PAYMENT TECHNOLOGY
credits based on returns or volume. To further responsible gaming initiatives, some states have limited funding methods by restricting the use of credit cards and have considered restrictions on player activity funded with joint accounts. There are also restrictions on the use of “gift cards” and “prepaid cards” in some states, although those terms are not always aligned with FinCEN terminology. A funding transaction typically comprises five parties: the card holder (the individual patron), the issuing bank (the financial institution that has issued the debit or credit card to the patron), the card network, the card acquirer (the processor of the transaction), and the merchant (the casino). When a card holder attempts to fund a transaction, there are several pieces of information that are passed along to an acquirer that enables it to determine whether to accept the transaction. When a card holder attempts a transaction using either a debit or credit card, the card holder inputs the 16-digit card number associated with that card. The 16-digit number will indicate various pieces of information including over which network the card was run, whether the card is a debit or credit transaction, and additional information about the patron’s account. What this number does not include is information that would allow an acquirer to determine if an account is held by a sole person or multiple individuals. That information is only held by the card holder on one end of the transaction and the issuing bank at the other end. The other actors within the payments chain cannot make a determination as to whether the account is a single or joint account and how many people are authorized to use it, only whether the individual attempting to use the account is authorized to do so. When a cardholder attempts to deposit funds with a debit or credit card, the acquirer is the first to receive information about the proposed transaction. The acquirer communicates with the issuing bank regarding the cardholder’s attempted deposit. The acquirer ensures that there are available funds in the account for a debit account or available credit should
a deposit be issued by a credit card transaction. The acquirer may also conduct an address verification check to ensure that the customer is an authorized account holder. However, there is no current verification method available for an acquirer to confirm that there is only one authorized account holder. For transactions that enable a customer to utilize their bank account to deposit funds into their wagering account via a check that is processed by an automated clearing house (ACH), similar information would be shared between the issuing bank and the acquirer processing the transaction. Like the card process, the exchange of information to facilitate the transaction does not include any details regarding the ownership of the account – whether sole or joint ownership. The utilization of non-reloadable prepaid cards or credit cards as a primary method to fund account wagering can be tracked and blocked using the BIN associated with the payment method. However, it is virtually impossible to track and block the utilization of such cards as a secondary or tertiary funding method.
Conclusion
Casinos are often the final environment in which consumers are required to use cash to fund their purchases. The AGA data quoted above and the success of proof of concept early adopters shows a latent demand for a cashless casino experience. With appropriate regulation of patron identity and source of funds, a cashless environment can be more secure and provide better visibility of fraud and/or problem gambling. For regulators, cashless casinos may thus better achieve their goals of protecting patrons. Early indications suggest that patrons quickly accept cashless casinos and operators benefit from increased customer spend, reduced costs of cash handling and greater customer loyalty. As a genuine benefit to both customers, operators and regulators, their deployment is likely to become the norm.
JENNIFER CARELTON Chief Legal Officer Sightline Payments For information contact jcarleton@sightlinepayments.com
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IMGL MAGAZINE | APRIL 2023
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