The decision by one of the largest banks in the world prohibiting its credit card holders from using their cards to pay for online gambling activities has left some Net betting operators baffled.
Recently HSBS plc, an internationally known bank, sent out notification to its credit card holders that included the following statement:
The Card shall not be used for payment of any gambling transaction or other transaction which is illegal under applicable laws and the Bank reserves the right to decline processing or paying any Card Transaction which it suspects to be a gambling or illegal transaction.
According to some reports, bank officials did not want to be accused of aiding what might be considered an illegal gambling activity or get stiffed by customers who couldn't pay their gambling debts. There was no indication of when the policy would be put in effect. While the statement does not specify Internet gambling, its birthplace implies Internet gambling.
Although HSBC is now headquartered in London, it first began operations in 1865 as the Hongkong and Shanghai Banking Corporation Limited based in Hong Kong. Although the bank has grown extensively over the years, merging with or acquiring other banks around the world, it's still perceived as an Asian corporation. And that leads to the heart of the matter for several bookmakers.
Calling it "pure speculation" William Hill CEO David Harding suggested that the move could be a result of "pressure from the Hong Kong Jockey Club."
Another European bookmaker had similar thoughts. The spokesman blamed the bank's precipitous move on Internet gambling prohibition legislation being considered by the Hong Kong government. Under its terms, those found guilty of aiding or "facilitating" illegal gambling could be fined up to HK$7 million and/or imprisoned up to seven years. The bill is still in committee and unlikely to be passed before a government commission review is completed, something that could take months or even years to be done.
How much this will affect Net betting operators is unclear, as at least one operator said only a small percentage of his customers actually use the HSBC issued card. "The vast majority of our customers use MasterCard to pay for their online gambling," he explained, "then followed by Visa."
He added, "We interpret this move as a very presumptuous move since it's not illegal to gamble on the Internet." The spokesman also felt customers' rights were being trampled by the bank's decision to disallow online gambling purchases.
It's believed that HSBC is the first non-American card-issuing bank to prohibit customers from using their credit cards to pay for online gaming transactions, leading some to speculate on how Washington D.C. politicians will see this move. Just last week a bill was introduced that would cut off most payment systems used for Net betting, including the use of checks, credit cards, debit cards and other electronic payment methods. Rep. James Leach of Iowa introduced HR 566, the "Unlawful Internet Gambling Funding Prohibition Act."
Although Leach's office was unaware of the bank's policy, a spokesman guessed that HSBC could have been hit with a large number of chargebacks from customers unable to pay for their gambling losses.
Meanwhile, Charles Crawford, executive vice president for Internet Billing Co. Ltd. said this move was unlikely to have much affect on Internet gaming sites if this move only affects non-American cardholders. "It's just another log on the fire," he added. "You can expect to see this trend to continue."
HSBC officials could not be reached for comment.
Vicky Nolan joined the IGN staff in October 1999. She's best known for inventing fire, the wheel and swiss cheese. She can be reached at email@example.com