The online gambling market has grown incredibly in the past few years, and some projections indicate that it will reach more than 153 billion dollars by 2030. With many of the gambling operators moving towards the virtual world, quick, secure, and dependable forms of payment processing have become the most important aspect of business.
Conventionally, online casinos have depended on offline modes of payment processors and merchant accounts to conduct transactions. Nonetheless, in the highly regulated and risky industry, a number of conventional providers are reluctant to service such companies. Such has been the case that a cottage industry of specialized gambling payment solutions designed specifically to meet the needs of iGaming operators has emerged.
The following article will compare and contrast the major differences, advantages, and drawbacks of using a dedicated gambling payment provider and using a traditional credit card processor. It will examine key considerations in the area of security, compliance, speed of processing, fees, and others in order to assist gambling operators in making the appropriate decision with respect to the payment requirements of their business.
Key Considerations When Choosing a Processor
When evaluating payment solutions, online gambling operators need to assess some vital factors:
- Compliance & Licensing. One should choose a processor who is conversant with gambling compliance and relevant licenses and is abreast of any changes in regulations. The non-compliance will lead to penalties or blacklisting of operators.
- Processing Speed. The abandonment rates can be raised with slow processing. The solutions to rapid payments and verification are to be identified.
- Security & Fraud Prevention. Security should be high in payment. Operators must safeguard the data of the customers, stop fraud, and uphold integrity in their operations.
- Fees & Transparency. Processing fees, interchange rates, and transparency around any hidden costs greatly impact profit margins.
- Reliability & Uptime. Gambling payment solutions must offer maximum uptime with redundancy to prevent missed sales or blackouts.
- Specialization Matters. Specialized KYC, responsible gambling, and navigating legislation tools have been created on platforms intended to be used in gambling.
These parameters will assist iGaming companies in choosing the best alternative to their unique payment requirements and business model.
Traditional Merchant Accounts & Payment Gateways
Over a number of years, online gambling operators have been relying on conventional merchant accounts and payment gateways that enable them to take payments. These solutions help the customers to pay through the most popular means, such as Visa, Mastercard, AMEX, bank transfers, and e-wallets.
Using these traditional providers offers some advantages:
- Established technology and experience in processing online transactions
- Integration with common shopping cart platforms
- Accept payments from customers instantly
However, there are some distinct drawbacks to employing a conventional credit card processor for a gambling operation:
Strict Compliance Rules
Conventional suppliers follow strict card network compliance rules and limits on supposedly high-risk industries such as gambling. Merchants are required to provide complete documentation that will show that they have fulfilled all the requirements set by the licenses and regulations.
The gambling sites have a dynamic regulatory environment where the legislations are changed frequently. It is very hard to keep up with the new rules unless a processor has specialized knowledge of such nuances. Consequently, several of them choose to shun gambling services altogether.
High Fees & Hidden Costs
While traditional processors seem attractive thanks to name recognition and experience, they often levy punitive fees on merchants deemed high-risk. Gambling operators frequently incur monthly service charges, non-compliance fees, higher transaction fees, confusing interchange-plus pricing, and expensive chargebacks.
These constant fees eat away at margins. Some traditional providers lure in merchants with competitive baseline pricing only to tack on many hidden ancillary fees after signing. This makes real processing costs opaque and hard for operators to budget.
Frequent Account Terminations & Fund Holds
Due to the complexity around ensuring full gambling compliance, many traditional processors abruptly freeze or terminate gambling merchant accounts after previously approving them. This leaves operators scrambling to find alternatives while revenue gets cut off.
Processors may also unexpectedly hold merchant funds for months over perceived compliance issues. These account disruptions and financial delays can wreak havoc on iGaming operations.
Lack of Specialized Tools & Reporting
While traditional payment gateways cover basics like shopping cart integrations and credit card processing, they lack tools tailored to the unique needs of regulated gambling platforms. This includes identity verification, geolocation confirmation, responsible gaming oversight, and detailed processing analytics.
To do so, merchants are compelled to patch together a dozen or more third-party solutions to address gaps in compliance, security, and business intelligence requirements, increasing cost and complexity.
The selection of a specialized gambling payment service helps to avoid these traps and streamline the work of operators.
Specialized Gambling Payment Solutions
During the last 10 years, a new generation of fintech providers has appeared to directly serve the rapidly growing regulated online gambling market. The platforms provide payment technology, merchant accounts, and banking tools that specifically address the specifics of iGaming operators.
