How do Card Issuers Charge for Casino Payments?
Processing casino gambling payments remains a controversial subject for several reasons. Many card issuers take the stance that online gambling is a high-risk industry. Whereas a provider may have no issue handling your grocery shopping transactions, likely, that it isn’t too happy to process your casino payments.
Further issues occur for card providers regarding those gambling platforms established offshore: different local rules and regulations and flat-out bans on some offshore card payments.
Whilst new online casinos may hit the ground running with their bonuses and game selections, what about payments? Thanks to the lack of credit and transaction history, startups can struggle with their hands, using higher-risk payment providers and passing on inflated charges to players.
The Current Situation
Laws and regulations are constantly changing regarding payments and online casinos. In 2020 the UKGC banned all transactions using credit cards on UK-based gambling platforms. Many card issuers are now also taking matters into their own hands, implementing rules and adding charges to these transactions. Some debit card providers also take the same stance as credit card issuers.
It’s something to check before you begin depositing and withdrawing at your favourite online casino.
MCC Codes and Regulations
How do card issuers recognise payments to online casinos? They allocate a Merchant Category Code to a merchant’s business category. The IRS implemented this four-digit code to help citizens report their income on 1099 forms. Things in the US went one step further in 2015 when three specific gambling MCCs were developed.
These codes were set to highlight regulated and licensed gambling establishments only.
If your card payment to an online casino does not display one of these codes, then a message is sent to the bank not to process the transaction. There are higher-risk payment providers which will allow casino payments. But these are likely to overcharge you for their services hugely.
What Type of Charges can be Applied to Casino Card Payments?
- Foreign transaction fees: If you play at an online casino that isn’t based within your country of residence, you may face these fees. These will be based on markups for currency exchange rates at the point of your transaction.
- Credit card transaction fees: If you manage to pay using a credit card, you can be charged up to 4% of the total transaction amount. There’s no point in depositing and withdrawing smaller amounts with a minimum guaranteed fee.
- Cash advance fees: It’s a good idea to check the small print of your card issuer’s agreement to mention casino payments. Very often, these types of transactions are classed as cash advances. This can be very costly in the long run, with anything up to 5% of the total transaction amount added to your payment.
- Increased interest rates: Credit card cash advances usually attract a much higher interest rate than standard purchases. This will appear as an added fee on your monthly card balance.
How to Avoid Being Charged for Casino Card Payments
Using an eWallet like PayPal for gambling will solve the issue of charges. You can easily use your credit or debit card to top up one of these handy wallets, no questions asked. This will allow you to deposit and withdraw from an online casino without a trace of card payment.
Choosing payment vouchers is another savvy way to avoid charges. These can be purchased in various outlets or even online and then used to make a deposit.
The online casino usually permits a withdrawal of winnings by bank transfer. Crypto gambling is gaining rapid popularity and enables you to use your Bitcoin to make casino payments. Top up your wallet with your debit or credit card, then transfer the crypto to your online casino balance.
Kevin Flynn is a lean start-up business consultant, PowerMBA, and Senior Financial Markets Editor at Investors Prism. He lives in Leominster, Massachusetts, with his wife…More info on Kevin Flynn