Card Acquiring for Crypto Businesses: What Is Permitted, What Is Restricted, What Is Risky

Crypto card acquiring gets far less attention than card issuing to cryptocurrency holders, yet it decides whether a business can take customer payments at all. Card acquiring is the other way around from issuing: money coming in rather than cards going out.

This topic comes up in conversations about compliance. Yet, the founders of crypto businesses typically do not approach this from the perspective of acquiring.

What Card Acquiring Actually Means for Crypto Businesses

Card acquiring for crypto businesses refers to the infrastructure that allows a business to accept payments from customers using a card: the acquirer that holds the scheme licence, the payment gateway that captures the transaction, and the merchant account the funds settle into.

It is distinct from card issuing and receives less attention in crypto compliance discussions, often to the detriment of the businesses involved.

The issues with crypto merchant acquiring are essentially rooted in the irreversibility of cryptocurrency transactions compared to the reversibility of credit card transactions.

A cardholder can dispute a payment months after it settles, but the coins delivered against it cannot be recalled, so the acquirer absorbs the difference. Every rule described below traces back to that mismatch.

How Card Schemes Classify Crypto Merchants

The classification a card scheme assigns to a crypto business directly determines which requirements apply and which acquiring partners are available.

Two distinctions drive most of the outcomes: the Merchant Category Code and the difference between prohibited and restricted status.

Merchant Category Codes: Why MCC Assignment Matters More Than You Think

Every business that takes card payments is assigned a Merchant Category Code. This is a four-digit number that defines the type of business for scheme purposes.

Cryptocurrency exchanges fall under a quasi-cash merchant category. Quasi-cash covers purchases where the cardholder receives something readily convertible back into cash rather than a consumed good or service, which is why schemes treat it closer to a cash withdrawal than a retail sale.

This is one of the most restricted merchant categories with both Visa and Mastercard, and it is the category most likely to trigger issuer declines, higher reserves, and enhanced monitoring.

Some crypto businesses could qualify under a standard merchant category if they are specifically focused on providing a product or service. The product or service must be defined in the company's founding documents.

The acquiring companies will cross-reference the merchant's description with the transaction details and values that a company provides to determine whether the description matches the transaction data.

Prohibited vs. Restricted: The Distinction That Opens Acquiring Doors

Within the card payment industry, there is a clear difference between prohibited and restricted merchants. The model of most crypto companies will fall under the restricted category.

The path to acquiring a card is available to most crypto businesses that founders do not realise are eligible.

Payment Service Providers will go further than the card schemes in excluding crypto businesses from acquiring their services. Companies like Stripe and PayPal have additional rules that will deny card acquiring to crypto companies that the card schemes permit.

What Is Clearly Permitted in Crypto Card Acquiring (If Structured Right)

Eligibility for card acquiring in the crypto industry is determined by how a business is structured, licensed, and documented, not by the industry category alone.

If a company offers a product or service, such as software, infrastructure, or services related to the blockchain, it could qualify for acquiring companies under less restrictive merchant categories.

Operating under a recognised financial license from the European Union or the United Kingdom will also improve the chances of accepting card payments as a crypto business. In practice this means an electronic money institution (EMI) or payment institution (PI) authorisation, or the equivalent national permission.

These licenses are given to financial companies that follow two sets of rules:

Both are exactly what an acquirer's underwriting team asks to see evidence of.

Certain verticals within the crypto industry are permitted to acquire a credit card if they are structured appropriately:

All of these entities must have their legal structure and license properly defined before they reach out to acquiring companies seeking to join their merchant partnership programs.

What Is Restricted by Schemes, PSPs, and Policy

Restrictions on card acquiring for crypto merchants operate at more than one level. Card scheme rules set the floor; payment service providers and individual acquirers often apply additional filters on top of them.

Scheme-Level Restrictions

Both Visa and Mastercard define very specific requirements for crypto exchange companies. These additional requirements include enhanced due diligence on these companies at the start of the relationship, meaning a deeper check on ownership, source of funds, and the merchant's own compliance programme than a standard merchant faces, followed by additional monitoring of their transactions.

The requirements have become even more stringent since 2022.

The other issue with crypto companies using credit cards to purchase their products is that most banks will automatically classify these transactions as cash advances. This will result in the credit card company declining the transactions.

This cannot be avoided by the acquiring company.

