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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.

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  • It's likely just a plain charge. Sure, they would suffer some backs but the whole outfit is shoddy, they wouldn't care. – Fattie Mar 23 at 14:45
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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.

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  • If you must invest in the new reg-C etc stuff, just roll over to startengine.com. I certainly don't recommend it, but the rest are a joke/comic. At least with startengine, say 1/2 of the mockups are serious. And they have that well-known "shark" guy on board now which lends a certain seriousness. – Fattie Mar 23 at 14:46
  • 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. Thoughts? – karancan Mar 23 at 20:33
  • Sounds like you got an answer!(grin) I would double-check with your credit card company and ask what they say about it just to settle the matter. – SRiverNet - reinstate monica Mar 23 at 20:57
  • Just for the sake of clarity foir anyone googling here: "I think ... these transactions are cash advances" That is flat wrong. (A) it's completely inconceivable a joke outfit like this would get the ability to run cash advances, it's just not even in the ballpark. (B) it is plain as day that it is a normal "purchase" and the company has actually verified that by phone!!. Please edit the answer to not spread misinformation. – Fattie Mar 24 at 11:52
  • My answer was posted BEFORE the OP had the conversation with Republic, so you have the benefit of more information than was originally posted. And the second answer below does a good job of laying out scenarios where this wouldn't be a "normal purchase" and could be transacted as something else. – SRiverNet - reinstate monica Mar 24 at 11:59
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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.

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    Nice work, @Bobson! All you said is spot on, and I still hold it will likely be a cash advance because that's what it really is in most respects. One probable reason is to prevent a charge dispute. Imagine letting someone charge a stock trade that goes the wrong way and then have them dispute that charge. I'm upvoting your answer because of how thorough you were, by the way! – SRiverNet - reinstate monica Mar 23 at 2:17
  • @SRiverNet - Yeah, the chargeback problem is definitely something they're going to have to deal with. It really depends what Republic.co does with the money behind the scenes. If it goes directly to the company being invested in, that's different from if it goes to buy a share in a pool that Republic.co maintains, for example. But they may also be counting on the "Know your customer" information they collect to defend themselves against any chargebacks. – Bobson Mar 23 at 2:55
  • Yeah, good luck with that. (grin) Amex is nothing nice on chargebacks when it comes to how they deal with merchants. – SRiverNet - reinstate monica Mar 23 at 3:01
  • There's not a chance "republic.co" would achieve broker/dealer with Visa ! – Fattie Mar 23 at 14:44
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    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. Thoughts? – karancan Mar 23 at 20:43

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