A payment processor or payment service provider (PSP) is a service implemented by a merchant to process all online payments made by debit card, credit card e-wallets etc and is different from the term payment gateway.
What is a gaming merchant account?
A merchant account is a type of bank account that accepts credit and debit card payments.
The payment processor communicates with the payment gateway and the merchant account, transmitting information quickly and securely which facilitates instantaneous transactions for the end users.
Online gambling and payment processors
Many payment processors steer clear from approving gaming merchant accounts for gambling related businesses as they are high risk.
The industry is perceived as a high-risk industry by most card processing providers for several reasons:
- They have a high-volume turnover, which increases the risk of money-laundering as large payouts are commonplace and payments can easily “get lost” within the gambling arena
- Gaming businesses can be based offshore and prone to fraud and money-laundering.
- If the business is new to the gaming industry, the lack of credit and transaction history can deter banks from offering accounts.
What features do casinos look for in an online gambling payment processor?
The transactions in the gaming industry are microtransactions and are therefore somewhat different to other online markets. The challenge is dealing with the multitude of in-game small transactions. Therefore, it is particularly important for gaming companies to find the right match in terms of a suitable payment service provider.
Here are the most important points to be considered in the selection of a payment processor:
Smooth pay ins and pay-outs.
An ability to provide both merchants and gamblers with smooth pay-ins and pay-outs gives them the edge over their competitors.
Offer various payment methods
Merchants expect the payment service providers to offer them several payment options. For large transactions, wire transfers like SWIFT and SEPA offer a great solution. However, it is also important to keep smaller transactions in focus and offer methods most suitable for them. Many people like to use their debit/credit card online so many online casinos offer credit card payment as one of their options. However, in the UK, as of 14 April 2020, online gamblers can no longer deposit at online gambling sites using their credit card.
As gambling is an international business, it’s vital for merchants to be able to accept payments in local currencies. This refers to both pay ins and pay-outs.
Prepaid cards or game cards are becoming increasingly popular among players. The reason for the popularity of this method is, among other things, cost control, as you purchase a fixed amount of credits in advance. In addition, payment with a prepaid card is anonymous, making the payment on gaming sites more secure for the user. One of the biggest PSPs offering prepaid cards for the gaming industry is Paysafecard.
An e-wallet is a secure online digital wallet that links to your bank account and allows gamblers to put money into their online casino account. Any winnings they make go into the e-wallet and allows them to transfer the funds back into their bank account. For online casinos, poker and sports betting, Skrill is a popular choice.
Payment with mobile phone / Mobile Payment
Some PSPs offer the option to pay by mobile. Boku is a popular option in the gaming industry, which offers payment via mobile phone.
Recurring billing software
For gambling merchants who want to offer their customers a subscription model of payment, they need to have recurring billing software in place. As recurring billing has its risks, it’s essential for merchants to also offer smart recurring billing, enabling the merchant to do partial withdrawals from the cardholder's account.
Fraud and chargeback prevention system.
Fraud is a challenge for gaming providers. PSPs therefore need a security system that processes correct payments but also recognises and stops incorrect payments. Since gambling is known for its tainted reputation, it’s crucial to have all the possible fraud and chargeback prevention systems in place.
Integration with the biggest gambling platforms.
The more of the biggest gambling platforms a merchant can integrate the better. Microgaming and Playtech are the two biggest online casino giants. They both host thousands of online slots and other gambling activities online.
Optimization for PC, laptop, tablet or smartphone
Many games are available for more than one platform. Whether on a home PC or on the move with a laptop, tablet or smartphone, users should be able to make purchases from anywhere. The process should be optimized for each device so that the payment is processed quickly and securely on each device.
Familiarity with regulations and laws of operating countries
Gaming providers are rarely bound to the local market, so they need the support of an experienced PSP, who is familiar with the regulations and laws of their operating countries.
Customer support and stable systems
Excellent customer support and stable systems are important when choosing a PSP. This should preferably be 24/7.
Protection against hacker attacks and Distributed Denial-Of-Service (DDOS) may also be a factor in the selection of the PSP.