NETeller: life after death. What's next?

Practically, at the next day PartyGaming a parent company of the famous market leader PartyPoker as well as several other poker sites (such as 888, owner of PacificPoker; Sportingbet, owner of ParadisePoker and Cryptologic, owner of Cryptologic network of poker rooms) took the decision to abandon the US market stating the further inability to give US residents the access to real-money poker and other real-money gaming sites, "suspending on indefinite time period all real-money gaming business". Some of the poker sites, most of them privately owned rooms as PokerStars, FullTolt poker and Bodog Poker decided to remain on the US market. Some smaller payment processors decided to drop their piece of American online gambling cake into garbage fearing the potential legal actions against them, however, their disappearance wasn't that much noticeable as everyone was holding the breath about the Neteller harmed in the most severe manner by passed UIGEA hunting the online gambling payment processors.

At that time Neteller was considered the biggest independent online payment processor with over 3 million customers in 160 countries with over $7 billion in annual transactions. It was considered as almost unique option for the online poker players to fund their accounts. In October 19, 2006 shortly after the UIGEA was signed into law, Neteller announced the cease of their funds transfers' acceptance from US customers in benefit of the gambling web sites within 270 days (same time frame was given by the Treasury and FedReserve Board to process the enforcement regulations). The first sign that Neteller will become the "first witch" to be chased was the suspension of its shares trading on the AIM London Stock exchange as it was in the middle road of its status determination with the US authorities. January 2007 the US government has issued warrants on ex-founders of Neteller Stephen Lawrence and Jon Lefebvre, both of them were charged in relation to the creation and operating of Internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from US citizens to the owners of overseas internet gambling companies and web sites. The rapid rejection of the company's Board of its "ex-founders" (despite the fact that Lawrence held 5.91% of company and Lefebvre - 5.54%) was probably explained by the fact that company's officials were concerned that the arrested founders who were charged with money laundering, the most severe felony in the USA, would seriously harm the company's reputation and will bring a considerable loss in shares value and company's net revenues. US Attorney Michael Garcia noted that the company was aware when it went public that in accordance to American legislation it is prohibited to promote certain forms of gambling, including Internet gambling and transmitting funds that more likely to be derived from criminal activity. In long-lasting negotiations with the company, it eventually agreed to pay a "whopping" US $136 million settlement and to stay out of the US market. Later online e-cash processor sold to Leben Investment Corporation its principal property in Calgary, Canada. The sale was processed via Neteller subsidiary NT Services Building with CDn $33.5 million. Neteller stated $ 57.7 million was seized by US authorities. As a part arrangement with authorities Neteller developed and implemented a distribution plan to return in about $94 million in funds owed to US customers with around $81 million being already disbursed that provoked an intense agitation in the forums and blogs relate to online gaming industry. January 16, 2008 the Isle of Man-based firm had to make its final payment $38.25 million. Later it was announced that under the Distribution plan undistributed funds will be held on the trust accounts with company's bank customers having until January 26 to withdraw their funds using its website.

Despite the cease of its activities on the US market Neteller ‘s Board is confident that it would be able to get back into increasing stream of the gambling industry and will meet the expectation of its shareholders in 2008. Basing on the official press release it was stated that the first step toward the bright challenges of the Neteller's future in 2008 would be expected re-branding of the consumer-facing web site http://www.neteller.com/. Among other initiatives we would mention as following:

• Stronger Consumer Offer: During the first half of the 2008 the neteller Group will introduce significant enhancements to its consumer services, including a new suite of highly secure and convenient card products, a new rewards program, and a range of new payment options.
• Enhanced Merchant Value Proposition: During the first quarter the Group will be announcing details of a broad new suite of e-commerce applications for both gaming and non-gaming merchants.
• Revitalized Consumer Branding: The Group updated its NETELLER Payment Network brand for consumers, at www.neteller.com at the beginning of January 2008.
• Updated Merchant Branding: As the Group introduces its new payment suite it will also be revising its merchant facing brands. The first of these will be the Group´s high velocity NetBanx payment gateway, in the first quarter.

It is forecasted that the preliminary results for the year 2007 would be announced in March 11, 2008.

However, many analysts are pretty much skeptic Neteller would be able to recover from the tremendous losses caused by the huge repayments and the lost of the US market and, as a result, more and more experts are trying to determine the potential successors of the emperor.

