How the payment model creates exposure
Buying crypto assets with a card looks like a purchase but behaves like a cash transfer: once the asset is sent, it is hard to reverse. That pushes fraud risk onto the merchant and acquirer. Regulators also treat exchange and custody as financial activity that may need registration or licensing, depending on the jurisdiction. Card networks have their own rules on how these purchases are coded, often as quasi-cash, and which merchants must be registered.
What underwriters usually ask for
- Licenses or registrations for exchange, custody or money transmission.
- A clear description of the activity: exchange, wallet, NFT sales, or accepting crypto as a payment method.
- KYC and sanctions screening procedures.
- Geographic restrictions and how they are enforced.
- Fraud controls on first purchases and new devices.
- Ownership structure and source of funds.
Controls that change the conversation
Strong identity verification before the first card purchase, delayed release of purchased assets for new customers, sanctions screening and transparent licensing reduce both fraud and regulatory exposure. Expect enhanced due diligence and ongoing merchant monitoring regardless of volume.
Frequently asked questions
Why are crypto merchants considered high risk?
Card purchases of crypto assets are hard to reverse once delivered, which attracts fraud, and exchange or custody activity may require financial licenses. Both raise underwriting scrutiny.
What is enhanced due diligence for crypto merchants?
Extra verification beyond standard onboarding: licensing evidence, ownership and source of funds, KYC and sanctions controls, and ongoing monitoring of activity and geography.