way.

Several countries and states have laws reflective of what I described, with the same taxonomy already in committee in Congress

US payment processors are the ones flying blind and interpreting things arbitrarily, and the courts might too, but the direction the legislatures are going will correct that

US payment processors have been giving casino chips this treatment for decades. I see no reason US legislatures would give cryptocurrency better treatment than that - if anything, they're more likely to smack it around.

Casino chips tend to be fiat-denominated and trivially redeemable at face value, so are true cash equivalents.

Cryptocurrencies tend not to be fiat-denominated, and even those that are don't have trivial free frictionless exchange for fiat at face value.

The Euro has an exchange rate and forex spread, too, hence neither of those things are disqualifying as a cash equivalent.

In pretty sure Euros are fiat-denominated and readily exchangeable for fiat (being, after all, fiat, makes this trivially true.)

Again, this is that "laws work like computer code" thinking.

Euros vary in USD value, and take a process to convert to/from USD just like Bitcoin does. Governments are not going to ban banks from treating BTC transactions as cash advances.

> Again, this is that "laws work like computer code" thinking

No, it's not.

Having done a political science degree with significant coursework in law and judicial politics, and gone back later and done a couple years of law school while working as a programmer before deciding that the cost/benefit of a license to practice law wasn't really worth it, I'm somewhat familiar with the differences between law and computer code.

> Euros vary in USD value, and take a process to convert to/from USD just like Bitcoin does.

That's, ironically, the “law works like computer code” thinking you were just complaining about. While there are certainly laws focussed on USD and equivalents vs every other asset imaginable, there are lots of laws about money more generally, and a lot of established precedent about what is and is not money, and, perhaps more critically, about how terms which are ambiguous in contracts (perhaps because subject matter to which they are being applied wasn't well known when they were drafted) are applied between parties with unequal power over drafting of th contract.

> Governments are not going to ban banks from treating BTC transactions as cash advances.

Governments aren't going tonban banks from applying the same didadvantageous conditions applied to cash advances to any transactions they want, but those with decent consumer protection laws may also not let them do so arbitrarily after the fact without clear notice in contracts of the kinds of transactions to which those terms will be applied, just because of some loose analogy between the subject of a term in a contract and product class to which it would not generally have been understood to apply by most people agreeing to the contract.

> Governments are not going to ban banks from treating BTC transactions as cash advances

Courts typically will look at the bank's rationale for charging customers higher fees arbitrarily.

You are heavily focused on the semantical debate about "cash advance" and not the consequences of categorizing this way.

A court might say "sure call them that, just don't charge customers higher a cash advance fee and higher interest", the bank will consider that irreconcilable and change the categorization anyway. Nobody will address the specific difference you wanted to debate about.

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