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The Banking Association Perspective S Grobler 2 March 2012 File: 95754

Presentation to the “Online Gambling Workshop” - Portfolio Committee on Trade and Industry, 2 March 2012 (Cape Town). The Banking Association Perspective S Grobler 2 March 2012 File: 95754. INTRODUCTION. Why regulate online gambling? Consumer protection? Revenue income?

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The Banking Association Perspective S Grobler 2 March 2012 File: 95754

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  1. Presentation to the “Online Gambling Workshop” - Portfolio Committee on Trade and Industry, 2 March 2012 (Cape Town) The Banking Association Perspective S Grobler 2 March 2012 File: 95754

  2. INTRODUCTION • Why regulate online gambling? • Consumer protection? • Revenue income? • Is restrictive regulation of online gambling feasible? • Local vs. “foreign” providers • Local vs. “foreign” punters • World Trade Organisation rules • (USA vs. EU compromise) • Commission Report – “a bigger role for the banks”?

  3. REGULATION AND COMPLIANCE • Reality vs “miracles” • Compliance costs, and who pays?

  4. INTERNATIONAL & LOCAL PAYMENTS SYSTEMS • Facilitate transactions, not restrict them • International standards & conformity • Efficient, reliable, secure, low cost, interoperable • Account number priority • Name screening (UN, OFAC) • false positives • Common Monetary Areas

  5. BANKING & PAYMENTS ISSUES re ONLINE GAMBLING (1) • Punter account types • Cheque, credit card, savings, domestic and international • Payment channels • EFT, Credit and debit card, prepaid card, mobile phone, internet, 3rd party intermediaries, vouchers all developed to facilitate safe & reliable eCommerce

  6. ISSUES Continued (2) • Credit card – Merchant acquirer • KYC on account take-on for local “licenced” or “illegal” service providers • Merchant classification codes • Resort services consolidation (e.g. hotel, dining room, casino, golf, online gambling) • Account name confusion • Common Monetary Area • Payouts/reverse cash flows

  7. ISSUES Continued (3) • Card issuer • Merchant classification codes • Physical presence of card holder • Within the country • Outside the country • Card holder not present • Transaction volumes • Bankserv “off-us” – 1.89b transactions per year average 60 per second, peaking at 152 per second on 23/04/11 (+ 80% of total transactions) • (PTO)

  8. Account numbers vs. account names • Payment systems use numbers, authorities restrict on names • False positives • Volumes

  9. ISSUES Continued (4) • “Illegal” online gambling vs. “legal” online betting • Bank confusion (“stop all online transactions”) • Difficulties in opening accounts for betting operations • Consumer perceptions • Moral issues • Child pornography vs. online gambling & lottery tickets & bingo & poker

  10. ISSUES Continued (5) • Alternative payment methodologies • Internet payments providers (e.g. PayPal, uCash) • Vouchers • Apple iTunes restrictions on SA

  11. CRIME PREVENTION • “Normal” eCommerce risks • Probity checks & controls on licensee shareholders and management • Threshold controls on punter behaviour (session wager limits, restrictions on winning payouts) • Casino lists of “prohibited” gamblers • Punter KYC and controls Control via online gambling service provider

  12. UNDER-AGE CONTROLS • Bank accounts – KYC controls • Who is actually using the computer, and where? • Parental control

  13. SOLUTIONS (1) • Local Merchant acquirer – Do-able • Licenced operators • Denial of service to identified illegal local operators • Local/resident punters – Not reasonably • Do-able • Volumes, account numbers, international systems, foreign-originated transactions, alternative structures • Over-riding suspicious transaction reporting regime still prevails for “accountable institutions”

  14. SOLUTIONS continued (2) • “New systems” vs. “Old” systems • New online gambling licences vs. established, interoperable payments systems • Consumer education re allowable vs. prohibited transactions

  15. DANGERS AHEAD • International competition & WTO challenges • Excessive local compliance burden vs. “free to use” international sites • Who is actually on the keyboard/interactive device, and where?

  16. THANK YOU.

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