Beginning April 17, 2015, major credit card companies American Express, Discover, MasterCard, and Visa will start using new Merchant Category Codes (MCCs) in identifying credit card transactions entered with regulated online gambling websites. Their aim is to establish an entirely new level of clarity, in order to address consternation over the hesitancy of banks to process Internet-based gambling transactions.
As it is, the percentage of rejections for Internet-based gambling payments is rather high. Numerous banks are still taking a cautious approach as far as processing of credit card payments for online gambling purposes is concerned. In New Jersey’s regulated market, the rate of rejections is too high and is usually cited as one of the main reasons why traffic levels are falling at the Garden State’s online poker websites.
The CEO of CAMS, Matthew Katz said that the growth of the fledgling industry has been hobbled by the high percentages of rejections. As head of a company involved in providing age and identity verification systems, Mr. Kantz led a panel of payment processing experts who spoke at the recently concluded iGaming in North America conference.
TJ Sharkey, Vice President of Operations at Vantiv Gaming Solutions, a company specializing in electronic payments and payment processing innovations, provided information about the three newly introduced Merchant Category Codes via Casino Enterprise Management website. These are:
• MCC 7800 for government-run online lotteries
• MCC 7801 for regulated online casinos
• MCC 7802 for regulated online horse and dog racing events
The new codes are supplementary to the list of existing transaction codes used by financial institutions in discerning the type of transactions for which authorization is being requested. The MCC 9754 used by MasterCard and the 7995 code used by VISA will remain, and are now designated as the code for credit card payments involving unregulated online gambling transactions.
The Vantiv CEO wrote that they have circumspectly monitored the authorization levels in the online gambling market during the recent past two years. They looked closely into the declined transactions, at the banks and brand of credit card that did not allow the transactions. They reached out to the related financial institutions, and were able to gather that the main concern is the possibility of getting embroiled in another Unlawful Internet Gambling Enforcement Act (UIGEA) crackdown.
The inability to tell between Internet-based gambling transactions originating from regulated and unregulated jurisdictions, surfaced as the main reason for the high rate of credit card payment rejections. Mr. Sharkey considers the new MCCs as a step toward addressing such concern, albeit adding that there is still much work to accomplish.
According to the Vantiv CEO, they have devoted a great deal of time educating the financial market and in instituting a level of uniformity and meaning to the MCCs. CEO Sharkey believes that through continuous education covering a broad audience, the recently introduced MCCs will eventually create a positive impact on the online gambling industry.
He added that bank card-issuers would be able to make authorization decisions with greater confidence, as they can now distinguish credit card dealings between lawfully recognized online gambling facilities from those that might not be operating legally.