May 18 2025
Icegate E Payment Gateway-Blacklisted MCCs and Indian Gaming Payment Gateways

Blacklisted MCCs and Indian Gaming Payment Gateways

In India, payment gateways and banks adhere to strict regulations set by the Reserve Bank of India (RBI) and other regulatory bodies when processing transactions related to gaming, gambling, and other high-risk industries. Certain Merchant Category Codes (MCCs) are blacklisted or restricted due to legal restrictions on online betting, gambling, and fantasy sports in some states.

Blacklisted/High-Risk MCCs in India

Some MCCs associated with gaming/gambling may be blocked or flagged by banks/payment processors:

  • 7995 – Betting/Wagering (including casinos & lottery)
  • 7941 – Gambling Transactions
  • 9399 – Government Services (Lotteries)
  • Some acquirers also block certain fantasy sports platforms if they classify them as gambling.

Many Indian banks decline transactions from these MCCs due to RBI guidelines or internal risk policies.

Indian Payment Gateways for Gaming Companies

While traditional payment gateways like Razorpay, PayU, and CCAvenue often avoid direct support for real-money gaming due to compliance risks, some specialized payment processors work with legitimate skill-gaming operators:

1. Cashfree Payments

  • Supports fantasy sports & rummy platforms.
  • Compliant with RBI’s guidelines on permissible online games.

2. Paytm Payment Gateway

  • Works with some skill-based gaming companies.
  • Strict KYC checks required.

3. Airpay

  • Offers solutions for regulated gaming businesses.

4. Zaakpay

  • Used by some mid-sized online gaming firms.

5. JusPay & NTT DATA Payment Services

  • Work selectively with compliant operators.

Challenges Faced by Gaming Merchants:

1️⃣ Many mainstream PGs refuse services if the business falls under prohibited categories like betting/gambling (even if it’s a game of skill).

2️⃣ Banks may block payouts based on MCC codes linked to restricted activities (especially after RBI’s stricter stance in recent years).

3️⃣ Some state laws ban real-money games outright (e.g., Telangana & Andhra Pradesh prohibit all forms of online gambling/skill-based stakes).

Alternative Solutions:

✔️ Use international PGs like Stripe/PayPal via offshore entities (but INR settlements can be tricky).
✔️ Partner with crypto/fiat hybrid solutions (highly risky; regulatory uncertainty).
✔️ Opt for UPI AutoPay/NBFC-backed escrow models (used by Dream11-style apps).

⚠️ Always consult a fintech lawyer before choosing a PG—compliance is key!

Would you need recommendations based on your specific business model?

Certainly! Let’s dive deeper into alternative payment solutions, compliance strategies, and emerging trends for gaming businesses in India.

1. Alternative Payment Solutions for Gaming Companies

Since traditional PGs (Razorpay, PayU) often reject gaming merchants due to MCC restrictions, here are some workarounds:

A. UPI-Based Direct Settlements (P2P Model)

  • Some fantasy sports apps use UPI AutoPay or escrow accounts to bypass PG restrictions.
  • Example: Users deposit funds via IMPS/UPI into a nodal account managed by an NBFC partner instead of direct PG processing.
  • Works well for peer-to-peer contests but requires strict KYC & RBI-compliant accounting.

B. International Payment Gateways (For Offshore Entities)

  • If your company is registered outside India (e.g., Singapore/Dubai), you can use:
    ✅ Stripe ↗️ (supports INR but may freeze accounts if gaming is detected)
    ✅ PayPal ↗️ (blocks gambling-related transactions)
    ✅ 2Checkout / CC Avenue Global ↗️ (higher approval chances)
  • Downside: High forex fees (~3-5%) + RBI’s LRS limits ($250K/year per user).

C. Crypto & Hybrid Payments (High Risk!)

  • Some betting platforms accept USDT/BTC via Binance/Bybit and convert to INR via P2P exchanges like WazirX (but illegal under Indian tax laws). ⚠️
  • A few offshore casinos use "crypto-fiat" gateways like CoinsPaid or BitPay (not recommended due to regulatory crackdowns).

2. Compliance Strategies for Gaming Startups

✔️ Register as a "Game of Skill" Entity (Not Gambling)

  • Fantasy sports operators like Dream11 classify themselves as skill-based under the Public Gambling Act exemption—this helps with banking approvals.
  • Obtain legal opinions from firms like Khaitan & Co or Nishith Desai Associates before approaching PGs.

✔️ Use White-Label Payment Solutions

  • Partner with fintech providers that offer “masked” MCC codes under generic categories like:
    📌 "Entertainment Services" (MCC 7996) instead of Betting/Gambling codes.
    📌 "Software Subscriptions" (MCC 5734) if selling virtual credits.

✔️ Work with NBFCs/Nodal Accounts

  • Many real-money gaming companies tie up with RBI-approved NBFCs (e.g., Transcorp, ZestMoney) to manage player deposits/payouts legally.
  • Example flow:
User → Deposits via UPI → Funds held in nodal account → Winnings paid out after TDS deduction.

3. Emerging Trends in Gaming Payments

Trend Impact
🔄 Tokenization (RBI’s Card Rules) Saved card payments now require token approval—may slow down deposits on betting sites.
🏛 28% GST on Online Gaming (2023 Law) Higher tax burden forces smaller operators offshore.
💳 Prepaid Cards/PayLater Options Slice & Uni cards used discreetly by players despite bank blocks.
🌍 Offshore Banking Hubs Goa/Dubai/Singapore corps route payments through EMI licenses.

Final Recommendations:

1️⃣ If running a legitimate skill-gaming biz (fantasy sports, rummy): Try Cashfree/Paytm PG + NBFC escrow model first.
2️⃣ For high-risk models (casinos/betting): Consider Malta/Curacao licensing + crypto payouts (risky but common).
3️⃣ Always consult a fintech lawyer—many startups get banned abruptly due to non-compliance!

Would you need help finding specific banking partners? Or exploring white-label PG setups?

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