MasterCard says No Way to Poker, Gambling

[superiorword]

Just got this link from an affiliate friend of mine. What can be the effect on player value and payments stability?


Full story here:


MasterCard says No Way to Poker, Gambling | Live Action Poker News

[jdwanchalk]

It's not like Mastercard knows when a Mastercard credit/debit card is used for online poker/gambling. It might as well be a glass doll from Costa Rica that someone bought, when in reality it was a deposit to UltimateBet processed in Costa Rica. They might eventually find out, but they process transactions very sneakily and are onto a new processor by the time the card company finds out.

I am pretty sure that most card companies have always been hesitant to process gaming transactions, even before the UIGEA.

[TheGooner]

It's not like Mastercard knows when a Mastercard credit/debit card is used for online poker/gambling. It might as well be a glass doll from Costa Rica that someone bought, when in reality it was a deposit to UltimateBet processed in Costa Rica.

You're quite wrong. I say that as someone who spent a dozen years writing transaction processing systems for EFT-POS and point of sale (in a previous job) and who set up dozens of computer authorisation links to mastercard/ VISA.

Credit Card processing is far more advantaced and information rich than standard bank wires. It has a lot of data.

Every Credit Card merchant is coded with a standard industry code (SIC) for the business that they're in, and deliberately misleading VISA, MASTERCARD will lead to much higher costs, fines, and/or cancellation of the ability to process.

I was amazed at the card company's level of data on card holders, and merchants, and they have masses of data and stats for all industries and can easily tell when a merchant is mis-coded - their numbers stick out like a small thumb.

Of course some small poker rooms do try it on, a fake name, and a fake SIC, but if/when they are caught both them and the processing organisation that registered them are banned.

With the data profiling techniques, it's easy to spot multiple repeat purchases within a day and a week, it's easy to spot that they were over the internet (no card track 2 data, no pin), and it's easy to aggregate data over 100 customers to find gambling sites.

They can simply void the transaction (no money for the merchant - chargeback for the affiliate - warning and/or cancellation for customer) as being illegal due to their T&Cs for US customer.

This is something that both VISA and Mastercard could have done a long time ago, but possibly turned a blind eye to as it was a lucrative area - remember the card companies traditionally charge between 2%-5% of the value of a transaction to the merchant as a fee.

I suspect that this is a reaction to the impending UIGEA implementation date, and also the usual Super Bowl week crqckdown.

But I also suspect it might also be a reaction to that one-man Canadian processor case we read about earlier this week. His trial, and his admissions of how he slipped things by the card companies - when they can obviously detect them - will be embarrasing and possibly illegal if they continue to perform so poorly.

BTW - I expect that international card holders will still be able to deposit at gambling institutions.

[jdwanchalk]

You're quite wrong. I say that as someone who spent a dozen years writing transaction processing systems for EFT-POS and point of sale (in a previous job) and who set up dozens of computer authorisation links to mastercard/ VISA.

Credit Card processing is far more advantaced and information rich than standard bank wires. It has a lot of data.

Every Credit Card merchant is coded with a standard industry code (SIC) for the business that they're in, and deliberately misleading VISA, MASTERCARD will lead to much higher costs, fines, and/or cancellation of the ability to process.

I was amazed at the card company's level of data on card holders, and merchants, and they have masses of data and stats for all industries and can easily tell when a merchant is mis-coded - their numbers stick out like a small thumb.

Of course some small poker rooms do try it on, a fake name, and a fake SIC, but if/when they are caught both them and the processing organisation that registered them are banned.

With the data profiling techniques, it's easy to spot multiple repeat purchases within a day and a week, it's easy to spot that they were over the internet (no card track 2 data, no pin), and it's easy to aggregate data over 100 customers to find gambling sites.

They can simply void the transaction (no money for the merchant - chargeback for the affiliate - warning and/or cancellation for customer) as being illegal due to their T&Cs for US customer.

This is something that both VISA and Mastercard could have done a long time ago, but possibly turned a blind eye to as it was a lucrative area - remember the card companies traditionally charge between 2%-5% of the value of a transaction to the merchant as a fee.

I suspect that this is a reaction to the impending UIGEA implementation date, and also the usual Super Bowl week crqckdown.

But I also suspect it might also be a reaction to that one-man Canadian processor case we read about earlier this week. His trial, and his admissions of how he slipped things by the card companies - when they can obviously detect them - will be embarrasing and possibly illegal if they continue to perform so poorly.

BTW - I expect that international card holders will still be able to deposit at gambling institutions.

