Nevada’s largest bank is moving to prohibit its customers from using Visa and MasterCard accounts for kaya qiu qiu.
On Dec. 1, Wells Fargo Bank amended cardholder agreements for its Visa and MasterCard credit and debit card customers. The amendment banned the use of the cards for any unlawful purpose — and specifically “to facilitate online gambling.”
“This is a credit card industry issue,” said Daphne Larkin, spokeswoman for Wells Fargo in San Francisco. “We didn’t want to find ourselves in the position of doing something illegal, so we started now, because the law is expected to change.”
The ban follows a dictate from Visa International that cardholders must be informed that Visa cards can’t be used for illegal purposes by Dec. 1. This dictate does not specify Internet gambling, though Visa warns customers to be cautious before using their cards for this purpose.
“Internet gambling may be illegal in the jurisdiction in which you are located, including locations within the United States,” Visa’s “Internet gambling advisory” on its website reads. “Visa cards may only be used for legal transactions. Display of a payment card logo by an online merchant does not mean that Internet gambling transactions are lawful in all jurisdictions in which the cardholder may be located.”
MasterCard provides similar language to its cardholders, but didn’t require member banks to provide such notices by Dec. 1. Still, the Wells Fargo ban applies to all cards issued by the bank, including MasterCards and cards from banks that recently merged with Wells Fargo, including Norwest and First Security.
Internet gambling is specifically prohibited by Nevada state law.
Both Visa and MasterCard require any Internet casino accepting their credit cards to include a message that tells cardholders to be aware of local laws before placing online wagers.
The reason Visa isn’t issuing an outright dictate against the use of credit cards for Internet gambling is that laws vary by location across the world, said Visa spokeswoman Casey Watson.
“It’s up to the bank to determine their overall policy,” Watson said. “A bank in Monaco will most likely approve it. (Internet gambling) is legal in Monaco, so it’s … not an illegal transaction within your jurisdiction. We acknowledge that.”
Internet gambling has also been prohibited for cardholders of Providian Financial, the nation’s fifth-largest credit card issuer, for nearly a year. Attempts to process a credit card transaction by an online casino will automatically be declined by Providian.
Providian banned ‘Net bets after a California customer sued the bank for attempting to collect on debt she incurred while gambling on the Internet. Wells Fargo, Visa and MasterCard were also among the defendants.
Visa may not have a mandatory ban against Internet gambling, but it is taking steps to curtail it. Under new Visa policies, online casinos are banned from paying customers by issuing credits to their credit card accounts.
Congress has also considered federal legislation banning the use of credit cards for Internet gambling. Rep. Jim Leach, R-Iowa, chairman of the House Committee on Banking and Financial Services, introduced a bill in May that sought to ban the use of any credit instruments, electronic funds transfers or checks in the use of Internet gambling. The bill was never introduced to the floor for a vote.
For the Internet gambling industry, any move against credit cards threatens its lifeblood. Internet gambling expert Sebastian Sinclair of Christiansen Capital Advisors estimates that 90 to 95 percent of the funds of the $11 billion in funds provided to online casino accounts in 1999 came through credit cards.
“This (restricting credit card use on Internet casinos) is a growing trend,” Sinclair said. “What’s happening here will drive … Internet gambling away from credit cards, but I think it has to anyway. Credit cards are not the medium for this industry.”
But even if other U.S. banks begin following Wells Fargo’s and Providian’s lead and begin banning online gambling outright, Sinclair believes it will make little difference for casino operators.
“Wells Fargo may take this position, but international banks are not going to feel this way,” Sinclair said. “In the United Kingdom, they’re not going to have a problem processing these transactions.”
The simple reason, Sinclair said, is that credit card use on Internet casinos can be quite profitable, despite the concern that players could “charge-back” their losses. Where general merchants must pay a 2.5 percent fee to the bank for each credit card use, Internet casinos routinely get charged fees of 5 percent to 7 percent, Sinclair said.
“They’re probably not doing too much worse than the operators in this business,” Sinclair said. “I really don’t think they (banks) want to get out of this business. There are hundreds of other banks that won’t (ban credit card use at Internet casinos), so it’s not a blow to the industry.”
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