The right payments provider can positively impact operators
Zak Cutler, Paysafe’s CEO of North America iGaming division, discusses the diverse benefits that payments can bring to U.S. online sportsbooks and iGaming brands, in an op-ed piece he originally contributed to SBC Americas.
The iGaming industry continues to grow rapidly across the globe, nowhere more so than in the U.S., where states continue to regulate online sports betting at a pace.
One of the key drivers of the growth of the industry is payments. Specialized payments providers with a deep knowledge of the iGaming landscape support operators as they push the industry forward.
Not only will payments play a critical role in the growth of iGaming globally, but it is also a significant component in determining the winners and losers in each market. Here are four ways that payments are making a difference to operators and the industry.
Facilitating operators in regulated markets
The iGaming market is perhaps the most heavily regulated online industry across the globe. And while this is excellent for the long-term future of the industry as a whole, for operators this can often cause short-term issues when entering new markets or developing new banking relationships. Experienced payments providers with a rich heritage in the global iGaming industry can support operators as they expand into new regions including banking relationships, as many are undertaking currently with the state-by-state growth of the industry in the U.S.
Depositing funds into a newly opened iGaming account is the last step in the player acquisition process for operators. So, this step must be seamless and easy. Any user experience that is difficult to manage or causes the player to second-guess making their initial deposit is going to be a lost customer for the operator that may have already committed considerable marketing spend into acquiring them.
In addition to best-in-class UX deposits, there are other factors payments can influence when it comes to customer acquisition:
- Card payment acceptance rates – Payments companies that specialize in servicing the global iGaming industry have the deep regulatory knowledge and the right banking relationships in place for sports betting platforms to reduce card declines. The most experienced payments partners in iGaming also have additional tools at their disposal to proactively reduce declines, such as historical data to support BIN analysis on when declines are likely to occur.
- An alternative when card declines do occur – But reducing card declines to zero is unrealistic, so another role for payments is to enable players to continue the depositing process if their card is declined. Proactively messaging players to let them know that their deposit is likely to be declined where possible and then offering the player other options to make the deposit is the best chance of still converting the player. For example, when we asked players in 2021 what they would do next if their card is declined, the most popular answer (35%) was that they would try to deposit using a digital wallet.
- Offering players their preferred deposit method – For many players card payments aren’t their preferred way to deposit into their iGaming account. This could be because they do not want to share their financial details with the operator, or they want to protect their privacy with their bank, or they simply have a preferred payment method for all online and ecommerce transactions. Payment types that are specifically designed for U.S. iGaming will help reduce customer acquisition costs, as they have a built-in customer base of avid gamblers that an operator can pull from. Offering the broadest range of deposit methods enables operators to appeal to more players.
- Quick withdrawals – Deposits aren’t the only payments that can potentially win or lose players. For example, according to our 2021 research, U.S. sports betting players consider guaranteed quick and easy payouts to be more important than brand trust, promotions, and even odds offered when they are asked to compare sportsbooks. Two-thirds (66%) of American players also expect their payouts to be in their account within 24 hours.
Fraud prevention and anti-money laundering
Another critical role for payments providers is to combat illegal activity. The iGaming industry is highly targeted by fraudsters that attempt to use stolen financial details to open gambling accounts in the hopes of quick profits. Friendly fraud is also an issue, where players make deposits into their account and if they lose their funds then claim a chargeback on the transaction, stating that it wasn’t them that made the deposit. In both circumstances, experienced payments providers can support operators to challenge these fraudsters.
And money laundering i.e., using the proceeds of crime to fund legal activities, is another way criminals can try to exploit gaming operators. Regulators rightly place huge pressure on operators to prevent this; payments play a critical role in supporting anti-money laundering efforts.
Discovering more about players
iGaming operators understand that the more they know their customers, the more they can tailor user experiences to their individual needs and expectations. Payments are an excellent source of data to enhance the customer experience. Payment providers that offer operators a full 360-degree view of how their customers behave in their checkouts via a single source of information provide the best insight into player behavior.
This article was originally published with the gaming industry media outlet SBC Americas here.