Visa and MasterCard have approved several new credit card codes to assist banks in differentiating between licensed state-run, legal online gambling, and illegal online gambling transactions which can be processed with ease. The three new codes that separate the now legal gambling activities from the all emcompassing original code used – 7995 – for all online gambling transactions are:
State-run online lotteries (7800),
State-run online casino games (7801),
State-run online dog/horse racing (7802).
The gambling industry’s is hoping that the new codes will allow for a clear differentiation in legal online gambling transactions from illegal ones, and in that way should ease the minds of some financial institutions regarding processing online gambling transactions. But the bank still has the final say on what types of transactions they will process. Banks and financial institutions are not obligated to accept any type of gambling transaction, regardless of its legality, and PayPal, American Express, Bank of America, TD Bank, and Wells Fargo are among the bigger banking names that refuse to process online gambling transactions. Due to this boycotting, the results of the new MCC codes have been neglible so far.
Pala Interactive has reported some positive results since the new codes went into effect. According to Chief Operating Officer Mike O’Malley: “Since making the change to the new codes, the number of transactions getting approved for MasterCard have doubled as well as a substantial increase in the number of players getting approved. Since making the change for Visa, we have seen increase in both approved transactions and players.” Pala has had the same boost in Visa volume but they’re also seeing an increase in MasterCard usage and success rates as well. So that is a promising sign.
PartyPoker has had more mixed results. According to bwin.party Group Director of Poker Jeffrey Haas. “In the first few days after the new codes went live, we saw an immediate decline in MasterCard transaction success rates of about 5%,” Haas stated. He said the company saw Visa transactions more than double during that time frame, but since Visa success rates have fallen to 11-15% following TD Bank’s decision to stop processing online gaming transactions. Haas believes this decline in MasterCard volume is a direct result of Santander prohibiting online gaming transactions; prior to the new MCC codes going into effect, Santander was processing online gaming transactions. Haas said over the past 50 days, they are seeing improvement, MasterCard volume is now down just 4% compared to the period before the new codes were instituted. “Two weeks ago we had an average success rate of 77.5% [MasterCard], and last week that improved to 79.3%,” Haas said, adding that on June 11, MasterCard success rates hit 84%. The decline in MasterCard has been more than offset with the substantial improvements we have seen in Visa transaction success rates,” Haas noted. “The success rate in June has been 61.1% MTD, with last week hitting above 62% for the first time.”
Bill Rini, the head of online poker for Caesars Interactive, WSOP.com has reported “minor improvement.” Rini said this is probably because only a few smaller banks now process online gaming transactions with the new MCC codes, but the larger banks are still prohibiting iGaming transactions and have not accepted payments. “The vast majority of banking in the U.S. is through larger banks, [so] not much is going to change until their policies on gaming transactions change,” Rini said. He thinks any improvement is positive, but credit card payment processing will continue to be a major problem until the major banks where most people have their accounts start accepting and doing what their smaller counterparts have already initiated.
Many industry experts ask Why the inconsistency? A possible reason for the discrepancies between operators could be sourced to the sign-up process at their sites and what payment options and how they offer them. Also depending on each site’s methods of deposit, and how evidently each site details which banks are prohibiting online gaming transactions, it could be one reason why sites are having very different experiences with credit card users since the new MCC codes went into effect.
Why are banks’ hesitant? The major uncertainty over current federal laws, as well as uncertainty over future possible laws such as RAWA just put forward to U.S. Senate are main reasons as to why. Getting a clear solution to the iGaming’s payment processing problem is going to take a long time to resolve. The new MCC codes weren’t expected to solve the issue overnight, but the good news is progress has been made, especially since iGaming launched in New Jersey in November of 2013. Before that time, Visa success rates were barely making it into the double digits. So though progress has been slow, it’s still a step in the right direction.