Australian-owned Westpac Bank has decided to charge higher interest rates on payments made through its credit cards. Customers now have to pay more interest on what Westpac calls “quasi-cash” payments, which include transactions drawn in favor of online gambling accounts.
Westpac charges 22.95% interest on cash advances
All payments used to buy cryptocurrencies or payments to online gambling accounts now fall under cash advances. A Westpac spokesman confirmed that most credit card transactions are used to pay online gambling companies.
Westpac currently charges an interest rate of 22.95 percent on cash advances made through its Hotpoints MasterCard.
Unless a standard MasterCard holder with Westpac settles their monthly balance by the due date, other ordinary purchases would earn 20.95 percent interest.
PGF spokesman calls for stricter regulations
Westpac’s move to raise interest rates on cash advances appears to have been inspired by the UK Gambling Commission’s ban on credit card payments to gambling companies.
The Health Promotion Agency has reported online gambling as a popular activity, noting that well over half a million people aged 15 and older have taken part in the activity. In fact, with so many operators out there, it’s no surprise that players are looking for new casino bonuses on a daily basis, such as those found on reputable sites such as Casino NZCasinoClub, which specializes in the industry.
According to the commission, the ban was imposed after an in-depth investigation revealed that a significant number of gambling addicts were using credit cards to pay for their gambling addiction.
The New Zealand-based Problem Gambling Foundation was calls for a strict crackdown on credit card payments to gambling companies after what Britain has done, along with a planned review of gambling laws in New Zealand.
Andree Froude, spokeswoman for the PGF, said credit cards cause problem gamblers to keep gritting their teeth at gambling when they run out of money. Froude supports a British-style ban in New Zealand, saying it is a much-needed measure to curb problem gambling in the country.
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Froude explained that the Gambling Act in New Zealand has brought tremendous changes to online gambling since it was passed in 2003. The law has implications for how Kiwis engage in online gambling in New Zealand as well as with gambling companies overseas.
According to Froude, the results of a Home Office review of online gambling in New Zealand are expected to be released soon. She also looked forward to regulatory alternatives to curb the extent of online gambling.
The PGF spokeswoman explained that more banks like Westpac should adopt stricter regulatory policies to address problem gambling and help at-risk addicts protect themselves from another downward spiral.
Froude calls for measures like Kiwibank’s VGBs
Referring to Westpac’s latest move, Froude believes it could easily be circumvented as players would use debit cards to avoid paying higher interest on their transactions.
To stem the rise of problem gambling incidents, in April 2021, Kiwibank allowed players to place voluntary gambling bans on their cards. VGBs would act as a deterrent to extensive borrowing that players could use to fuel their obsession.
According to Kiwibank’s Sustainability Report, over 127 customers had taken advantage of the voluntary ban, avoiding an average annual gaming spend of around $13,000. Impressed by Initiative of the Kiwi Bank, Froude had urged other banks to do the same.
Westpac, Commonwealth Bank of Australia and National Australia Bank have all offered VGBs similar to Kiwibank, but their New Zealand affiliates such as Westpac New Zealand ASB Bank and Bank of New Zealand have taken no such action.
Froude decided to take a measure like VGBs because she believes the tool can be an effective measure to protect problem gamblers from gambling addiction. In her words, she would advocate mass encouragement for banks to move towards such an instrument.
Interest Hike to make the customer experience consistent
According to Westpac, increasing interest rates should make the experience more consistent for their customers. Other cash advance transactions would also include sending money abroad and making payments to stock investment platforms like Sharesies.
According to Sharesies co-CEO Leighton Roberts, some investors using the platform fund their accounts via credit card payments.
Kiwibank’s terms and conditions went on to mention that the purchase of tokens or foreign cash constitute cash-like transactions.
The Australia and New Zealand Banking Group Limited had its own definition of cash-like transactions. Buying gift cards, travelers checks, foreign cash, wire transfers, money transfers, and gambling account top-ups are all included in this definition.