In November, Visa/MasterCard publicly decided to 'crack down' on online gambling by refusing to authorize consumer credit card transactions on known online gambling sites. The cause of this came from and increasing amount of consumers who disputed large gambling charges on their credit card bills. They were claiming the credit card companies should not have allowed the charge in the first place, referring to individual State laws on sportsbook and casino. Some have been so bold as to sue the credit card companies for allowing them to build up large gambling debts, attempting to have the debt written off. In some cases, consumers won against the credit card company in court.
The Visa/MasterCard situation has certainly made it tougher to gamble on the internet. But this industry is not taking this lying down. Online casino and sportsbook companies and others have created unique e-commerce casino payment systems. For gamblers, these new systems are a bit more foreign than simply typing a credit card number and an expiration date. Usually it involves a few more steps to set up the first time, but once in place, its about as fast to use as your credit card.
"The secret is to provide a private digital cash system that is easy to use, secure, and fast," says James Duchscherer, VP Marketing of Poker.com. When gamblers from a poker room were asked what they look for most in an on-line casino, fast payouts (36%) and secure transactions (22%) topped the Poker.com survey.
Companies like Equifax, PayPal and NETeller jumped onto the scene immediately, recognizing a huge opportunity to gain market share for online commerce. Other traditional payment options like bank wire transfers and Western Union have also seen more use. Traditional check writing, while much slower due to 'snail' mail, is also used.
Digency, a new e-commerce company for the e-gaming industry, has a product called 'IP Check.' Ed Starrs, the company's CEO (also the former President of Starnet Systems) told us it is a "a secure payment platform which allows consumers to pay by online check from their local bank account. Paper checks print within our bank and are cleared through traditional check processing, while our check guarantee program insures every item."
Inet Software is a company that designs internet sportsbook software. Trip Conroy, the company's COO told StartCasino.com, "Obviously the Visa/Visa decision to declined charges from Internet gaming sites has put a dent in the industry, but it won't stop things. We have since gone out a found some European merchants that are still taking charges from gaming sites to use for our payment processing. We are also exploring the 'no-name' debit cards, and other 'e-payment' solutions that work as cash."
Richard Brightling, Vice President at IQ-Ludorum, agrees that debit cards are becoming more popular. He said, "Debit cards are the way to go. Banks in Europe are starting realize the potential for this market, and they are starting to look at it much more seriously."
"We have integrated our payment system with Equifax, PayPal and NETeller, enabling our Licensee base to offer alternative online payment methods to all of their Players," says Mark Waters, Director of Business Development of Gamblingsoftware.com (an online casino software company). "All three systems provide an added guarantee to our Licensees in verifying the identity of the Player, which has had a large impact in eliminating instances of fraud."
Bryan Abboud, The managing director of Interactive Gaming & Wagering told StartCasino.com about their new e-commerce system for software licensees, "IGW has developed a routing system whereby the transactions, if not successful with the initial processor, will move onto the next processor automatically-all seamless to the player."
"In our experience there are pros and cons with respect to each of the alternative payment mechanisms," said Darold H. Parken, President of Chartwell Technology Inc., a software provider. "We can not say which is most effective however we do see an increase in requests for NETeller and Firepay products."
Due to the Visa/MasterCard crack down, less casino companies have advertised on the internet as a result. "We've seen a significant decline in the amount of advertising dollars that are being committed by our on-line casino customers", says Gian Perroni, President of MarketEdgeDirect.com. "We expect the industry to recover as we get into the month of May. As their customers become more comfortable with the wide array of payment options, and their deposits reflect this, the casinos will be able to return to their previous marketing expenditures."
Marc Lesnick is webmaster of StartCasino.com - an online casino business information web site for entrepreneurs.