MCC 7995 Compliance Guide for Global Gambling Operators

The gambling industry is a complex web of regulations and compliance requirements, with Merchant Category Code (MCC) 7995 serving as a critical thread. This code, specifically assigned to “Betting, including Lottery Tickets, Casino Gaming Chips, Off-Track Betting, and Wagers at Race Tracks,” is pivotal for global gambling operators. It identifies transactions tied to gambling activities, ensuring accurate categorization for banks, payment processors, and regulators.

However, compliance with MCC 7995 isn’t uniform across the globe. Regions like Canada, Australia, New Zealand, and Brazil each have their own regulatory frameworks, creating unique challenges for gambling operators.

In this comprehensive guide, we will delve into the intricacies of MCC 7995, examining its impact on the gambling industry and providing essential insights for operators seeking to navigate compliance in these key markets.

What Is MCC 7995 and Why Does It Matter?

Merchant Category Codes (MCCs) are four-digit numbers used by payment processors and financial institutions to categorize transactions. MCC 7995 is specifically assigned to gambling-related transactions.

In a card-present environment, a Merchant that conducts gambling transactions must use MCC 7995 (Betting, including Lottery Tickets, Casino Gaming Chips, OffTrack Betting, Wagers at Race Tracks and games of chance to win prizes of monetary value) for those transactions. If the Merchant also sells other goods or services, it must use the appropriate MCC for the other services^[1].

For operators, this code serves several crucial purposes:

• Transparency: Banks and payment processors can easily identify gambling-related transactions, which is vital for compliance with anti-money laundering (AML) and regulatory requirements.
• Risk Management: MCC 7995 helps financial institutions assess the risk associated with gambling transactions, as the industry is often considered high risk.
• Authorization Decisions: Some banks or card networks may restrict or decline MCC 7995 transactions based on local laws or internal policies.

Failing to comply with MCC 7995 regulations can result in declined transactions, penalties, or even the loss of payment processing capabilities.

Canada: Provincial Oversight and a Growing Online Market

In Canada, gambling regulations are shaped by a unique framework where provinces hold the authority to regulate sports betting and other gambling activities within their borders. This decentralized system allows each province to tailor laws to their residents preferences but creates a fragmented regulatory landscape that operators must carefully navigate.

Key compliance points in Canada

• Provincial Authority: Compliance with MCC 7995 in Canada requires adherence to specific provincial rules. For example, Ontario’s Alcohol and Gaming Commission (AGCO) enforces strict oversight of iGaming operators, while other provinces like British Columbia have their own frameworks.
• Transparency and Consumer Protection: Provinces emphasize transparency, requiring operators to clearly outline terms and prevent misleading advertising. Failure to meet these standards can result in fines or suspension of licenses.
• Impact of MCC 7995 on Transactions: MCC 7995 categorization for gambling transactions means operators must implement secure payment solutions to reduce chargebacks and improve authorization rates.

Industry growth in numbers

The gambling market in Canada is thriving. With over 19.3 million active online gamblers, gambling revenues in Ontario alone hit $1.4 billion between April 2022 and March 2023. The sector is projected to grow 6.39% annually between 2024 and 2029, reaching a market volume of $5.71 billion by 2029. For operators, this growth highlights the importance of staying compliant while capitalizing on expanding consumer interest^[2].

Australia: A Mature and Heavily Regulated Market

Australia’s gambling industry is one of the most mature globally, contributing AUD $6 billion in annual revenue and $16.8 billion in industry value added (IVA). However, this significant economic contribution comes with robust regulatory oversight, particularly for online gambling^[3].

Key compliance points in Australia

• Interactive Gambling Amendment Bill 2016: This legislation introduced stricter requirements for online gambling operators, including limitations on certain services and tighter licensing procedures.
• National Consumer Protection Framework: Designed to enhance consumer protection, this framework introduced measures such as mandatory account verification, deposit limits, and responsible gambling initiatives.
• MCC 7995 Transactions: Australian regulators monitor gambling transactions under MCC 7995 to ensure operators comply with anti-money laundering (AML) and counter-terrorism financing (CTF) laws. Non-compliance can result in severe penalties.

Opportunities in the Australian market

Despite the stringent regulations, Australia’s gambling industry continues to grow steadily. For MCC 7995 operators, investing in fraud prevention tools and adhering to responsible gambling measures can ensure compliance while maintaining trust with consumers in this highly competitive market.

