You are here: Home - Credit Cards & Loans - News -

Lloyds and Virgin Money ban credit card users from buying Bitcoin

0
Written by: Paloma Kubiak
06/02/2018
Lloyds Banking Group and Virgin Money have confirmed they will no longer allow customers to buy cryptocurrencies such as Bitcoin on their credit cards.

Banking giant Lloyds said across its brands – Lloyds Bank, Bank of Scotland, Halifax and MBNA – it will not accept credit card transactions involving the purchase of cryptocurrencies.

Virgin Money said following a review of its policy, customers will no longer be able to use its credit cards to purchase virtual currencies such as Bitcoin. However, there’s no such ban on debit cards.

The head of the Bank for International Settlements (BIS) this morning called for a regulatory clampdown on cryptocurrencies, which led to Bitcoin’s price tumbling below the $7,000 mark.

Citizens Advice chief executive, Gillian Guy, welcomed the move from the banks. She said: “This shows recognition of the risks of credit card customers running up debt they can’t afford – something that Citizens Advice sees the impact of every day.”

However, David Coker, lecturer in accounting, finance and governance at Westminster Business School and former vice president of global risk management at Deutsche Bank, believes that despite sharp drops in price and growing hostility from banks and regulators, the Bitcoin market is maturing.

He said: “Cryptocurrency naysayers have been given great energy of late on account of the recent price corrections and the decision of a number of banks and financial institutions, including Lloyds Bank and Virgin Money, to ban credit card customers from charging Bitcoin purchases.

“In truth these events are nothing more than a further sign that the Bitcoin market, and cryptocurrencies in general, are maturing; in other words, business as usual and much ado about nothing.”

He added that if looking at Bitcoin as a new asset class exhibiting characteristics of both commodities and currencies, prohibiting credit card customers from charging their purchases of Bitcoin “makes good sense and is a sign that the market is adapting to the peculiarities of cryptocurrencies, without the need for top down regulation”.

Coker said: “For example, without prior arrangement most credit cards won’t allow cash advances and even those that do typically limit the amount that may be realised in cash. These limits are always a small fraction of total available credit. This is done to protect the lending institution from outright fraud by customers who might walk away with the cash then refuse to pay.

“The same principle applies here with Bitcoin. Banks are notoriously slow to move in ways that might restrict revenue. And credit cards are big revenue generators for many financial institutions. At the same time, banks must act to control losses. Many institutions have realised Bitcoin has generated significant attention because many customers have charged their purchases. Banks, concerned some of these same customers may refuse to pay, are simply limiting their exposure.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
investing
Investors: is now the time to take profits?

UK equities have fallen back to levels seen in early 2017 while in the US, the market has lost all...

Close