As gambling operators increasingly cultivate their digital presence, appealing to a greater presence of international consumers, online payments processors have become highly valuable business partners. Gambling Insider spoke to ECommPay’s Head of Product Development, Nikita Mischenko, and MiFinity Senior Sales Executive Kris Deyanov, to learn more about the future of payments in gaming.
Is having a quality payments service still an undervalued aspect of a digital betting operators offering in 2016?
Nikita Mischenko: In our opinion, service quality is an integral part of any business. Any company wishing to be competitive in the market must meet consumer needs to improve its products, services, tools, and technologies, and to find a unique approach to both prospective and existing clients. It should go without saying that a company unable to provide a convenient, innovative, secure payment solution to an e-commerce client will soon be replaced with a competitor.
In the future, we expect to see even more technologically advanced payment solutions, created with international e-commerce standards in mind to meet any and all client requirements. Fundamentally, successful and effective collaboration between a payment services provider and an online gaming merchant relies on the bespoke services model. Taking an individual approach to the client’s business ensures high quality, personalised products and services, which, in turn, increase the merchant’s results and revenue.
Kris Deyanov: The key areas of focus for online gaming companies are the betting software that they use and compliance with the regulations of the markets that they operate in. The betting software is seen as the key point of differentiation for these companies and as a result, having a quality payments service is still and undervalued aspect.
Payment providers are an important resource for all online gaming companies, the services that are provided can have a big impact on the end user experience, which in turn impacts retention and customer satisfaction. They need to be efficient, reliable and trustworthy in the services that they provide to ensure that customers receive their funds in a timely manner.
Online gaming operators have an array of options when it comes to payment providers and different product offerings. While there are cost-saving advantages that can be achieved by partnering with one supplier, over-reliance on a single operator can adversely impact on the company in the long term. As a result many gaming operators use a range of providers to ensure that they have redundancy in place so that they can maximise their uptime.
What has been the biggest obstacle you have had to overcome in the industry in 2016?
NM: We have been lucky in that we haven’t faced any serious obstacles this year. That said, 2016 isn’t over yet, so perhaps more challenges are coming our way. Our main priority is and continues to be the development of solid defences against fraudulent activity.
Online gambling has long carried the stigma of incurring high risk, often resulting in exorbitant processing fees. To try to counteract these risks and to keep costs at a minimum, ECommPay works closely with our gaming clients to guarantee an optimum level of security.
In addition to the more conventional payment products and services, ECommPay’s innovation and expertise has seen the development of highly advanced security measures, such as the risk management solution FraudStop, which features a large range of filters individually adapted to merchant specifications. As of 2016, ECommPay has furthermore introduced the BI (Business Intelligence) system, which operates in real-time to mitigate potential risks. This product drastically improved the response rate to fraudulent transactions, allowing an immediate response to potential threats.
Despite its highly effective proprietary anti-fraud solution, ECommPay explores additional avenues of keeping client businesses safe from fraudulent activity. In August 2016, ECommPay became the first acquirer in the world to implement MasterCard’s newest anti-fraud technology, MasterCard Dashboard, which gathers data to combat fraud globally and provides a number of universal features to ensure greater coverage. ECommPay’s rapid implementation of the risk management product demonstrates the acquirer’s dedication to maintaining a leading market position and the desire to provide clients with the most advanced solutions available.
KD: The payments sector is constantly changing and evolving, keeping abreast of these changes and ensuring that our technology can meet the changes as they arise is a constant challenge for payment companies. We have met this challenge head on and our flexible global solution has allowed us to adapt to the changing needs of the market.
Have the priorities for online payments companies in terms of product offering changed at all in the past 12 months?
NM: In principle, the priorities have remained the same: Increased customer conversion, technical and security features; improved payment process, convenient for the end-user; and an enhanced selection of popular alternative payment methods.
Following trends in the electronic payments market, which highlight the importance of a balance between security and convenience, we have always placed an emphasis on developing innovative technologies to ensure both at all stages of the payment process.
As we predict that the bankcard will soon become obsolete, we have increased our focus on developing solutions for new payment methods. The growth of alternative payment services, which have expanded significantly over the past year due, in part, to long term financial crises in a number of countries, encourages ECommPay to aggregate the most popular payment methods for the convenience of our clients.
KD: The payments industry is constantly evolving as more operators enter the market and existing players bring new types of payments to the market. Payments firms must be responsive to customer preferences, invest in technology to develop new features that add value, and remain dynamic to counteract competitor’s activity in order to be successful. As the needs of the customers change, the demands placed on payment providers by operators continue to change. This in turn means that the payment providers must be flexible in their product offering to meet these new challenges.
