UK Regulator Clarifies Credit Card Ban

The UK’s Gambling Commission has reiterated that the ban on using credit cards to finance gambling also applies to online wallets that are funded by credit cards. The new ban, which was introduced on April 14th, is aimed at reducing the risk of UK gamblers being harmed. It will now be even more difficult for customers to gamble using credit now that it is clear that e-wallets are included in the legislation.

Someone typing on a computer keyboard, holding a credit card.

By making it harder to gamble on credit, the regulator aims to reduce instances of harm. ©Cottonbro/Pexels

Harder to Gamble Using Credit

Addressing UK operators, the regulator reminded the industry that included in its ban on credit cards are credit card payments made through MSBs, or Money Service Businesses. For users of online casinos and betting services, this means that deposits can no longer be made using e-wallets that have been funded from a credit card.

E-wallets are popular method for paying for goods and services online. Users can either deposit funds into their e-wallet or link it directly to a bank account. E-wallets are most commonly used when shopping online, although being able to use them on mobile devices means that they can also be used for contactless payments on the go.

These days most people have access to some kind of e-wallet, and well-known services include Apple Pay, PayPal and Venmo. Pros include convenience, security and privacy. Most banks don’t take a positive view of customers who gamble, so using separate services has been advantageous for those seeking loans and mortgages. With that comes risk though, and it is this that the regulator is trying to address.

The credit card gambling ban was first announced in January, in a move that aims to protect UK customers from gambling harms. Justifying the landmark decision, the regulator explained that it wanted to stop consumers from being put at risk of gambling more than they can afford to.

The ban came into force on April 14th, and since then operators have not been allowed to accept payments from credit cards. However, included in the new license condition 6.1.2 is the stipulation that gambling operators must not accepts funds from MSBs or e-wallets that allow credit card deposits either.

According to the Gambling Commission, by making it more difficult to access and use borrowed money for gambling, consumers will be discouraged from attempting to do so. This in turn will reduce the risk of harm. If e-wallets were not included in the ban, the credit card ban would be much less effective as it would simply be too easy for customers to get around the rule.

While the Gambling Commission has maintained that it made its plans clear during the consultation process and in its following responses, it seems that operators may not have been adequately prepared for the ban. Only if an MSB has prevented the use of credit cards for gambling itself can an operator accept any payments from it.

To clear up any remaining misunderstanding, the Commission has reiterated that this ban applies to electronic money services, for example Revolut, which accept credit card funds from customers. Operators will now be responsible for implementing their own systems to make sure that payments are not accepted through these products.

There are two main factors that the Gambling Commission wants to remind operators of, before accepting payments through MSBs. Firstly, operators need to be sure that customers cannot fund their e-wallet using deposits from credit cards. Secondly, all payments from an MSB will need to be rejected if that service has not put in place a system to block credit card deposits being used for gambling through its own services.

Reducing Gambling Harms

When it was first reported in January, the ban on gambling with credit card deposits seemed like it could make things difficult for the industry. Combined with the negative impacts of the COVID-19 pandemic, this latest development will put even more pressure on operators.

The ban applies to online services as well as payments accepted at real-life betting shops and casinos. According to data collected by the regulator, 24 million adults in the UK gamble, with 10.5 of these gambling online. Figures collected by UK Finance say that in 2018, 800,000 people in the UK gambled using funds from a UK issued credit card. Meanwhile, the Gambling Commission’s figures say that 22% of online gamblers who use credit cards for wagering fall into the category of problem gamblers.

These statistics show just how common using credit card funds to gamble with was in the UK, preceding the ban. This means that the ban may hurt the industry, but it will also significantly reduce instances of customers being put at risk.

Earlier this month campaigners also pointed out gamblers in the UK are also able to gamble using credit on a mobile phone. Described as a ‘loophole’ in the new legislation, many online operators are still allowing customers to make deposits using a pay-by-phone option.

This can be viewed as gambling with credit, as many people pay a monthly phone bill. This bill in turn could also be paid for with a credit card. Charities campaigning against gambling harms argue that this is not good enough, and that inconsistencies like this will make the new credit ban ineffective.

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