Investing in republic.co using a credit card

Question

The crowdfunding site Republic.co allows investors to invest in opportunities using a credit card: https://republic.co/help/what-payment-methods-can-i-use-to-fund-my-investment-1

Does anyone know if these are coded as cash advance transactions on a credit card?

Edit: contacted Republic

I sent Republic a message about this and got the following response:

Thanks for reaching out. It should show as a "purchase" and not a "cash advance". Your investment is just a one-time payment. It has a recurring charge tag on your statement but this is so if you adjust your investment up or down during the campaign, we can make a commensurate adjustment.

Answer 1

EDIT

There are limited circumstances (depending on how the company is set up to accept credit cards) where this could be tagged as something other than a normal purchase, and then it's up to your issuing bank to decide how to handle the charges.

Frankly I don't know why you'd invest using a credit card. These are startup companies in most cases, many of them a LONG way away from being anything remotely close to a publicly-traded stock where you could sell your holdings, so you can't rationalize using a credit card by the return you'll get (unless you're going to pay the bill in its entirety, which still invalidates the point of using a credit card in the first place!).

If I had to speculate (and this is speculation!), I'd say the reason they let people invest by credit card is to make it easier, for starters. It lets people make a quick, simple transaction when this should be a carefully thought through decision, because you're essentially throwing your money away with many of these companies simply for the vanity of being able to say you invested in them.

After glancing through the site, I would advise you to be careful about investing, mainly because there are heavy restrictions on what you can do with your shares for 12 months after purchase. Additionally, there is no liquid market for your shares in many (if not most) of these companies.

As they warn, don't invest any money that would require you "alter your lifestyle", which is another way of saying don't put money in that you can't afford to lose or walk away from.

If you can afford to speculate and put a little bit in a few of these companies, however, it could work out alright, but the odds are long. The majority of them are pre-revenue.

Answer 2

Everything SRiverNet said about investing is good advice. However, I think they're most likely to charge your card as a Security Broker/Dealer (MCC 6211). The Visa document about it says:

• Merchants classified with this MCC are licensed, in all jurisdictions they sell into to buy, sell and broker securities, stocks, bonds, commodities, and mutual funds.

Depending on what they actually do with the money internally, I could see it being possible that they will charge your card as one of:

• Money Transfer company (MCC 4829)

Merchants classified with this MCC allow customers to transfer funds via an electronic funds transfer / wire transfer / remittance (both card-present and cardabsent locations including on the premises of the merchant and third-party agents such as casinos, truck stops, or check-cashing storefronts) or via an original credit transaction (e.g., via Visa Direct or Person to Person [P2P] payments).

• Financial Institutions – Merchandise, Services, and Debt Repayment (MCC 6012)

This MCC must be used by Financial Institutions for the purchase of merchandise or services from or the repayment of debts to banks, savings and loans, thrifts, and credit unions. For example: the purchase of checks, other financial products, or promotional merchandise, deposits, the funding of an account, the purchase or reload of a stored value card, the purchase of foreign currency, non-fiat currency (for example: cryptocurrency), money orders (a negotiable paper based remittance – not a Money Transfer), travelers cheques, and loan fees or financial counseling service fees. This MCC must also be used for the repayment of a debt, loan, or credit card balance by a cardholder to the financial institution.

• Non-Financial Institutions – Foreign Currency, Non-Fiat Currency (for example: Cryptocurrency), Money Orders (Not Money Transfer), Account Funding (not Stored Value Load), Travelers Cheques, and Debt Repayment (MCC 6051)

This MCC must be used for the funding of an account (excluding prepaid card loads), the purchase of foreign currency, non-fiat currency (for example: cryptocurrency), money orders, or travelers cheques that occurs at non-Financial Institutions such as currency exchanges or money order (a negotiable paper based remittance – not a Money Transfer) merchants.

Whether any of those count as a cash advance for purposes of your specific card, I don't know.