Online Gambling & Gaming

Challenges facing online gambling payments

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Online Gambling Payments Still on the Rise

The global online gambling and gaming industry is on a winning streak, with its value set to reach $1 trillion by 2021.

Gambling activities are moving online, with the most significant growth happening on mobile.

In fact, the mobile sector of the global gambling market is forecast to grow at a compound annual growth rate (CAGR) of 18.84 percent from 2017-2021.

The gaming industry has to constantly adapt to ever-changing regulations while keeping pace with the rapid evolution of mobile and online gaming services.

In the last few years, we’ve seen rapid innovation in online gaming payments, including faster deposits and withdrawals, one-click features, and built-in biometrics.

Who are the players?

The way that people gamble, and the demographics of gambling, are changing.

Younger millennials and the older representatives of Gen Z (ages 18-21) are expected to make up 40% of consumers by the year 2020.

This youngest consumer generation (age 18-21) is typically focused on digital technology and the mobile phone.

In one survey, 80% of 18-21 year olds would give up television for a day – and 28% would give up friends or money – to keep their mobile phone.

But don’t forget the baby boomers. The over 60’s are spending more than twice the amount they did on online gambling 10 years ago.

UK online gambling infographic

5 Challenges facing online gambling payments

The need for speed

Research shows that more than 25 percent of online gamblers have abandoned registering a new account with a gambling website due to its complicated sign-up processes.

Whether it’s depositing funds, placing wagers or withdrawing winnings, online gamblers expect to have as fast, seamless and easy an experience as they have with Amazon.

Online operators have to support a smooth user journey whilst minimizing fraud.

This need for speed in online gaming means platforms can’t afford to depend on manual security checks or other inherited validation processes.


The rapid growth of online gaming comes at a price - increased cybercrime.

Stolen or spoofed identity data is still the biggest threat.

One man in England lost nearly 12,000 pounds when fraudsters using stolen identity credentials made 110 fraudulent transactions at an online gambling website.

According to the ThreatMetrix Gaming and Gambling Cybercrime Report, one in every 20 new account creations is fraudulent.

Meanwhile, automated bot attacks can account for around half of daily gaming and gambling traffic during periods of peak attacks.

While account creation is the most vulnerable part of a customer’s journey, the operator in partnership with its payments provider needs to supply:

  • ID verification
  • Politically exposed person monitoring
  • Anti Money Laundering regulators (AML)
  • Sign up monitoring
  • Log in monitoring
  • Withdrawal and deposit monitoring
  • Actual games and tables monitoring

  • High Risk

    Payments Processors consider gambling merchant accounts to be high risk for a few reasons, including age restrictions, diverse global laws, high-volume turnover, higher-than-typical chargebacks, money laundering and fraud.

    When looking for a merchant account for your gambling business, save time by seeking out companies that explicitly support gambling.

    By using the latest data protection technology and fraud prevention mechanisms, such as 3D Secure, address verification and CVV, the right payments provider can help you reduce your risk and enhance your data security.


    The European market is the largest market for online gambling worldwide, accounting for 47.6 percent of the total revenue.

    There is no one EU policy that regulates online gambling. Each member state has taken it upon themselves to regulate online gaming. That means the merchants and providers need to keep a close eye on any recent developments and changes within their targeted markets. Countries such as United Kingdom and France for example require domestic license in order to market and accept players from these territories.

    What each European market has in common is strict Know Your Customer (KYC) and Anti-Money Laundering requirements. Every player must be properly identified and assessed to mitigate the potential for money laundering and crime risks.

    In late spring of 2018, the United States Supreme Court changed course on sports betting in the country.

    According to Reuters, the SCOTUS struck down a federal law from 1992 that banned sports betting in most locations. The Court sided with the state of New Jersey, which argued that the federal law interfered with states’ rights to regulate sports betting.

    While the decision doesn’t automatically permit sports betting everywhere, any state that wishes can now legalize betting on football, basketball, baseball and other sports.

    One research firm estimated before the ruling that if the supreme court were to strike down the law, 32 states would probably offer sports betting within five years. To keep up with which U.S. states are taking action on sports betting, check out this ESPN tracking map.


    A chargeback is a Visa, MasterCard or Discover transaction that is disputed by a cardholder. The reasons include non-receipt of services, dissatisfaction, or fraud.

    One example: a player at an online games table takes a huge loss, telephones his credit card issuer and denies the charge.

    It’s a he-said, she-said argument that online gaming merchants often lose.

    When a consumer does this and gets away with it, whether it’s a legitimate mistake or not, they are 50% more likely to do it again within 90 days.

    Buyer’s remorse, the ease of calling the bank and denying a charge, and merchant policies, all aggravate chargebacks.

    An online survey found that the two biggest issues that businesses face when dealing with chargebacks are disputing them (59%) and being able to identify friendly fraud (58%).

    The more chargebacks a casino has to pay, the bigger the impact on its bottom line and reputation.

    What is the future of Online Gambling?

    Gaming and gambling companies, in partnership with payments providers, need to find new ways to identify and authenticate good customers while delivering a seamless online experience.

    With one in every 23 payment transactions being fraudulent and nearly half of all transactions coming from a mobile device, gambling platforms are betting on automated authentication.

    Techniques like device fingerprinting allow a merchant to trace the transaction history of the device used while risk-scoring tools constantly refine the rules they use to reject suspicious orders. With criminals constantly updating their techniques, risk-scoring tools need to do more than flag suspect transactions; they must constantly refine the rules they use to reject suspicious orders.

    Gathering and analyzing real-time data to identify a user’s digital identity and provide better service looks like a win-win for the online gaming industry.

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