Historically, all a person would need to engage in gambling would be a few spare coins in their pocket or an ATM close by. But the influence of the pandemic has altered much of the process we once knew. In addition to tighter regulations and caps in online gambling, it became clear that Alternative Payment Methods (APMs) have become an increasingly popular form of payment for the iGaming and Sports Betting industry.
In this exclusive for The Fintech Times, Kristian Gjerding, Co-Founder and CEO of CellPoint Digital, discusses how payment orchestration is enabling more players to take part in online gaming by opening up payment options, and how lockdown forced casinos and gambling halls to close down, whilst online poker and online sports betting, amongst several other forms of iGaming, becoming increasingly popular.
Gjerding is a serial entrepreneur and business strategist. He held leadership positions at Network Appliance and Sun Microsystems before co-founding CellPoint. His role is both inspirational and operational: sharing his vision and keeping us all on track and growing (fast) in the right direction.
OVER the last two years, sign-ups to online gaming websites and programmes greatly increased. Due to the effects of lockdown forcing casinos and gambling halls to close down, online poker and online sports betting, amongst several other forms of iGaming, became increasingly popular.
Digital payments also saw a rise over the last two years. While Alternative Payment Methods (APMs) were already increasing in use pre-pandemic, forcing players online removed cash and tap payments, with many looking to adopt new payment methods in order to play. Add on to this that credit card use for online gaming was capped, or in some countries completely banned, and it becomes clear that APMs are a very popular form of payment for the iGaming and Sports Betting industry.
Armed with and accustomed to an array of APMs, consumers can spend their money to play from almost anywhere in the world from card or cash-based wallets to mobile payments, to pre-paid cards.
Gaming operators unable to accept these APMs risk creating customer friction-points that interfere with their growth ambitions and prevent them from scaling their businesses to serve a global customer-base and reach new markets.
The rise and rise of APMs
Consumer adoption of APMs is growing exponentially and were believed to account for over half of all global eCommerce payments in 2019 – the last year for which results are available. At a more regional level, it is reported that in Europe, upon reaching the Point of Sale (POS), 80 per cent of consumers have an expectation to pay for their goods and services with a digital payment method rather than a typical debit or credit card.
Meanwhile, across the Asia-Pacific (APAC) region, nearly all consumers (94 per cent) report that they would consider using an APM in 2022 and within the Middle East and North Africa (MENA) experts are saying digital wallets are set to be the region’s preferred means of making payments. Owed largely to the pandemic and the necessity for online, digital, and contactless payments, Latin America is also catching up with 55 per cent of the population now banked and the use of APMs on a steady increase.
As we can see, consumers are shifting towards APMs in ever-increasing numbers. For gaming operators with cross-border growth ambitions, it means that developing an APM strategy is now crucial for penetrating global markets and driving revenues.
As an increasing number of gaming operators with ambitions of international growth are experiencing, an inability to accept a customers’ preferred payment method is one of the more reliable ways to turn players away. Indeed, a recent study in the US found that 42 per cent of American consumers will bring a purchase to a halt if their favourite payment method isn’t available.
The problem for gaming operators is, with all these different payment methods, some more popular in specific regions than others, and with a gauntlet of contrasting international regulations to navigate, implementing and managing all these methods can be incredibly difficult.
It is partly because of their ability to confront this friction that payment orchestration platforms are growing in prevalence.
Enter the payments orchestration provider
According to PYMNTs, the global market for payment orchestration platforms is also expected to grow 20 per cent every year between 2021 and 2026. With each new merchant implementing the technology, consumers across the globe have a new place to spend their money in whichever way suits them best.
The platforms provide gaming operators with a single interface through which all transactions between themselves, their customers, and their payment providers are initiated, directed, and validated. The agility this confers to gaming operators who would otherwise need to manually integrate new APM options – resulting in protracted time-to-market and decreased competitiveness – is considerable.
Moreover, the complexity of monitoring the performance of multiple, manually integrated, and siloed payment methods would add to these obstacles and delays. Here, payment orchestration intercepts by automatically aggregating and processing these crucial data streams and providing gaming operators with valuable, real-time analytics that save time, prevent human error, and aid decision making.
This speed to market coupled with comprehensive real-time reporting allows gaming operators to begin increasing revenues in the short-term and make better decisions to facilitate growth in the long-term. However, the opportunities to enhance cash flows don’t stop there.
When a gaming operator relies on a single acquirer/PSP it is they who have ultimate control over transaction flows. For example, if the PSP succumbs to an outage, the gaming operator is subsequently and directly impacted. Likewise, if the PSP routes transactions to a specific acquirer, the gaming operator can do little if the costs they incur from this acquirer are unfavourable to them. A payment orchestration provider redresses this imbalance by transferring control of the transaction flow back to the gaming operator by allowing them to create real-time rules for switching transactions and offering APMs to consumers. This dynamic routing improves the success of processing rates, gives customers more payment options, and means failed transactions can be re-routed to the next acquirer leading to fewer lost sales.
Collectively, these various payment orchestration features and functionalities both unleash the potential of APMs and provide gaming operators with the speed and flexibility to drive revenues to ambition-exceeding levels.
Partnership with payment orchestration platform provider is key
By plugging directly into existing core or eCommerce systems, payment orchestration platform providers allow gaming operators to develop a growing payment ecosystem where the best-suited partners are easily picked and added. With online transactions optimised to accept a full suite of APMs, opportunities for growth quickly begin to multiply.
Gaming operators can display their games or services across multiple digital channels knowing that consumers can pay using whichever APM they prefer. This allows more players to have fun with the games they want to play and allows gaming operators to target specific regions by demonstrating their ability to accept the most popular APMs consumers in that region.
Payment orchestration enabled APMs add agility and dynamism to today’s gaming operators that allow them – for the first time – to give consumers whatever payment method they want, wherever they are. As the adoption of APMs continues its steep upwards trend, this capability will only become more essential for gaming operators looking to thrive on a global scale.