The Best Gambling Bank Accounts For Casino Businesses

Gambling Accounts
January 23, 2024
5 min read

IGaming is high-risk, extremely fast-paced, and finding the right financial institution that truly recognizes the needs of iGaming companies is critical. We explore some of the most important features and benefits of bank accounts that iGaming businesses should look for…

1. Foreign exchange services and international transactions

Suitable banks and payment institutions for iGaming businesses should offer foreign exchange (FX) services. These services ideally will be for both fiat money (government-issued and government-backed currency, such as the US dollar, Euro), and popular gaming destination currencies such as CAD.

A growing number of banks and institutions are multicurrency, enabling either internal FX transfers or B2B payments in any chosen currency, significantly improving the fund flows for iGaming enterprises.

In addition to FX services, banks should be able to facilitate transactions internationally. This is especially important for iGaming businesses as many have a global customer base and will need the facilities to handle daily international transactions. They key list of transaction systems that an account should feature are:

  • Named IBANs
  • BIC
  • SEPA
  • SEPA Instant
  • FPS
  • EFT and ACH
  • CLS participation

IBAN (International Bank Account Number) is a unique code given to bank accounts to enable banking institutions to send and receive funds across Europe, the Middle East, North Africa and the Caribbean. Whilst popular in those regions, there are other more efficient means of transferring funds internationally, and to countries beyond these aforementioned regions.

BIC (Business Identifier Code) is often interchangeably used with SWIFT (Society for Worldwide Interbank Financial Telecommunication). Whilst SWIFT is essentially a global messaging service used by financial institutions to send information and instructions pertaining to money transactions, the BIC or SWIFT code (also called the BIC or SWIFT ID) helps identify the banks and specific accounts located around the globe. Having the ability to transfer finances via an IBAN, BIC, or SWIFT route is an imperative feature of any iGaming bank account. SWIFT is renowned for its high-level security and protection for every transaction.

SEPA (Single Euro Payments Area) enables customers to make international bank transfers in Euros. All 27 member states of the EU, as well as a few non-member countries whose native currency is the Euro, are able to transfer money via the SEPA system. A bank account offering SEPA transfers will enable for efficient and convenient transfer of Euros across Europe.

EFT (Electronic Funds Transfer) are electronically authorised money transfers used for online payments of bills, products, as well as ATM withdrawals and eWallet payments. EFTs also enable peer-to-peer electronic payments (P2P) and app payments (e.g., Venmo and PayPal), in which no financial institutions are involved.

EFTs have greatly reduced the time consuming process of using checks and cash to transfer money and allow for greater flexibility in withdrawing and moving funds. They also make telephone banking and telephone payments possible and have led to a reduction in late fees and interest charges due to the speedy nature of the transactions. 

ACH (Automated Clearing House) are payments processed by the Automated Clearing House Network of financial institutions. ACH payments fall under the umbrella of EFT payments as everything is done electronically. This is an exclusively US-system. ACH transactions take place between two US financial institutions, either via online banking portals, online payment portals through which payments are facilitated through a bank account, or via services such as Venmo or PayPal. ACH payments carry a lower fraud risk and payments are quick (often instantaneous)

CLS is an independent multi-currency settlement system for foreign exchange transactions. The Continuous Linked Settlement Bank was established in 2002 and has supported a growing foreign exchange market, boasting 70 members consisting of key financial institutions.  CLS was initially established to mitigate settlement risk and it does so by using the Payment vs Payment (PvP) principle, in which two flows between the buyer and seller occur and are settled simultaneously. CLS was particularly useful during the COVID-19 pandemic, during which the FX markets experienced extremely high volatility. Using CLS, FX market participants benefited from a much more controlled risk and were able to endure the more extreme market conditions during that period.

2. Multi-currency accounts and services

Multi-currency accounts might feel like the practical step for an iGaming business handling payments in multiple currencies daily, however, there are some drawbacks that need to be addressed.

