IBA Compliance Connection

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Are you aware of any law or rule that would prevent us from blocking all online gambling transactions, even if lawful? Also, does the state of Illinois need to take action on the new merchant category codes for lawful gambling transactions before merchants can begin using them? How are gambling businesses assigned codes?

Jul 28, 2015

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No, we are not aware of any law or rule that would prohibit you from blocking lawful gambling transactions, assuming that your account agreements permit you to block those transactions. When Regulation GG was issued, the Federal Reserve stated that it does not require financial institutions to process gambling transactions if they have decided “for business reasons not to process such transactions.”

No action on the part of Illinois is required before merchants may begin using the new category codes. Both Visa and MasterCard require a gambling merchant to register with the card network before using the codes.

For resources related to our guidance, please see:

Prohibition on Funding of Unlawful Internet Gambling Final Rule, 73 Federal Register 69381, 69391 (November 18, 2008) (“The Agencies continue to believe that the Act does not provide them with the authority to require designated payment systems or participants therein to engage in any particular line of business or process any particular transactions.”)

MasterCard Rules (May 28, 2015 update) (“A U.S. Region Acquirer may use MCC 7801 (Internet Gambling) or MCC 7802 (Government Licensed Horse/Dog Racing) . . . if the Acquirer has first registered the Merchant or Submerchant with the Corporation as described in section 9.4.2 of the Security Rules and Procedures manual.”)

MasterCard Security Rules and Procedures (February 15, 2015), Section 9.4.2, page 67 (Procedures for registering “non-face-to-face gambling merchants.”)

For more information, MasterCard refers to the following bulletins, which are available only to MasterCard network participants: “Revised Standards for New Merchant Category Codes,” Global Operations Bulletin No. 11 (November 3, 2014) and “Gambling Merchant Category Codes — Clarification,” Global Operations Bulletin No. 3, (March 2, 2015)

Visa Merchant Data Standards Manual (October 14, 2014), page 7 (Merchants using codes 7800, 7801, or 7802 “require special registration with Visa Inc.”)

For more information, Visa refers to the following bulletin, which is available only to Visa network participants: April 2015 VisaNet Release