New Credit Card Code May Boost Legal Online Gambling
A change in the way credit cards are categorized may soon give legal online casinos a significant boost in sales. The state of New Jersey has developed a new Merchant Category Code that separates legal and illegal gambling transactions, giving banks the opportunity to start approving the charges from legal online casinos.
The Unlawful Internet Gambling Enforcement Act of 2006 put some substantial restrictions on Internet gambling, making it illegal in the United States. Recently though, special sanctions were put in place to allow online gambling in New Jersey, Nevada, and Delaware.
Under the law, online gambling transactions were not approved by banks and credit card issuers because they were categorized with four simple digits: 7995. That is the category code given to all online gambling efforts.
“In the U.S., some financial institutions have taken the route of declining these transactions altogether to protect themselves from any regulatory scrutiny,” said T.J. Sharkey, an executive at payment processor Vantiv Gaming Solutions. “With new MCCs, however, their ability to identify regulated transactions will become easier, thus giving them the ability to navigate regulatory scrutiny.”
New Jersey has created a new code – 7801 – to classify legal online gambling transactions from the illegal ones. Discover, MasterCard, American Express and Visa have agreed to the new code for approved transactions.
While the new code could give banks incentive to approving specific credit card transactions, some credit card issuers simply do not want the liability that comes with online gambling. Additional efforts may still be required in order for financial institutions to do business with Internet casinos.