7994 Video game arcades/establishments

Introduction

• What it is: This MCC represents businesses that offer video game facilities for entertainment and recreation.
• Risk level: Medium — Often reliant on cash flow and seasonal spikes in attendance.
• Acceptance difficulty: Medium — May face scrutiny due to high-value transactions and potential for chargebacks.
• Typical business models: arcade centers; eSports lounges; recreational gaming establishments; family entertainment centers with gaming options.
• For merchants: Expect moderate MDR; potential high reserves during peak seasons; clear service descriptions may help with approvals.
• What PSPs expect: Business registration; a detailed overview of gaming offerings; compliance with gaming regulations if applicable.

Payment Insights & Benchmarks

Merchants in the video game arcades and establishments MCC should anticipate challenges related to payment acceptance and customer behavior. Factors such as payment method preferences and higher chargeback risks make careful monitoring essential for maintaining profitability.

Payment methods

Cards: commonly accepted, but may have lower approval rates due to fraud concerns associated with gaming transactions.

• E-wallets: popular for ease of use and rapid transactions, particularly among younger audiences.
• Prepaid cards and vouchers: often utilized to circumvent chargeback risks and enhance customer privacy.
• Mobile payments: emerging method with growing acceptance, especially among tech-savvy customers.

Authentication & security

Strong customer authentication (SCA) measures like 3DS are frequently applied, impacting conversion rates.

• These security measures can reduce fraud but may increase friction at checkout for legitimate users.
• Continuous fraud monitoring is important, particularly as gaming environments can attract higher fraudulent activities.

Benchmarks (indicative, not guaranteed)

MDR: generally higher than standard e-commerce; expect increased costs due to fraud risk.

• Rolling reserves: could be significant, reflecting high chargeback potential.
• Settlement delays: may extend beyond standard e-commerce timelines (7+ days typical).
• Chargeback ratios: often above average due to the nature of gaming transactions.
• Approval rates: typically lower for card transactions compared to alternatives like e-wallets.

Key metrics to monitor

Transaction approval rates segmented by payment method and customer type.

• Chargebacks differentiated by fraud vs. customer service issues.
• Customer behavior trends, including average spend per visit.
• Decline codes to understand the reasons for failed transactions.

Risk & Compliance

Merchants under this MCC face a variety of risks, including high exposure to fraud and chargeback disputes. PSPs and acquirers implement rigorous checks, requiring merchants to demonstrate robust operational controls and compliance with AML/KYC standards to mitigate these risks.

Chargebacks & fraud

Frequent instances of friendly fraud, where customers dispute transactions claiming they did not authorize them, are common.

• Bonus abuse through exploitation of promotional offers can lead to increased chargebacks.
• Other issues include stolen credit card usage and refunds demanded after a brief usage period.
• Mitigation tools include velocity checks, behavioral analytics, and deposit limits to identify potential fraud patterns.

AML/KYC expectations

Stringent identity verification (IDV) is expected, including government-issued ID checks and validation against sanctions lists.

• PSPs expect ongoing monitoring of source-of-funds to ensure that funds are not coming from prohibited sources.
• Manual review triggers may include large transactions for in-game purchases or patterns that suggest gaming is being used for money laundering.

Operational red flags

Merchants must avoid vague ownership or opaque operational structures that can raise suspicion among PSPs.

• Observed traffic patterns from unverified regions or affiliates can indicate potential fraud risks.
• Absence of responsible gaming measures, such as self-exclusion features or deposit limits, is a significant red flag.
• Clear communication of refund and return policies is critical; lack thereof can lead to increased disputes and chargebacks.

Onboarding Checklist

Merchants under this MCC should prepare a complete onboarding package before approaching PSPs or acquirers. A well-structured submission improves approval chances and shortens review times.

Legal & corporate documents

company registration and incorporation documents

• disclosure of beneficial owners (UBO) and corporate structure
• valid licenses for the relevant business activities
• policies: Terms of Service, Privacy, AML/KYC, Refund Policy

Financials & risk management

recent financial statements and cashflow forecasts

• liquidity or reserve model for payouts
• description of antifraud setup and monitoring tools

Product & marketing

demo access or screenshots of the live platform

• marketing plan and traffic source overview (affiliates, SEO, PPC)
• geographic targeting information
• KYC flow details, including IDV providers and thresholds

Technical integration & security

payment architecture overview with supported methods/providers

• description of SCA/3DS flows, retry logic, and tokenization
• PCI DSS compliance status and data storage policy

Operations

customer support coverage (languages, 24/7 if available)

• SLA for dispute handling and chargeback response
• deposit, bet, and payout limits; self-exclusion mechanisms
• internal process for chargeback investigation and documentation

Regulation & Licensing

Licensing and certification are essential for merchants operating under this MCC, as they validate compliance with local regulations and help ensure the safety and integrity of gaming activities. Recognition of licenses varies significantly depending on the merchant’s jurisdiction and the target markets they serve.