A multi-currency account does what it says on the tin: it is a bank account that allows you to transfer money in a variety of currencies. Transactions are completed using a main currency (e.g., US dollar) and the other currencies are then held until you wish to exchange it. Most accounts only offer withdrawal and transfer features using the most popular currencies.

The biggest drawback of multi-currency accounts can be the cost. These services can come with fees, and multi currency accounts typically have very low interest rates, meaning the value of the assets held in the account may depreciate over time. On the plus side, if a business absolutely requires multi-currency accounts and are operating in a high-risk industry like iGaming, then multi-currency account costs will easily make business sense. This is because a business that is handling multiple currencies daily will likely benefit, even at higher costs, through a much more straightforward method of handling multiple currencies.

3. Account segregation for player protection

As an iGaming business, everyday thousands of pounds, dollars, euros and other currencies may be coming into your accounts. Some of this money is customer funds and it is this money that requires extra care. Often, regulation dictates that customer funds should be held in a separate account, distinct from the company’s other finances. The segregation of customer funds helps to protect both the customer and the business. In cases of insolvency, the customer should be able to clawback their protected funds. In instances of fraud, businesses can support criminal investigative bodies by sharing details of correctly reported and clearly segregated pools of customer cash.

Account segregation is required by law in many countries for various FinTech companies, including payment service providers, investment funds, insurance businesses and—of course—iGaming enterprises. Many banks will essentially end up acting as a mediation between customers and the iGaming businesses. They will offer Banking-as-a-Service (BaaS) so that iGaming companies can continue to receive payments from customers without any sort of disruption, and simultaneously will trust the bank to hold and record these customer funds separately from the company’s other assets. Payment service providers can only receive licences once they have proven that these segregated accounts are already in place, ready to segregate funds.

The most appealing and competitive BaaS account segregation solutions enable uninterrupted account use, automation of activity to reduce time and increase security, clear reporting tools and practices, and expert on-hand support to ensure a smooth BaaS experience.

4. Fast and secure payment processing

Consumers in virtually every industry are now conditioned to expect instantaneous payments, transfers, and exchanges to take place. Whether paying at a till in a store, via an online portal, or depositing funds into an app, consumers want a streamlined, simple, user-friendly experience. It’s no surprise that fast and secure payment processing is an important feature that banks can offer. In the iGaming industry, this is especially important, as the nature of online gambling often sees multiple transactions taking place within a single interaction.

Compare this to online retail, where retailers only need to rely on their online payment portal performing well once (or twice) per individual customer shopping experience. In the business of online gambling, customer retention could easily dwindle following poor experiences with depositing and withdrawing funds. 

One study by TrueLayer and YouGov found that over 50% of surveyed players in Europe expressed a willingness to switch to another iGaming brand if it provided instant payouts. 28% of respondents said they would contemplate increasing their deposits if they had the option to instantly withdraw their winnings. It is banks and payment service providers who will need to assist iGaming businesses with providing their end users a harmonious experience with every transaction.

5. Software integrations and open banking

One way that banks can offer iGaming companies a competitive advantage in the industry is via Open Banking. This is when customers can share specific financial details, visible only to them and their bank, with selected financial providers. 

Information such as the account balance and transaction history are shared, in order for financial institutions to offer personalised products and services, with the aim of increasing savings or improving experiences. Open banking is also frequently used to enable smooth and instantaneous interactions. By allowing a connection between a customer and selected service providers, the bank can facilitate quick transactions that put money exactly where customers want it.

Open banking is going to encourage much more interlinking of accounts to take place. For example, players register and then make their first deposits through two different flows, however open banking enables these two flows to link together and talk to each other. By interlinking these two activities, iGaming companies can better identify fraudulent players, and genuine players can enjoy a more fluid sign-up and get started experience.

This is all made possible via software integrations that perform these functions silently in the background, away from the front-end where the consumer is trying to enjoy their online gaming experience. Software integrations can support payment providers, affiliate systems, wallets, game content, marketing content and even regulatory elements to iGaming experiences.

