Wirecard Explains How Virtual Banking Will Work

By Chloe Albanesius
The virtual banking world now has the backing of an actual bank. German bank Wirecard is among the four investors that recently purchased banking licenses issued by the virtual community of Entropia Universe.

Virtual reality enthusiasts paid a total of $400,000 earlier this month to acquire the licenses, which will allow their owners to lend cash to the community's participants for the virtual purchase of anything from game-fighting weapons to real estate. They will have the exclusive rights to these banking licenses for two years, after which Entropia will consider issuing additional licenses.

The Wirecard stake was purchased for $59,060 in conjunction with Entropia avatar Janus JD D'Arcwire. Other purchasers include Jon "NeverDie" Jacobs, an Entropia nightclub owner and one of the world's most well known players, who paid $90,000; avatar Yuri iNTellect, representing Russian Internet payment provider MONETA.ru, by Efremov, who paid $99,900; Second Life celeb Anshe Chung, who paid 60,000; and an anonymous entrepreneur using the avatar name "Jolana Kitty Brice," who paid $95,000.

Purchasers also had to pony up an additional $100,000 in seed money to acquire the licenses.

The move is another step toward making virtual reality more than just a game. Members may be hunting for monsters and mythical swords, but they're doing it with real money that can now be backed by funds from a real bank. Gamers like Jacobs and Chung survive on the proceeds of their virtual activities and grow their businesses within the confines of the virtual community.

Wirecard declined to provide details on how much of that $59,060 it actually paid. Its interest in the virtual community stems from the increasingly popularity of virtual reality.

"The growth of virtual economies … results in significant business opportunity for banks offering services specifically targeted to the needs of such customers," said Jan Marsalek, vice president of software and development at Wirecard, via an email interview.

"Only real life banks are able to offer a unique set of new and exciting but also trustworthy and secure services to the users of virtual worlds," Marsalek said. "The future growth and reputation of virtual worlds significantly depends on the sustainability of the services provided to their users and we believe that real life banks, such as Wirecard Bank, can add substantial value to the overall game play experience."

The deal with Entropia is not Wirecard's first foray into virtual reality. The bank already operates a virtual bank branch within the Second Life, operated by members of Wirecard's customer service team out of Leipzig, Germany, according to Marsalek.

Given that Wirecard is an actual bank, it has the opportunity to provide more services than those virtual banks operated by Entropia avatars. At this point, if an Entropia member wishes to do business with one of the other banking avatars, they must hand over some of their virtual acquisitions as collateral in order to receive funds instead of receiving money outright, according to Entropia officials.

Wirecard's offerings will be designed around the bank's Internet payment service, Marsalek said. The bank will begin with a single line of business, but officials are exploring additional opportunities within Entropia.

"Wirecard Bank is able to offer … far more sustainable services … due to the fact that it's a real life bank," Marsalek said.

But real life banks are also subject to real life banking regulations. "Depending on the origin of the customer, some services or products may be restricted to certain geographic areas," Marsalek said. "The legal implications of a failed business relationship vary as well as … the service or product affected."

Marsalek downplayed concerns about the anonymity of its Entropia customers. "Even the best-known and most trusted avatar will have to reveal the real-life person behind it when it comes to certain types of services," he said.

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