PSP and Acquirer-Level Restrictions: Where Most Applications Actually Stop

The major payment service providers have internal lists of companies that will automatically reject crypto companies as merchants. This is true of all the most popular payment companies.

This means that crypto companies will have to seek out specialised high-risk acquirers that have the resources to handle their compliance needs. These acquirers price for the risk they take on, so card payment acceptance for crypto companies usually comes with higher processing rates, a reserve, and tighter volume limits than a low-risk merchant would see.

Specialised acquiring companies will use rolling reserves for crypto merchants. When acquiring cryptocurrencies, a rolling reserve will be put in place to hold a percentage of the merchant's sales for a period of time. This could be for a few months.

This reserve is used to cover chargebacks on transactions. If someone uses a credit card to purchase cryptocurrency, the company will be able to cancel the credit card transaction.

However, the cryptocurrency cannot be rolled back to the company from which it was purchased. This creates a loss for the acquiring company. The rolling reserve prepares the acquiring company for such scenarios.

The Practical Structure for "Safe" Card Acquiring in Crypto

Approaching an acquiring partner without the right structure in place is the most common reason crypto merchants are declined, even when they are eligible in principle.

Two requirements stand above the rest.

Licensing as a Foundation, Not an Afterthought

A recognised financial license has become a baseline requirement for crypto merchants who approach any acquiring partner. It demonstrates that the company is under regulatory oversight and can stand up an AML program to be audited in the case of any wrongdoing.

Those who offer acquiring for crypto merchants are themselves subject to oversight by the card schemes. They must ensure that each merchant they onboard to their acquiring account satisfies certain regulatory standards.

One thing that many crypto companies are unaware of is that the acquiring agreement must be held by the licensed entity. This is true even if the acquiring entity is part of a larger company.

The entity that processes card payments must have the same license as the company running the AML program.

Flow-of-Funds Documentation

Acquirers need to know the flow of funds created by each transaction processed through their acquiring account. They need to know the flow of funds from the acquiring account to their operational and custodial accounts.

For crypto merchants, specifically, this flow-of-funds requirement extends to seeing how the fiat currency that is received from card payments is subsequently used: to purchase cryptocurrency, to rest in a protected account, or to go to a third-party custodian of the crypto company.

A custodian holding client assets off the merchant's own balance sheet is the hardest of the three for an acquirer to verify, so that leg needs the clearest documentation of the set.

If this flow of funds is not documented properly by the crypto company, this is the single most common reason that acquiring companies will turn down a merchant application.

The underwriters see the flow-of-funds documentation and recognise that there is risk associated with the merchant that they cannot control, hence the maximum risk rating to the acquiring company.

Common Pitfalls for Crypto Business Founders in Card Acquiring Compliance

Several recurring errors cause crypto merchants to lose their acquiring accounts or face fines, often after they have already been approved.

By taking steps to avoid chargebacks early in the company's launch, such as applying 3D Secure authentication so liability for fraudulent disputes shifts to the issuer, setting first-purchase limits, and making the descriptor recognisable on the cardholder's statement, the founders can avoid this issue.

The Regulatory Outlook: What MiCA Changes for Crypto Merchant Acquiring

MiCA introduces a formal license category for crypto-asset service providers that acquiring companies can reference during due diligence. Its scope and its limits in the context of card acquiring are both worth examining.

The Markets in Crypto-Assets Regulation (MiCA) has given crypto-asset service providers (CASPs) a license category that can be referenced by acquiring companies and payment schemes to determine whether a cryptocurrency company is in compliance with regulatory standards.

For crypto companies within MiCA's scope, having such a license will improve their eligibility to open acquiring accounts with European acquiring companies that are required to complete due diligence on crypto companies seeking their services.

MiCA provides acquiring companies and payment schemes a point of reference for crypto companies that surpasses the lack of regulatory clarity surrounding unlicensed cryptocurrency exchanges.

However, MiCA does not override the rules of the payment schemes or the policies of the payment processor. A company licensed under MiCA will still have issues obtaining approval for its acquiring application because of its business model.

MiCA only covers due diligence regarding the regulatory standing of the company; it does not fulfil the criteria for flow-of-funds documentation, chargebacks, or monitoring requirements. Hence, MiCA is only one of many conditions that must be fulfilled for a cryptocurrency company to receive an acquiring account.