New Zealand: A Digital Revolution in Gambling

New Zealand’s gambling market has experienced a digital transformation, with iGaming taking center stage. Approximately 80% of adult New Zealanders engage in some form of gambling annually, and the growing preference for online platforms highlights the importance of compliance in the digital realm^[4].

Key compliance points in New Zealand

• Online Gambling Oversight: The New Zealand Department of Internal Affairs regulates gambling activities, including online transactions. Operators must comply with laws prohibiting unlicensed gambling services.
• Data Protection and Transparency: MCC 7995 operators must ensure secure handling of customer data and offer transparent payment processes to maintain compliance.
• Consumer Behavior Trends: As online platforms dominate the market, operators must adapt by integrating user-friendly payment systems and advanced fraud prevention measures.

Growth potential

The rise of smartphones and high-speed internet has made iGaming more accessible than ever. For MCC 7995 operators, the shift towards digital platforms represents an opportunity to cater to a tech-savvy audience while meeting compliance standards.

Brazil: Explosive Growth Amid Regulatory Changes

Brazil has emerged as a global leader in the iGaming market, driven by the rapid adoption of online gambling. The country’s Blask Index surged from just 1.3 million in 2016 to a staggering 189 million by August 2024^[5]. However, new regulations adopted in December 2023 aim to bring this booming market under tighter control.

Key compliance points in Brazil

• New Gambling Law (2023): Brazil’s updated regulations require all operators to obtain local licenses and adhere to strict consumer protection measures. This includes implementing responsible gambling tools and complying with AML policies.
• MCC 7995 Challenges: As one of the fastest-growing iGaming markets, Brazil demands robust payment solutions to manage high transaction volumes. MCC 7995 operators must address challenges like fraud, chargebacks, and currency fluctuations.
• Localized Payment Methods: To stay compliant and competitive, operators should integrate local payment solutions such as PIX, which is widely adopted in Brazil for fast and secure transactions.

Market opportunities

Despite the regulatory changes, Brazil’s iGaming market continues to attract operators, thanks to its enormous growth potential. Leveraging MCC 7995-compliant payment systems and aligning with local laws will be key for operators looking to succeed in this vibrant market.

Why MCC 7995 Compliance Matters for Global Operators

For gambling operators, maintaining MCC 7995 compliance isn’t just about avoiding penalties—it’s about ensuring operational efficiency, customer trust, and financial stability. Here’s why it’s essential:

• Preventing Payment Rejections: Many banks and card networks will only process gambling transactions if they are correctly categorized under MCC 7995.
• Building Trust with Regulators: Proper compliance demonstrates a commitment to transparency, reducing the risk of audits or penalties.
• Enhancing Customer Experience: By ensuring seamless payment processing through compliance, operators can avoid disruptions that might frustrate users.

How CommerceGate Helps with MCC 7995 Compliance

Navigating the complexities of MCC 7995 can be daunting, but CommerceGate provides the expertise and tools to help global gambling operators achieve seamless compliance.

• Tailored Payment Solutions: Integration with local payment methods like PIX, SPEI, and ELO cards, ensuring compliance with MCC 7995 across key markets like Brazil and Mexico.

• Fraud Prevention and AML Tools: Advanced AI-driven systems to monitor transactions, reduce fraud, and ensure adherence to AML regulations.

• Market Expertise: With decades of experience in high-risk industries, CommerceGate understands the unique challenges of MCC 7995 compliance in markets like Canada, Australia, New Zealand, and Brazil, among many others.

Partnering with organizations like CommerceGate can transform the complexities of MCC 7995 into a strategic advantage, empowering gambling businesses to flourish in competitive and rapidly evolving markets. Let us collaborate to ensure your operations remain compliant, secure, and optimized for sustained success.

^[1] https://by.visa.com/content/dam/VCOM/download/merchants/visa-merchant-data-standards-manual.pdf

^[2] https://www.statista.com/outlook/amo/online-gambling/canada#analyst-opinion

^[3] https://washingtoncitypaper.com/article/613403/a-deep-dive-into-australias-gambling-industry-facts-figures-and-future-projections/

^[4] https://timesofmalta.com/article/the-changing-landscape-igaming-new-zealand-a2.1093915

^[5] https://next.io/news/features/the-anatomy-of-brazil-online-casino-legalisation-blask/