The payment regulators in the UK mentioned that the card market is not working well after a quick review of the fees charged by the industry, such as those charged by MasterCard and Visa. The payment system regulator said on Thursday that these companies have raised their processing fees by almost 25% since 2017.
Soon after this news, MasterCard and Visa also caught processing payments for unlicensed or illegal gambling sites and accused them of scamming users in the UK market for thousands of pounds.
Investigations revealed these payment processors’ failure to block unlicensed transactions despite their previous commitments. UK customers were heavily scammed last week out of massive sums and some even faced financial ruin. This called for politicians and regulators to take up urgent action against MasterCard and Visa, who were tied to scam gambling sites in the UK.
Payment Giants’ Links to Illegal Gambling Sites
Both MasterCard and Visa were caught on several unlicensed gambling sites. MasterCard was given permission to provide crypto as one of their payment methods on online platforms, targeting UK players in the world of live sports betting and casino gaming. Visa too was offered on such websites.
Both payment processors gain from such arrangements and have earned relatively small fees with every transaction made.
The links of MasterCard and Visa to unlicensed websites were revealed during an investigation which Investigate Europe coordinated into a chain of online casinos in UK, operating in Europe despite being restricted or banned.
These websites operate without any UK gambling licenses, but still attract millions of players. The payment processors were charged with links to these websites that left one particular customer suicidal, who lost around £60,000 gambling unwittingly on an unlicensed gambling website. Another player lost over £200,000 and said, “Those who run these casinos have stolen my life,”
Nine UK gambling websites were found without any gambling licenses, which are mandatory by gambling laws, but they were still available in search listings or were promoted on various social media platforms. Of those nine unlicensed websites, five most commonly used websites drew around 4 million visits by UK players from October to December.
Later they were accused of withholding winnings and deleting player accounts once customers complained about the inability to withdraw their winnings. The website operators, based overseas, neglected the requests and said that they prohibited all illegal activities on their platforms and would carry out further investigation.
The regulators, including the Gambling Commission, were aware of such platforms but were slow to act. This shows the existence of enforcement challenges that still persist in the iGaming industry in the UK.
Calls for Action & Industry Response
The Gambling Commission earlier received many complaints about these unlicensed gambling websites that still remained accessible, accepting transactions from UK players and providing sterling deals such as bonuses up to £1,800 and free spins. They were previous agreements too, that involved blocking in legal transactions by the regulators, but it was not enforced.
The recent Visa and MasterCard issues have raised questions about the importance of monitoring unlicensed gambling transactions and put the Gambling Commission under pressure to increase oversight.
Both MasterCard and Visa have claimed that they prohibit illegal activities on their networks and the responsibility was down to the financial institutions and banks who need to ensure that the merchants act lawfully according to the rules set by the payment processors.
Neither MasterCard nor Visa have commented on the agreements made earlier with the Gambling Commission to prohibit unlicensed transactions.
Visa stated that the illegal activities were “explicitly and unequivocally” prohibited while another spokesperson mentioned, “We take this very seriously and investigate all reports of illegal activity,”. He also added that the organization does not have any direct relationship with the merchants and only works with collaborators, terminating all those who sell illegal services.
Meanwhile, while testing the Observer, most payments were transacted through PaymentIQ, a payment tool that is used by gambling websites. This “payment orchestration” element is mostly used by companies in the high-risk sector in order to channelize transactions through different institutions, which maximizes the chances of approval.
PaymentIQ has also come under the radar with the MasterCard-Visa scam and the industry experts highlight the complex financial ecosystem, which promotes unlicensed gambling on a national and international level.
- Mastercard and Visa claim they prohibit illegal activity but shift responsibility to banks.
- PaymentIQ, a payment tool used by gambling sites, also under scrutiny.
- Industry experts highlight a complex financial ecosystem enabling unlicensed gambling.
