PAYMENTS 101. Provided by. Tim Richards GM/SVP of Interactive Solutions

Transcription

1 PAYMENTS 101 Provided by Tim Richards GM/SVP of Interactive Solutions

2 Overview Payment and Settlement Life Cycle Merchant Category Codes (MCC s) and Merchant Verification Values (MVV) High Risk Merchants The volume of Big Banks Debit and Credit Cards ACH Transactions Insured Depository Accounts Pay Walls and Wallets

3 Authorization Lifecycle

4 Clearing and Settlement Lifecycle

5 Merchant Category Codes Merchant Category Codes (MCC) Four digit number assigned to a business and used to classify commerce by type of goods or services it provides UIGEA mandates that legal gaming sites must process using the correct codes provided by the card systems or face legal action Accepting the Risk BOTH the Merchant Bank AND the Card Issuer Bank must be willing to accept the risk and allow the MCC to process When loading a general purpose account that is primarily used for gaming, the correct MCC must be used Merchant Verification Value (MVV) Additional code provided by Visa after verification process Offers little relief as it is passed after the MCC code igaming MCCs All gaming Horse racing, dog racing and non-sport internet gaming (for MasterCard only) Lotteries (for MasterCard only)

6 High Risk Merchants To qualify for this right to process as a High Risk Merchant, a merchant must comply with the following: PCI-DSS requirements and audits Implement fraud controls Provide chargeback monitoring One time registration fee of $50,000 and an annual $500 fee for each merchant/site registered Thoroughly vet the gaming site and receive a legal opinion as to the nature of its legality All transactions using the MCC codes 7995, 9754 or 9399 in a non face-to-face manner are High Risk for both MasterCard and Visa The gaming industry needs to lobby the card networks once relevant data is available showing that because of implementation of both KYC and GeoLocation, igaming should not be considered High Risk

7 Work with the big banks Highest Purchase Volume Rank Issuer (Billions) 1 Amex $ Chase $ B of A $ Citibank $ Capital One $ Discover $ U.S. Bancorp $ Wells Fargo $ Barclays $ USAA $33.20 Issuers 1 thru 5 account for 71% of all volume Issuers 1 thru 10 account for 86% of all volume Without the top banks supporting igaming we cannot be successful as an industry AMEX and Discover will not authorize igaming purchases This is due to being both the bank and card network

8 Credit and Debit Card Use When cards are used in a non Face-to-Face manner they are deemed High Risk PIN s can only be entered on Triple-DES encrypted PIN pads (TDES EPP) PC s and Mobile devices do not have this capability therefore all transactions are card not present Signature is not allowed in a card-notpresent transaction Government assistance is often provided via debit accounts Payment providers need to ensure that all BINs associated with EBT cards and other assistance cards can be blocked In Europe, MasterCard and Visa currently allow payouts larger than the original purchase to be put back on credit cards or debit accounts This is to compete with prepay programs Refunding wins to a card is not allowed in the US If there are too many refunds/returns the card networks may: Audit you Deem you a High Risk merchant or Discontinue your affiliation

9 ACH Transactions ACH is essentially an electronic check; Stands for Automated Clearing House Funding a Site Not immediate without warranty Generally clears the next banking day Warrantied transactions allow players to access their funds and play immediately An ACH transaction requires the payment provider to have an ODFI to essentially sponsor the transaction ODFI Originating Depository Financial Institution This is a similar requirement and risk as the Merchant s Sponsoring bank in a credit/debit transactions ACH enjoys success in the ilottery and online OTB markets Removing funds ACH can be used for a player to remove funds or winnings from their wagering account or wallet Prior to allowing this transaction a verification of the account is generally required This involves the patron validating the amount of a micro-transaction ACH funds can be delayed based on KYC or velocity checks Today ACH, Check and prepaid cards are the most common methods for removing or accessing funds ACH will be the most cost effective

10 Insured Depository Accounts Any funds being held in a wagering account or wallet should be held in an insured depository account The FDIC has shown willingness to extend its coverage to sub-accounts of a single depository account that goes over $250,000 The bank or account holder must maintain and report on the balance of each sub-account Any funds in the sub-account that exceed $250,000 will not be covered by the FDIC

11 Pay Wall A pay wall is the UI the prompts allowing a patron to pay for an e-commerce purchase It generally accept various forms of payment and can hold the patron's payment profile in a PCI environment By a site using a 3rd party pay wall or wallet they can alleviate their PCI and PII burdens as it relates to payments

12 ewallets Primarily used to aggregate various payment forms and balances of funds not held by a wagering account Preferred by ipoker players as a quick and inexpensive way to move funds between sites Casinos desire them as a way to bridge their disparate landbased and internet gaming channels They can also bridge those same channels for loyalty and rewards Stored Value rules and the Card Protection Act of 2009 likely apply and need to be followed Need to have escheatment procedures in place for abandoned accounts Can assist with Responsible Gaming Velocity and exclusion controls can be applied to help players across multiple systems and sites

13 Thank you Please note that this presentation is meant to be informational only and not a complete list of requirements for compliance. The area of payment rules, regulations and banking laws are very fluid and advancing regularly. Please be sure to see advice from competent counsel and payments experts.