What is an MCC, and how is it affecting online gaming in the U.S.?

An MCC, or Merchant Category Code, is used by Card Associations, like Visa and Mastercard, to identify specific transaction types.  Most Associations have around 1,000 unique MCC codes.  For Visa and Mastercard, MCC code 7995 identifies transactions as gaming, which includes casino chip sales, lottery tickets, racetrack wagers and off-track betting.

In the United States, as a direct result of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), transactions that were coded with MCC 7995 were blocked, regardless of the merchant or customer.  Rather than risk the possibility of receiving significant fines by accepting these transactions it was deemed easier to simply block all transactions bearing this code.

Now that there is an emerging legal online gaming climate in several states, the Card Associations are going to need to work with the banks and acquiring processors to allow these transactions from licensed online operators.  Perhaps a clearer ruling from the DOJ would help alleviate the concerns of the financial associations in particular.

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