By Justin Pike, CEO & Founder of Burbank
Underage gambling and unauthorised in-app purchases made by children have become growing concerns globally. With their highly engaging experiences, online gaming platforms are incredibly popular among children, but they can also expose young users to financial risk and gambling-like behaviour, often without parents even realising it’s happening.
These aren’t isolated issues. They are sobering challenges that are widespread, increasing in seriousness and consequence, and can develop into bigger issues related to mental health and financial harm.
The in-app spending trap
Digital social gaming platforms like Roblox are hugely popular with children under the age of 16, enabling them to connect with others and explore a vast library of user-generated content. Roblox offers players the option to buy virtual currency, which unlocks features and accessories. The key problem is that without the right parental controls in place, these types of in-app purchases can be too easy for children to make.
One parent recently shared her story on how her 9-year-old daughter spent more than £1,000 over three months on Roblox without realising the money was real. The daughter wasn’t acting maliciously; she simply wasn’t aware that the game’s coins were connected to her mother’s bank account.
The mother commented that “Kids don’t see it as money. It is coins and a gaming app. They don’t connect that it is money you have to pay for.”
While most online gaming platforms aimed at children do offer parental controls, in reality they’re difficult to configure, poorly communicated, and easy for increasingly tech-savvy children to bypass.
The blurred line between gaming and gambling
Youth gambling is also on the rise. A 2023 report from the UK’s Gambling Commission found that 31% of 11-17 year olds have engaged in some form of gambling in the past year. This isn’t just in the UK; in the US, a study by the University of Pennsylvania reported that 2.9 million youths aged 14-22 have gambled with money, and nearly 580,000 engaged in online gambling. From a global perspective, 17.9% of teens, over 160 million, reported gambling in the previous 12 months.
These challenges are not isolated to the more traditional forms of gambling either. It’s also the gamification of gambling through mechanisms like loot boxes, where children are encouraged to spend money for randomised rewards. This is cloaked gambling – designed to trigger similar addictive patterns to traditional gambling, which often lead to real financial consequences.
Why is this happening?
Long story short, because it’s easy.
If we look at the user experiences across all these different platforms, there is enormous diversity in how they are accessed and the pathways to purchase. But there is one thing they all have in common – there’s a payment.
Online payments are called card-not-present (CNP) payments; where the cardholder doesn’t physically use their card or enter their PIN. These transactions significantly differ from in-store payments as there’s no categoric verification of who is making the payment. And this is the weak spot.
If a child has access to a parent’s saved card on a mobile or a tablet, there’s little to get in the way to stop them from spending. It’s not the system’s fault; it was never designed with age verification in mind. But this is what’s being exploited.
Rebuilding trust in online payments
To tackle underage spending and online gambling, we need to take a closer look at how payments are made in the first place.
Card-present payments, such as how we pay in-store with card and PIN, enable categoric confirmation that the cardholder is making the purchase. You have a physical card, and the PIN provides verification.
So, if we only accepted card-present payments for things like in-app purchases and to access online gambling platforms, this would create a significant barrier to entry for children. Because children would need access to both the card and the PIN to make a purchase.
This is especially important when we consider the types of cards children can access:
- Youth debit cards (age 13+) are usually non-contactless (meaning they must be swiped through a payment terminal) and designed for in-person use only.
- Scheme debit cards (age 16+) can be contactless and used online, though still under parental oversight
- Credit cards are not issued to anyone under 18, though minors can sometimes be added as authorised users.
So, the critical key to all of this is enablement of card-present payments in online channels.
Burbank has developed a solution ready to deploy now, called Card Present over Internet® (CPoI®), which enables card and PIN authentication online. Furthermore, CPoI® can actively screen a card when tapped to ascertain a minimum age limit of the cardholder. This allows certain platforms, like gambling sites, to block purchases from underage accounts when using card-present technology.
This isn’t just a benefit for the end user; it also benefits merchants and regulators by helping to enforce age control in real-time, rather than relying on manual intervention or parental supervision.
Protecting our children online should not be optional
While the digital economy has been progressing and innovating at breakneck speed, the safety rails haven’t kept up. We’re in a place where it’s technically easier for a 12-year old to top up a gaming wallet than it is for them to buy a soft drink in a shop. This can’t continue.
If we want to change this, we need smarter systems that build in safeguards from the start. CPoI® offers a practical, scalable solution that doesn’t just respond to the symptoms, it addresses the cause. Because protecting children should never be optional, and payment security should be for everyone.