As a result we have seen changes in what is expected of us by our clients and enhanced our product offering as a result. We are seeing more demand for the MiFinity e-wallet solution from gaming operators which indicates a change in focus from the market.
And for digital gaming operators, is payments technology more important now than it has ever been?
NM: From the moment gambling went digital, payments were imperative to its success. The key difference between then and now lies in the role of a payment services provider. Whereas before, processing companies functioned as acquirers, they now act as consultants, advising gaming merchants on profit maximisation and technological optimisation.
The unparalleled growth of the e-commerce sphere has had a direct impact on the gambling sector – the 25,000+ online wagering platforms generating between 20-40 billion USD in worldwide revenue. Since gambling continues to have high risk factors, the strategic objective of payment services providers is to minimize the risks and to effectively combat fraud.
KD: Payments are a fundamental element of the product offering, however at times they are not seen as the top priority for an online gaming company, advancements in technology in the payment space means that there are now significant competitive advantages that can be secured by utilising technology.
Any data breaches can cause serious reputational damage to both the gaming operator and the payment provider. This risk presents an opportunity to payment providers. By utilising the latest data protection technology and fraud prevention mechanisms, such as 3D Secure, providers can offer a robust product to the gaming companies which reduces their risk and enhances their data security giving reassurances to their customers that they can be trusted to hold funds.
How could the payments industry in gaming be affected by regulation changes in 2017?
NM: In a growing number of jurisdictions, gaming services face increased regulation. The Russian Federation, for example, has recently outright banned online gambling and implemented a block on MCC 7995. In other countries, licences have become more difficult to obtain. Merchants working within the gaming sector must remain vigilant, keeping a close eye on recent regulation, to avoid engaging in any illegal activity.
Payment services providers are intimately familiar with the regulation affecting client industries and can therefore assist gaming merchants in navigating legal questions and ensuring that they do not break any laws.
KD: The payments sector is a highly regulated area and changes to the regulations have an impact on how companies do their business. Compliance with these regulations is critical to success in the payments industry. At MiFinity, we ensure that we remain compliant with all regulatory changes and our flexible solution means that we can adapt to any further changes that arise in 2017 and beyond.
What factors or technology will have the biggest impact on online payments in 2017?
NM: Improving security. Despite the extensive list of payment instrument alternatives, credit cards remain the most widespread. Unfortunately, credit and debit cards are less reliable and less secure when compared to e-Wallets or other payment methods.
2017 will surely see more alternative payment systems, which will accent the need for increased credit card security with additional verification features. New security measures are already being implemented. For example, some payment services now scan a photograph of the payment card rather than allowing a user to manually enter the payment information. We also foresee tokenisation technology, which converts payment details into a token for secure delivery, gaining widespread popularity. This likewise applies to blockchain technologies.
KD: Security and regulation remain some of the biggest issues in the industry as inadequate controls in one company can lead to a data breach which results in a reputation damage for the whole industry. Therefore the key areas of focus for the payment industry are around data security, adherence with best practise standards and compliance with regulations. The industry must work together to earn customer’s trust and confidence that their shared data will remain secure. Failure to do so could hinder the industry’s ability to grow.
In addition, the uncertainty that has been brought about by the United Kingdom’s decision to leave the European Union has led to a turbulent time in global foreign exchange markets and a significant fall in the value of the pound. For online gaming companies who operate in the UK or who have to make payments to UK-based customers, this poses a significant foreign exchange risk. This is likely to remain an ongoing issue during 2017. Payment providers who can offer gaming operators the means to manage this risk will be at a competitive advantage if this trend continues.
Will we see more acquisitions on consolidation in the industry in 2017?
NM: Yes, absolutely, this recent trend will continue. As large entertainment companies and game publishers seek to boost their business, corporations will merge or acquire smaller companies on an international scale. In the United Kingdom, 2015 saw more gaming mergers and acquisitions than any other country, and this trend seems set to continue, with leading bookmakers and betting companies looking to expand their portfolio.
It is also important to note that the majority of industry growth happened online, suggesting that the digital gaming sector is the most lucrative. In working with a payment services provider, gaming companies will gain access to the tools they require in order to attract a broader client base and increase revenues.
KD: In recent years, customers have migrated away from bricks and mortar betting shops to online gaming operators. Traditional gaming operators have entered the online space and used mergers and acquisitions to gain a foothold in a competitive market. Large gaming operators have sought to grow through acquisition and mergers to consolidate their market position. This was seen recently in the merger between Paddy Power and Betfair earlier this year which saw the formation of one of the largest gaming operators in the world. This news was swiftly followed by the announcement of the merger between Ladbrokes and Gala Coral. This is a trend that we would expect to continue in 2017 and beyond.