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Recommended Reads: Subscription-Fraud rising

"Subscription gaming is in trouble. While the free-to-play business model has been pitched by many as a good strategy, it is going to become necessary in a higher payment processing world." (Steven Davis, SecurePlay)

There was a quite lively debate on revenue-models of games in the past weeks: what is going to be the gaming industries’ dominant model – retail, microtransactions, subscriptions, free to play? Could high-budget titles like WoW sustain themselves on microtransactions?

Here comes another smack to subscription-based games: Steven Davis, CEO of SecurePlay, points towards a current rise of credit-card-fraud, connected with MMOs and gold-farming (or rather gold-fraud), this time hitting the game-industry rather than gamers:

“Of course, why steal accounts and do all of that hacking? After all, credit cards numbers are widely available at nominal cost. ...
Banks don’t like charge-backs. High risk/ high fraud markets (the adult industry and gambling) pay a substantial premium for payment processing. If fraud gets too bad, payment processors will simply refuse to service companies. The also will impose additional procedures to combat fraud - all of which cost money. ...
So, gold farming may go away or the price of items on secondary markets may explode as gold farmers have to manage their own fraud risks from gold frauders.”

Not only could this in turn raise the prices for subscription-based games like WoW, as payment processors will charge premiums to the gaming-industry if they start to consider them as a high risk/high fraud market (or by increased costs for countermeasures being passed to the customers) – banks will probably just block payments to game-operators altogether due to rise of charge-backs, as already happening with Halifax of Bank of Scotland.

via Kotaku.

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