The necessity of the strong payment processor for the online gambling industry was brightly demonstrated within the Superbowl when all available processors cracked within the first three hours unable to handle the intense traffic.

1.YouTeller

Shortly after the announcement of Neteller's intention to pull its business from the US market, January 18 the London-based technology company Seed Capital Ltd came up with a new payment processing service "YouTeller.com". As it was declared by the CEO and co-founder Jahannes Knierzinger: "We will start in March with a revolution in simplicity of worldwide online payments. Everybody who can download songs or play online games will now be able to pay for that instantly". Recently, as it was stated in company's pres-release, YouTeller was granted with "Small E-money issuer Certificate", that would allow it to operate as the e-wallet. Some analysts predict that the new processor would be more successful due to the fact that it doesn't have any overseas branch in a NAFTA - countries, like Neteller or Citadel and, therefore, it would avoid any vulnerability under US legislation. The main goal is considered to develop worldwide online payments with WTO and the EU. Let us note that WTO in April 2005 took several steps against the USA in order to correct discrimination tendency for not taking the "appropriate steps to comply" against foreign internet gambling operators in Antigua and Barbuda ".

YouTeller promises its customers to send, receive money without any charges applied and will allow o deposit and withdraw funds directly from the bank account or credit card. Meanwhile it is mentioned on the web that the fees to deposit the fiuns from UK based bank account - 1%+ $1.00; from c/c - 3.50% + $0.50. In order to withdraw funds the customer would pay as follows: from/to UK bank account - 1%+ $5.00, from/to c/c - 1% +$5.00.

2. NuCharge

The other potential rival of Neteller might be considered NuCharge, a pre-paid phone card that is used directly - to make international calls, or indirectly - to fund a virtual wallet with eCash credits (widely used by certified merchants, including online poker sites like Bodog). The card can be purchased either with Visa or MasterCard, in $100, $150, $200, and $300.

As to the applied fees, you have to be prepared to 3% loading fee while buying the phone card with your c/c, however, it is free if case you use the cards to receive equal eCash credits at certified merchants or to make long distance phone calls. Most of the cards have 3 or 6 month expiration term.

3. MyWebATM

The third potential player might be MyWebATM, another option for the stored-valued (maximum amount on hold - $2,700 with $9,700 in deposits/calendar month), pin-based debit card we have plenty on the market, that will allow to load online poker accounts funding directly from your personal bank account. The fees applied would be more likely as follows:

• Monthly Maintenance: $3.95, only charged if there is a balance on the card
• Reload MyWebATM from a credit card (15 minutes): 3.7 percent plus 32 cents
• Reload from ACH (2-5 business days): $1.32
• Withdraw from US ATM: $2.50 (Daily limit of $500)
• International ATM fees: $3.95
• Point-of-sale (store) purchase: $1.75 (daily limit of $2,700)
• Card to Card Transfers: $5 (Daily limit of $500)
• MyWebATM Card-to-Card Funds Transfer: FREE
• Card-to-ACH transfer: $4
• Funding from bank account: $2.82
• Returned ACH fee: $25.00
• Administrative Fee to Liquidate Account: $25.00
• Replacement Card: $9.95

Upon customer's request the MyATMCard might be issued with the same number and variety of functions compiled in any other ATM card.

The online gambling regulation became a sensitive issue during the debates during the ongoing presidential elections. Among the most interesting platforms regarding the online gambling we would cite those of Ron Paul, Hilary Clinton who supports industry position to find the ways to regulate properly the online gambling without taking the discriminating steps and without enlarging the cash outflow to gambling sited based overseas) and, of course, Barack Obama who supports regulation to "address the worst abuses".

Neteller has been considered a bit of a success story by observers of the online bingo industry for the way it was able to bounce back from the crippling run-in with US authorities last year. However, it seems that the witch hunt just started. The EC, who was blaming the US for the discriminative methods in relation toward foreign online gambling companies recently issued the warning against Germany and Italy forcing the state authorities under the heavy penalties to take appropriate actions to bring their legislation on online gambling to the EU basis. As it was recently announced by the US Attorney Michael Garcia office federal prosecutors in Manhattan have seized over $717 million in assets from the online gambling operations with $450 million to be seized within the couple upcoming months.




Natalia, reporter of Trainex Journal

Comments

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