Last week Mark MacCarthy, the senior vice president for public policy at Visa U.S.A. Inc., told a U.S. House of Representatives subcommittee that the responsibility for keeping Americans from participating in Internet gambling shouldn't be placed on Visa's shoulders.
The Subcommittee on Oversight and Investigations was hearing testimony relating to the financial transaction side of Internet gambling. Executives from various industry associations and problem gaming centers testified. Rep. Sue Kelly, the subcommittee chairwoman, said the purpose of the hearing was to ask questions and raise issues about Internet gambling. Several House members are said to be coming forth with bills aimed at making the activity illegal.
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"It is our view that the responsibility for illegal acts should be placed squarely on the shoulders of the illegal actors themselves--the gamblers and the casinos who are engaging in illegal gambling activities. Payment systems operators, like Visa, are not in the gambling business."
- Mark MacCarthy, Visa
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MacCarthy was the only representative from a credit card company to testify. On behalf of Visa, he expressed the opinion that payment institutions should not be charged with policing duties when it comes to making sure that Americans aren't gambling online.
"It is our view that the responsibility for illegal acts should be placed squarely on the shoulders of the illegal actors themselves--the gamblers and the casinos who are engaging in illegal gambling activities. Payment systems operators, like Visa, are not in the gambling business," he said.
MacCarthy said that Visa has taken steps to address Internet gambling since its policy is that "Visa cards should be used only in connection with legal transactions." The company tells card issuers to warn cardholders of that fact.
He said that the large volume of transactions--35.5 billion per year--forces Visa to rely on a merchant coding system to determine the nature of transactions. Online gambling merchants must use a gaming code as well as an electronic commerce code; the combination lets Visa know the deal is likely an online gaming transaction and enables issuers to deny authorization.
That system, however, relies on the merchant to enter the correct code. There is a penalty for not doing so, but there are also, as MacCarthy said, "obvious incentives for some Internet gambling merchants to try to hide from Visa and its members." In addition, the combination of codes doesn't tell the issuer whether the transaction is illegal in a particular jurisdiction.
Another complicating factor is services that allow users to purchase e-cash with credit cards and use the money towards Internet gambling.
"It is our belief that these alternative forms of payment will become the payment system of choice for Internet gambling, in part to avoid the coding and blocking systems that Visa and the other traditional payment systems have established," MacCarthy testified.
MacCarthy declined to comment much further than what he stated at the hearing. Other credit card companies were similarly tight-lipped. A representative from Discover Card would only say that Discover has a policy against contracting with merchants that accept Internet gaming transactions.
Joanne Fisher, a corporate spokeswoman for American Express, said the credit company has a worldwide policy against allowing its cards to be used in any kind of gambling purchase, be it on the Internet or in an actual casino. She said that this has been the policy of America Express since the early 1990s.
"We're one step removed," she said. "We're not signing the merchant to begin with."
Under questioning from Rep. Bob Goodlatte, MacCarthy said if Visa found out that an Internet gaming company was offering online gambling to Americans, it would "take steps to immediately remove that merchant from our payment system."