6. Volume control

Banks serving iGaming companies need to have the capacity to handle a unique transactional environment. First, iGaming equates to transactions at volume. Not only must banks in this sector be able to deal with very high volume but also with the fast-paced nature of these transactions and the multi-layered risks. Each transaction needs to be assessed in milliseconds and against multiple other transactions to help determine if it might be fraudulent, or if player protections need to be enforced. In addition to all this, transactions are happening in two directions: money is being deposited and simultaneously withdrawn by players, amplifying the company’s exposure to risk.

Banks need to have payment processor facilities or partnerships that enable millions of transactions to take place, and at the same time, provide an exceptional service that helps iGaming companies mitigate risks, remain compliant, and satisfy their end users.

7. Emerging technologies

Emerging technologies present both exciting opportunities and plenty of risks and challenges. One area of emerging technology that is dominating the spotlight is artificial intelligence (AI). Various machine learning technologies are becoming available to iGaming companies, to help with everything from identifying vulnerable players who may need additional safeguarding in place, to personalising player experiences with real-time improvements made possible through live machine learning programs.

Many banks are also working hard to increase AI programs that assist with fraud detection. In 2021, financial institutions reportedly spent $217 billion on AI applications (source: Business Insider) to help assess fraud risk and prevent fraudulent activity. Banks are rolling out AI-backed KYC measures, fraud-score reports, and purchase profile programs to help them continue to offer slick and secure financial services.

Most banks have also launched biometric security measures as a way to challenge rising numbers of synthetic identity fraud, such as the unreliability of SMS text authentication. Synthetic identity fraud is the fastest growing financial crime in the United States, and involves the creation of a new identity using stolen or fabricated information. 

Physical biometric technology enables the analysis of unique traits, including retina details, ear shapes, vocal pitch, and even vein patterns and makeup. From an iGaming business perspective, this level of security helps build trust between the bank and the customer, and demonstrates just how serious banks are about tackling all types of fraud.

Lastly, banks use end-to-end encryption (E2EE), meaning that data being transmitted between two endpoints (e.g., the customer and the bank) is converted into an entirely illegible form and does not get intercepted at an intermediate point. At the other endpoint, the private information is decrypted and shared with the intended destination. 

E2EE differs from other types of encryption because of the use of two different cryptographic keys both belonging to the recipient. The sender uses the recipient’s public key to send the information. Even if the public key were to be intercepted, it only contains encrypted data. The private key is held by the receiver on their device and will only decrypt the data once it has arrived at the intended destination. This way of transmitting data satisfies a key element of the PCI (Payment Card Industry) Data Security Standards.

8. Regulatory compliance

This goes without saying, yet it makes the list anyway. This is not because some banks might not be playing ball with regulation, but regulatory compliance is becoming increasingly challenging because of several interlaying factors. 

Regulation is siloed to individual jurisdictions, with some overlapping policies, laws and guidelines issued by international bodies (e.g., IOSCO) or regional organisations (e.g., the EU). This means that for international iGaming organisations, a global scope on the regulatory landscape is imperative, yet it won’t be the right approach to each individual player, who is governed by their own unique set of circumstances.

A banking partner should be of the same mindset, whether local or international. Banks need to be especially proactive in anticipating compliance in areas that may impact their customers. This is so that they can help to protect their clients and support a seamless adoption of new regulation requirements within ample time.

Summary: Choosing the best bank account for iGaming companies

Whilst it is not always possible to find a bank that satisfies all requirements, creating a list of your priorities can assist in selecting the right partner, and in doing so it is important to select a partner that is most attuned with the industry, and the many existing and future requirements.

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The information provided in this article was accurate at the time of publishing. This information is not to be used for trading, investment, legal, financial or any other form of business advice.

Disclaimer: This article is for information purposes only. It is not intended to serve as financial, investment, legal, or any other advice. The information presented here is accurate at the time of publishing.

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