Why China’s Gambling Capital Doesn’t Accept E-Wallets

Why China’s Gambling Capital Doesn’t Accept E-Wallets

If you are a fan of roulette, slots, or blackjacks in China, then there is a range of payment methods you can use to deposit at an online casino. However, that might not be possible if you want to enjoy gambling game in China’s capital, Beijing.

An e-wallet or a digital wallet is a payment system that is used to store the payment information of online casino players securely. It also safely secures the users’ passwords. Using a digital wallet plays an essential role in the casino world. It accelerates and facilitates the checkout process. In addition to all that, an e-wallet can also be used to keep digital coupons and loyalty card information.

E-wallets in the online gambling market are the best alternatives to bank card payments. The e-wallets services differ in so many ways. However, despite all that, they have become so popular in China. PayPal is one of the global e-wallet service providers that are used by gamblers in China. Together with others such as Neteller and Skrill, they have become so popular in casinos. However, China’s gambling capital does not think in that same direction.

China is the global leader in asset circulation. The circulation happens through social apps and mobile digital wallets or e-wallets. A total of 76% of people in this country use or would desire to use the mobile digital wallets. All online transactions, especially for gambling, are done through e-wallets. Other than the mentioned ones, there are also other popular e-wallets are WeChat Pay, Tenpay, and Alipay.

It is also a fact that China is fast hurtling towards a cashless system of operations. Some of the primary digital payment services within the country have helped in promoting this practice. However, back to the online gambling market, things do not appear the same. The days of e-wallet companies’ natural growth seem to be ending if this latest curb is anything to go by.

As more online gamblers continue to adopt the use of e-wallets, the Chinese authorities are ending this. The Chinese high office is more concerned about the security of those who use some of these applications. Their main concern is on how the e-wallets companies manage the users’ deposits. The issue of security has prompted China’s gambling capital to impose some curbs in the industry. The bans might hurt the revenue of various e-wallet companies that have been operating in the Asian country. They might also significantly curtail their rapid pace of expansion.

The signals for a possible ban of e-wallets came in long ago. The People’s Bank of China sent the first signal on December 30. It is the country’s central bank. On this particular date, it raised the ratio of the payment platform’s reserve funds to 50%. The rate was initially at just 20%. This move effectively placed more e-wallet deposits of various customers in escrow; even those who had funds in their e-wallets, like gamblers were significantly affected. The payment providers now hold the funds under their centralized organization, which is one of the ways of tracking how these funds would be utilized.

The measure was supposed to come into effect in April 2019. Over time, it will possibly grow to 100%. If this happens to force, then vast sums of money in interest fees will be erased. These funds are received by most of these e-wallets used by gamblers in China.

Online transactions got what is known as a leg-up post demonetization. It was what led to the growth of e-wallets. It also led to the introduction of the Unified Payments Interface platform that appears to be slowly taking over in China’s capital, and even the e-wallet technology itself.

Reasons Why China’s Gambling Capital Doesn’t Accept E-Wallets

Here are some of the possible reasons why the authorities here have opted to block the use of digital wallets by online gamblers.

Security Issues

SecurityOnline gambling transactions using e-wallets are also prone to the risks that usually come with an ordinary mobile transaction. The use of e-wallet has led to the rise of data theft, and this could be a genuine reason why China’s capital is ending this. There have been many cyber-attacks targeted to those who use e-wallets to store their winnings and other data.

Cybercriminals usually look for vulnerabilities within a particular technology and use it to con customers. Several apps have been hacked in the past, and e-wallets are no exception. When such unfortunate thing occurs, all the cash contained in the customer’s account is drained. Perhaps the gambling authorities at China’s capital are trying to stop this before it happens.

An Effort to Stop Hacking

Stop HackingAn e-wallet works on over-the-air communication. Because of that, the device can be at high risk of being compromised by hacking. Criminals today use the NFC and RFID wireless communication devices to steal numbers. Hackers stand a few inches away when the account holder is making their transaction; the customer’s data would then be seized and kept. The card can be later replicated, making it ready for use at any place.

It is just a matter of time before several e-wallet cards become vulnerable to online pickpocketing. It is one of the reasons why the cards are being phased out in China’s capital. There is, however, a way in which the cards can be safe from the RFID criminals. It is by wrapping them in tin foil. A tin of foil is believed to have the capability of blocking the skimmers frequencies.

Ransomware seems to be on the Rise

Ransomware involves the hacker obtaining remote access to the device including the victim’s data. The victim becomes unable from accessing the system until they pay a certain amount of money. Ransomware prices vary based on the digital currency exchange rates and the variant of the ransomware.

The Obstacle of KYC

KYCE-wallets are currently facing a significant obstacle to their operations in the gambling market. It is the requirement of KYC (Know Your Customers, which is mandatory for all the clients. This requirement kicked off in March 2018. From that time, there has been an enormous impact on the transactions by online gambling companies and gamblers. Between February and March of 2018, there was a 30% decline in the e-wallet transaction value. Volumes have also considerably dropped.

All indicators point at a new replacement, which is the UPI mode of payment in the gambling world. UPI does not require the KYC process. That happens because it works just like any other online banking transaction. The requirement of KYC appears to be a temporary challenge for all e-wallet users. It could be one of the possible reasons why China’s capital is slowly kicking away the use of e-wallets for online betting transactions.

The Interoperability Issue

e-wallet interoperabilityInteroperability is another factor that might warrant a ban on the use of digital wallets by gamblers in China. Even after finishing the KYC requirement, there are still more constraints that the gamers face. At the moment, it is not possible to move money from one wallet to another. The UPI mode of the payments, on the other hand, is different.

Most e-wallet companies have taken several steps to ensure this does not happen, but they still appear to be on the rise. As a way of guaranteeing that gamblers enjoy their games without worrying about money and information kept on their e-wallets, China’s capital have a solution. It simply meant to curb the use of the e-wallets in the country’s capital.

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Thomas McCoy was born in Bethesda, Maryland and studied finance at the Kogod School of Business at American University in Washington D.C. before heading to New York and a job as a forex trader on Wall Street. Successful enough to launch his own, online forex trading platform, Thomas has long had a keen interest in the places where the worlds of finance and technology meet. As a prolific blogger, Thomas considers himself an expert on cryptocurrencies, casino asset restructuring, and emerging technologies set to change the way people do business.