HSBC online gambling charges
January 4, 2007
Looks like this one is popping up all over the net. HSBC will increase credit card rates for users who participate in online gambling endeavors such as online poker, sports betting and horse racing. An interesting quote from the BBC take on this news:
Bad risk?
In the past year all the main banks have complained loudly that they have been racking up more bad loans in their credit card businesses.
Normally a decision by a bank to charge more would signify that it had seen an increased risk of losing money in that particular line of business.
But HSBC denied that customers who gamble using their credit cards are more likely to run up big debts and then default on them.
“We have not seen that as part of our customers’ behaviour,” said the HSBC spokeswoman.
HSBC’s decision will apply to both internet and telephone gambling and thus covers online poker, internet bookies and betting exchanges. However, it is illegal to use a credit card in a casino, while the betting industry has a policy of not accepting them in High Street bookies.
According to the Association of Payment Clearing Services (Apacs), people in the UK spent £1.51bn on gambling via their credit cards in the twelve moths to June 2006. That was just 0.8% of all credit card spending which amounted to £120.2bn.
It’s quite likely more that the banks know that they can jack up prices on the rates and if an online gambling user is processing their bets through a credit card then that user will likely go to a third party payment processor. This reduces the number of people potentially using the HSBC credit card system. It could be interpreted as form of due diligence on the part of the banks (if it in fact needed to be used as such).
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