I am hit with what equate to $150 or so worth of total fees when all is said and done for a $2000 deposit. Could these fees be a result of whatever rules they are circumventing (the coding and all)?

[TheGooner]

Possibl - the fees structure for card processing is quite complex.

- Each industry group is in a certain band for risk of fraud.
- Big merchants get volume based discounts, small merchants pay premiums.
- Countries are also rated according to risk, US not risky, Costa Rica might pay a 3% premium.
- Finally, transactions where the card and cardholder are present and a pin is used are much lower risk, while internet transactions are charged more.

So if we assume :
- a Costa Rican company
- using a fake name (to get around the code), but therefore with no history so a small merchant
- doing internet transactions
- and a medium SIC risk.

We might get a charge of :
- Risky country (+2%) small merchant (+3%) internet transaction (+1%), medium risk SIC (+1.5%) = a total charge of 7.5% on credit cards

That would equate to a $150 charge on a $2000 deposit.
(Disclaimer - I don't know the exact scales used today -and I knew that I was aiming for 7.5% - but you see the system involved)

Compare that to Sears who might only pay 1.25% for in store transactions.
- US Company (0%), big company (1.25%), in store (0%), low risk SIC (0%)

We think that gambling affiliation is a rort - I tell you that the credit card companies are creaming it from merchants (and then they charge the cardholders monthly interest too!)


Mind you - they do need a lot of serious systems - and have many defaulting card holders - but still the personal credit card business is NOT cash poor !

[Gydian]

Those percentages must be pretty close, cause I assume my 3.25% breakdown is something along the lines of 0% Canadian business, 1.75% small business, 1% internet merchant, and 0.5% low risk (due to card being processed mostly online without card in hand).

[pokerprop]

No gambling but I processed a LOT of high-risk credit card transactions a decade ago. Sure it was not a lot to gambling sites, but I had no problem pumping though $500K per month over a dozen merchant accounts all registered to fake companies. I was banned and given crazy reserves on several occasions, but I was in a high profit business (similar to gambling) that I could sustain this okay.

I'm sure gambling sites do very similar to what I did and what jd suggested.

[TheGooner]

I'm sure gambling sites do very similar to what I did and what jd suggested.

Was your previous line illegal under US law? I doubt it.

I think that's the major difference here, as the UIGEA now makes it illegal for US players and US companies to make and accept payments from gambling companies.

While we might want to debate whether that includes poker and/or casino and not just sports books - the credit card companies do not want to go to court to challenge their right to process these transactions - they are happy enough to simply exit the market.

The credit card companies have the data and the tools to profile a new merchant these days and work out what their business really is. They have to make an effort to utilise those tools - and what we are seeing is that effort.

[pokerprop]

No was not explicitly illegal on a federal level same as UIGEA but I did unknowingly run processing for a pirated software company and had an issue with feds over that. but different story.

Most of what we processed involved no physical product: Internet based advertising campaigns, tele-classes, live seminars etc. At the volume we were doing and that i was processing for other high risk companies for a fee
if the merchant banks knew what I was processing than I never would have gotten processing to start and I was blacklisted a few under various companies but always had a way to process.

I had dozens of shell companies that appeared to be legit and we'd process through them.

I was a teenager at the time this all started. My business practices have changed a lot and I'd no longer risk the stuff i did then, but in the early days it was all about money.

Perhaps I'm wrong because it's been a while, but I'd struggle to see why the same methods i used wouldn't work and i've assumed this is pretty much how gambling companies have been getting away with it. The one thing they do need to change is pushing cards through first normally. They should be archiving which banks decline and then bouncing those through an alternate merchant and controlling the flow better. That's one thing we always did, I never ran the same credit card through multiple accounts. Example when someone ordered next month I'd use the same card as last. Also there was no way to link my accounts together. if I was shut off it was one account at a time. Generally in 6-12 months we'd get back 70% of so of the funds frozen (They'd always find a way to grab the rest, partially because no longer could we dispute chargebacks so every claim was became a chargeback rather than the 30% claim to chargeback ratios before.

[pokeraussie]

I am surprised this topic is not a bigger issue on this forum. If this is indeed true, this is going to have a huge impact on the poker affiliate industry. If players can't deposit with their credit cards, its next to impossible to make a deposit, and I doubt most recreational players will bother with the hassle of depositing with another method if its going to be inconvenient. Are the proposed changes just going to affect mastercard deposits for American players, or will this be a global issue? Even if its only American players this is a VERY big deal. When are the changes going to come in?