UK Payment Processors Reach Payment Blocking

March 13, 2014 by

uk-payment-processorsThe companies that process online gambling payments have a sort of conflict of interest when it comes to blocking payments from unlicensed casino sites. On the one hand, they want to look like they are working with the government to help prevent unlicensed sites from reaching customers. On the other hand, blocking these casino sites directly cuts into their bottom line and costs them money. When a conflict of interest like this happens in any industry, the companies will usually only go against maximizing profits if it looks like they will help them in the long run.

Voluntary Agreement by UK Payment Processors

Earlier this month, the House of Lords shot down an amendment to the Gambling Licensing and Advertising Bill that would have stopped payment processors from allowing transactions to unlicensed online casinos in the United Kingdom. In spite of the vote of 171 for and 185 against the amendment, three of the top payment processors have come together to form a voluntary agreement to stop the transactions anyway. Visa, MasterCard and PayPal have all come together in a voluntary agreement to do this.

Analysis of This Move

They say there’s strength in numbers, but in this case it’s more like there’s weakness in a lack of numbers. If only one company agreed to this, it would put them at a disadvantage against the competition because of the lack of business. This is why it’s so important that multiple payment processors come together in this type of agreement at the same time.

So why would they agree to something that cuts into their bottom line? There are two reasons. First, it’s looking like there will be a third read of the bill soon, and it could pass regardless forcing their hand. If they act ahead of time like this, they get free publicity and help for their public image for doing something that they will likely have to start doing at some point anyway. Second, gambling transactions to unlicensed sites aren’t necessarily protected and could be seen as a liability.

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