Robinhood Wallet and Fomo Code Memecoin Purchases as Digital Media to Bypass Card Network Rules

Robinhood Wallet and the Fomo platform are processing memecoin purchases made with credit cards by classifying those transactions as "digital media" rather than cryptocurrency, a coding choice that sidesteps restrictions Visa and Mastercard have maintained since 2021 and quietly earns users credit card rewards points in the process.

Test purchases confirmed the classification scheme is active as of September 1, 2026. The merchant category code (MCC) assigned to these transactions, the four-digit label payment networks use to define what a merchant sells, determines whether a purchase is flagged under crypto-restriction policies. By landing outside the crypto category, the transactions clear card network filters and trigger rewards accrual that issuers explicitly designed to exclude from digital asset buying.

Chase has already begun sending inquiries about these transactions to affected cardholders, a signal that at least one major issuer is scrutinizing the pattern. That kind of issuer-level monitoring typically precedes a formal merchant review, and in past cases involving MCC misclassification, outcomes have ranged from chargeback liability reassignment to outright merchant termination. Visa and Mastercard's operating rules give networks broad authority to sanction merchants that misrepresent transaction categories, and the exposure for both Robinhood and Fomo is material if either network determines the "digital media" label is inaccurate.

The card network restrictions these platforms appear to be working around were introduced to address two specific risks: excessive chargebacks from consumers who bought volatile assets and then disputed the charges, and the broader consumer protection concern that credit-funded crypto speculation amplifies retail investor losses. Memecoins, which can lose 80 to 90 percent of their value within days of launch, sit at the extreme end of that volatility spectrum. Consumer protection advocates are likely to argue that routing memecoin purchases through a softer transaction category actively undermines the guardrails those restrictions were meant to provide, placing credit-funded losses on consumers who may not fully understand what they are buying or how their card issuer will treat the charge.

Regulatory interest from the SEC, CFPB, or OCC is plausible. The CFPB has previously flagged deceptive merchant category practices in other financial products, and misrepresenting the nature of a transaction to a card network could draw scrutiny under unfair or deceptive acts or practices frameworks. The SEC's interest would hinge on whether the underlying memecoins constitute securities, a question that remains unresolved for most tokens in that category. Neither agency has commented publicly on these specific platforms.

MCC manipulation is not a new tactic in crypto. Exchanges and payment processors tested similar approaches in 2017 and 2018, reclassifying crypto purchases to avoid cash-advance fees that issuers began applying to digital asset transactions. Most of those workarounds collapsed once networks updated their monitoring systems and tightened operating rule language. The current episode follows the same structural logic: identify a gap in automated enforcement, exploit it until issuers or networks close it. The difference now is that the platforms involved, Robinhood in particular, carry significant regulatory visibility and a consumer base large enough to generate the transaction volume that triggers issuer-level review quickly. Ireland's recent decision to bar crypto from its €197 billion state savings scheme reflects the same underlying instinct among financial regulators: keep speculative digital assets walled off from mainstream retail financial infrastructure.

Whether Robinhood and Fomo designed this classification intentionally or inherited it from a payment processor integration is a question that will matter significantly in any enforcement proceeding. Robinhood has not issued a public statement. Fomo has not commented either. Chase's inquiry may be the first formal pressure point, but it is unlikely to be the last.