Top gambling payment solutions include platforms like Epay, Trustly, MuchBetter, and Nuvei, among others. These providers offer operators a compelling proposition:
End-to-End Gambling Expertise
They possess specialized expertise across gambling regulations, compliance protocols, security best practices, and responsible gaming requirements globally. By solely focusing on gaming merchants, they stay on top of legislative changes and localization needs.
This experience allows them to expertly guide operators through licensing and payment approval while limiting compliance-based account terminations down the road.
Faster Onboarding & Increased Approval Rates
Since these providers deal with regulated gambling sites that have to fulfill stringent KYC and geolocation conditions, the risk level is lowered. This means faster rates of approval of merchant accounts.
Instead of a trial-and-error approach with conventional acquirers, specialized solutions put the operators into payment acceptance mode within a short time. This fast-tracked onboarding will enable gambling brands to market quickly.
Lower Fees & Costs
Specialized gambling payment platforms operate on lower interchange fees and offer reduced processing costs to clients. With less compliance overhead and a greater ability to classify merchant risk levels appropriately, these savings get passed on to operators.
The focused nature of these gambling payment specialists also lets them optimize operations and run much more efficiently. These cost savings ultimately help improve profitability for gambling brands.
Faster Payouts & Settlement
Special gambling payments are focused on quick payments and the settlement of gambling transactions. The best-rated ones offer industry-leading payout rates, with the average under 24 hours.
They are able to receive and finalize payments in a much shorter time than traditional merchants by streamlining systems based on the type of gambling transaction and the flow of values. This enables gamers to withdraw winnings in a fast manner.
Enhanced Security & Compliance
Safety and compliance are paramount in gambling, making security capabilities a key differentiation point for providers. Top options offer robust fraud monitoring, automated KYC screening, anomaly detection, responsible gaming oversight, and more.
They also continually audit and refine defenses based on emerging threats targeting gambling operators specifically. This enhanced security posture helps protect sensitive player data.
Better Analytics & Reporting
Professional gambling payment systems are very effective in offering comprehensive analytics and transaction information to customers. Operators will have an insight into the main performance indicators concerning deposits, payouts, payment channels, locations, and so on.
Such business intelligence benefits the sites by optimizing conversion, increasing revenues, smoothing operations, and complying with regulations. Traditional merchant accounts do not have dedicated reporting for gaming merchants.
Choosing the Right Gambling Payments Partner
Since we have considered the essential contrasts between the traditional and specialized iGaming payment solutions, operators should be cautious when deciding on their final choice of a partner to establish a relationship with.
The first step entails confirming licensing, certifications, and compliance with your target markets. Providers should hold gambling merchant licenses and bank partnerships for their desired jurisdictions.
Next, assess available payment channels. Look for versatility around card payments, bank transfers, and alternative options favored locally by players. Having flexibility in accepted payment methods is vital.
Evaluate available security and fraud-prevention capabilities as well. Robust KYC, geolocation confirmation, AI transaction monitoring, and responsible gaming features should be present. Airtight security is non-negotiable.
You will also want to confirm the speed of submissions, the underwriting process, and payout settlement. The quicker, the better. The customers will be annoyed to find out that reviews can be long or cashouts slow.
Lastly, examine pricing models and see whether there are hidden charges, and clarify the interchange rates of transactions. Other providers will offer low, attractive prices only to cover it up with high ancillary charges. Be sure that you know the real total processing costs.
If the iGaming operators choose a gambling payments expert that meets all of these criteria, they can circumvent the trappings and constraints of standard merchant accounts.
The specialized capabilities and tailored integrations lead to higher conversions, reduced fees, bulletproof security, and an improved player experience. Ultimately, this helps accelerate growth for ambitious gambling brands.
Conclusion
The online gambling industry is not slowing down. But to make the most of it, it is important to apply payment solutions designed specifically to meet the challenges of regulated gaming operators. The players require quick, safe, and stable ways to make deposits and withdrawals.
Although it might appear so, traditional merchant accounts are not the right option because they just do not have the specific tools and experience to be sustainable in the long run. The restrictions imposed in the fields of security, compliance, support, and transparency accumulate quickly, as discussed here.
With the adoption of new payment solutions that focus on the gaming industry, operators will benefit by increasing the approval rate, reducing costs, and having a rich feature base that meets their particular requirements.
With the industry coming of age and many more jurisdictions legalizing iGaming, these payment experts specific to gambling keep demonstrating that they are an irreplaceable asset to operators. They have solutions that make sites scale quicker and provide bulletproof payments end-to-end.