Operator licenses

Local gaming licenses — common in many jurisdictions, required for legal operation of arcade establishments.

• State gaming board licenses (e.g., in the U.S.) — necessary for compliance with state regulations on gambling and gaming.
• International Skill Games licenses — may be required depending on the nature of the gaming offered.
• Business operation licenses — essential for general operation, provided by local government authorities.
• Recognition of these licenses by PSPs varies by region and target audience.

Geo-restrictions

Some countries impose strict regulations or outright bans on arcade operations, affecting transaction processing.

• In the U.S., regulations may differ across states, particularly regarding games of skill versus chance.
• PSPs often restrict services in jurisdictions with unclear gaming laws or grey market operations.

Certifications & audits

PCI DSS compliance for any transaction involving card payments and user data security.

• Regular audits to ensure compliance with local gaming ordinances and regulations.
• Periodic reviews for adherence to responsible gaming practices.
• Certifications for technical standards where relevant (e.g., for gaming software integrity).

Official Definitions & Network Comparisons

This section shows how major card networks define this MCC and highlights practical differences that affect merchant onboarding.

Explanation:

While the definitions are broadly aligned, the nuances in terms like "entertainment" and "establishments" can impact onboarding processes. Some networks require strict compliance with local laws and regulations, particularly regarding age limitations. High-risk regions may incur additional scrutiny, leading to potential denial reasons such as insufficient licensing, unclear business model, or geographical risk assessments.

Alternative MCC Codes

Merchants often confuse this MCC with other categories. The table below shows which codes are related, why they are confused, and what risks misclassification brings.

Rule of thumb for merchants:

If your business involves games that allow players to win or lose money, ensure you are classified under the appropriate MCC. Misclassifying your business can lead to severe compliance issues, including account termination and lost revenue.

Best Practices for Merchants

Merchants in the video game arcades and establishments category must navigate unique challenges related to payment processing, risk management, and customer engagement. By adhering to the best practices outlined below, merchants can optimize their operations, reduce disputes, and foster robust partnerships with payment service providers.

Classification & transparency

always use the correct MCC for video game arcades to ensure compliance and reduce the risk of account issues

• clearly display business practices, customer policies, and gaming age restrictions on your website
• provide transparent billing descriptors that accurately reflect arcade services and purchases

Fraud & chargeback reduction

implement 3DS or step-up flows for online game purchases or in-app transactions where fraud risk is higher

• utilize clear billing descriptors and offer immediate purchase confirmations via email or SMS
• log in-game transactions and events to help support your position in the case of chargebacks or disputes

Payment acceptance optimization

offer various payment methods such as credit/debit cards, wallets, and cash options to accommodate different customer preferences

• utilize geo-routing to optimize payment processing based on the customer’s location and test provider performance regularly
• consider using separate merchant IDs (MIDs) for different gaming experiences or service types to manage transaction flows better

Operational discipline

monitor key performance indicators (KPIs) such as authorization rates, chargeback ratios, and average revenue per user (ARPU)

• conduct regular compliance audits to ensure policies are up-to-date and effectively managed
• establish a dedicated process for handling disputes and chargebacks, with clear response timelines

Payouts & liquidity

maintain sufficient liquidity buffers to accommodate rolling reserves and potential chargeback expenses

• automate Anti-Money Laundering (AML) checks for larger withdrawals and transactions to minimize risk
• regularly review payout structures and monitor for any unusual withdrawal patterns or behaviors

Business Scope & Examples

This MCC covers businesses that operate video game arcades and similar establishments where customers engage in gaming activities for entertainment and leisure. Merchants classified under this category usually provide services or platforms for both physical and digital gaming experiences, often involving a direct payment structure for play.

Models

traditional video game arcades with coin-operated machines

• esports arenas hosting competitive gaming events
• pay-per-play gaming lounges with console or PC setups
• virtual reality gaming centers offering immersive experiences
• online multiplayer gaming platforms with in-game purchases

Borderline cases

Game development studios — companies creating games rather than providing a gaming venue; typically not classified under this MCC.

• Mobile game applications — while they generate revenue through in-app purchases, they may not fit if there is no physical arcade presence.
• Retro gaming cafes — establishments featuring classic games; the classification may depend on the service model and payment structure.

Signals for correct classification

customers pay directly to play games on-site or through a subscription model

• the venue has a physical location dedicated to gaming activities
• games offered involve no payout in real money, focusing strictly on entertainment