Regulated UK gambling merchants now operate with bank-grade controls, including comprehensive KYC, real-time fraud monitoring, affordability checks, and ongoing customer verification. Yet payment infrastructure still treats them under frameworks designed for an earlier era.
Independent research reveals the gap between modern regulatory standards and payment treatment, alongside practical opportunities to modernise.
.webp)
Regulation Evolved. It’s Time to Transform Payment Infrastructure.
Since 2019, UK gambling regulation has transformed the industry. Regulated gambling merchants now implement:
- KYC and identity verification at customer onboarding
- Real-time AML transaction screening and fraud monitoring
- Financial vulnerability checks and affordability assessments
- Recurring customer verification every 24 months
- Age verification and safer gambling interventions
These are controls equivalent to what banks themselves use. They are powered by platforms commonly used by banks, such as FICO, Jumio, Onfido, and Veriff. Yet payment processing for regulated gambling still operates under MCC 7995, a global classification that doesn't distinguish between highly regulated UK operators and unregulated markets.
The Result
- Processing costs of 60-90 basis points versus 40-60 bps for comparable high-street retailers
- Card-based transactions show authorisation rates of 92-95%, compared with 98-99% for the same cards when processed via Apple Pay
- Fraud rates consistently below 2 bps, lower than clothing stores, hotels, and many "low-risk" categories
What the Research Found
A total of 62 stakeholder interviews were conducted across regulated gambling merchants, payment schemes, acquirers, banks, and industry experts within the UK payments ecosystem.
Processing Cost Gap
Regulated operators face processing costs 50% higher than similar-volume retailers, despite operating with lower fraud rates and stronger customer controls.
Authorisation Rate Disparity
A 5-7% difference between physical card and digital wallet authorisation rates reveals opportunities to modernise bank fraud rules built for an earlier era.
7 Practical Recommendations
The research identifies concrete opportunities that payment schemes have successfully implemented in other industries.
- Explore new MCC frameworks for UK regulated gambling merchants (similar to how US schemes updated their approach)
- Pilot unique BINs per merchant to enable more granular risk assessment (proven effective with airlines and hotel chains)
- Leverage existing transaction data that's already available but underutilised in authorisation decisions
- Pass KYC verification indicators in payment messaging to reflect the enhanced due diligence already performed
- Modernise quasi-cash treatment to reflect current regulatory controls and monitoring
- Pilot MID whitelisting programs for regulated merchants meeting defined standards
- Standardise authorisation decline codes to improve transparency and enable data-driven optimisation.
None of these are unprecedented. Payment schemes have successfully changed MCC frameworks when different industries evolved. Airlines, hotels, and telemarketing all benefited from similar transitions.
Regulated gambling in the UK is ready for the same evidence-based approach.
Progress Happens When the Industry Collaborates
We're building a coalition of gambling operators, acquirers, and payment professionals committed to aligning payment treatment with regulatory reality.
For Gambling Operators
If these challenges affect your daily operations, let's discuss practical solutions.
For Payment Professionals
If you're interested in data-driven modernisation, explore the full research.
Independent. Comprehensive. Evidence-Based.
This white paper was commissioned by PXP and conducted by Piran Consulting Ltd (PCL), an independent payment consulting practice.
Research Methodology:
- 62 interviews with regulated gambling merchants, payment schemes, acquirers, banks, and industry experts
- Proprietary authorisation rate analysis and fraud/chargeback benchmarking across merchant categories
- August-October 2025 fieldwork period
- External validation of findings and recommendations
All views, findings, and conclusions are those of Piran Consulting Limited and do not necessarily represent the views of PXP or its affiliates.
