What the Mastercard, Visa shut-downs mean for operators
This month saw a wave of panic as MasterCard and Visa staged a crackdown on cards from their US customer bases being used on egaming sites. With Norway last week approving an identical ban on Norwegian payment processors, we assess just what effect the moves by Mastercard and Visa will have on both US and European operators...
THIS month saw a wave of panic among US players as MasterCard and Visa staged a crackdown on cards from their US customer bases being used on egaming sites.
The move came ahead of the implementation of the final rule of America’s Unlawful Internet Gaming Enforcement Act (UIGEA), which would require US payment firms to establish and implement policies designed to prevent payments to businesses in connection with unlawful Internet gambling by 1 June 2010.
Seeking to prevent online gambling payments is not new for either company. Both have long-standing policies designed to allow cardholders’ issuing banks to turn down transactions in accordance with local law via the ‘code’ system, which tells issuing banks what kind of payment is being processed.
What was new is the card companies’ focus on preventing operators from recoding ‘7995’ egaming transactions as other forms of commerce ““ a widespread practice that has enabled many online gamblers in America to continue using their card on egaming sites.
Although an unpleasant shock for US-facing operators, the crackdown will no doubt have been greeted with no little sense of Schadenfreude by operators such as 888, Bwin, PartyGaming and Sportingbet that ditched highly lucrative US operations post-UIGEA.
This is of course just a temporary setback for those who continue offering egaming to Americans, as they offer a range of alternative payment options to credit cards, assuming the attack on recoding was anything more than an attempt to assure regulators by sending a warning shot across the bows of US-facing sites.
Instead, the crackdown presented US-facing sites with a public relations challenge, racing to reassure US customers there are alternative ways to pay before those customers go elsewhere.
How quickly and successfully they do that will determine the extent of the pay-off for non US-facing operators struggling to compete with US-backed poker liquidity in Europe.
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