Section 7: Prohibition on Payment Facilitation

Overview

Section 7 of the Promotion and Regulation of Online Gaming Bill, 2025, essentially cuts off the money supply to illegal online money games. It makes it unlawful for banks, payment gateways, and other financial institutions to process any transactions related to these games. This aims to prevent people from depositing funds to play, or withdrawing winnings from, prohibited online gaming platforms.

Key Provisions

• Prohibition on Facilitation: No bank, financial institution, payment system provider, or any other entity can facilitate any financial transaction – deposits, withdrawals, in-app purchases used as stakes – for online money games.
• Broad Scope: The prohibition covers not just direct transactions but also indirect methods like using vouchers or credits intended for gaming.
• Due Diligence for PSPs & Banks: Payment Service Providers (PSPs) and banks are required to update their systems to identify and block transactions related to prohibited gaming services. This includes monitoring merchant category codes, transaction patterns, and onboarding procedures.
• Contractual Obligations: Contracts with merchants must include guarantees that their services won’t be used for online money gaming, with penalties for violations.
• Exceptions: E-sports and social/educational games that don’t involve stakes or wagers *can* accept payments for subscriptions or one-time access, provided they comply with child safety and advertising regulations.

Practical Impact

This section significantly impacts several stakeholders. For citizens, it aims to protect them from the financial risks associated with illegal online gambling. For businesses, particularly banks and payment gateways, it creates a compliance burden, requiring them to implement robust monitoring and blocking mechanisms. Failure to comply can lead to penalties. For the government, it strengthens its ability to regulate and control the online gaming industry and curb illegal activities.

Examples

• Example 1: Simple Application – A user attempts to deposit ₹1000 into an online poker platform using their credit card. The bank, due to the filters implemented as per Section 7, blocks the transaction.
• Example 2: Borderline Situation – A gaming app offers ‘loot boxes’ that can be purchased with real money and contain items that give players an advantage. If these loot boxes are deemed to function as stakes in a game of chance, facilitating their purchase would be a violation of Section 7. However, a simple cosmetic item purchase would likely be permissible.