Merchants are adapting to a customer journey that has changed forever, especially those within the global iGaming market which continues to experience unparalleled growth; largely accelerated by casinos and major sports venues forced to shut down during the pandemic. The online gambling market is expecting annual growth of 12% from 2021-2026, with online revenue increases of 135% in a booming US market. New Jersey is set to become the first state to hit $1bn in annual iGaming revenue in 2021.
With this, the iGaming industry is presented with an unmissable opportunity to scale cross-border. To effectively do so will mean building relationships with – and serving– customers in different territories. This comes with challenges. Typically, these customers have legacy payment systems only designed for domestic use, or they find themselves faced with the expensive rates demanded by international Payment Service Providers (PSPs). With that in mind, how can iGaming companies scale internationally with a flexible payments ecosystem to match? The answer, surprisingly, might lie in going local.
Mechanisms to pay cross-border
IGaming companies looking to expand into new countries and territories typically have two options when building out their payments ecosystem. Those brands looking to transact across different countries can work with an international PSP for all their acquiring needs. This approach has positive and negative sides. It can help reduce the time and effort needed to manage a complex payments ecosystem, but likely incurs high costs in the form of sub-optimal transaction rates. In addition, this doesn’t allow for any back-up options in the event of failed payments. Working with a single PSP also limits the payment methods and currencies the merchant can offer, creating friction for the end customer.
Another option is for merchants to build out their own payments ecosystem – comprised of various PSPs – in-house. Recent figures suggest that over half (57%) are already working with more than one processor. Doing so allows the merchant to create multiple relationships with several PSPs ‘on-the-ground’ in their country of choice, protecting them to a certain degree from payment rejection, and offering some element of control over transaction costs. Manually developing and maintaining a complex, international payments ecosystem in-house, however, is extremely time-consuming. Perhaps more damaging is the fact that it can cause severe delays for agile merchants looking to move into new markets.
Going local to go global
As a rule, customers want to pay in their local currency, using a familiar method, both of which change on a country-by-country basis. But partnering with local acquirers and PSPs allows merchants to plug into the local ecosystem, not only offering preferred currencies and payment methods, but also utilising the experience of domestic partners to help enhance their payments journey. When it comes to the future of iGaming, integrating several local acquirers instead of one main international player may provide the best outcome. It means merchants are empowered to protect their bottom line, and deliver a frictionless payment experience for their customers.
Unlocking local partnerships with payment orchestration
Payment Orchestration Platforms allow iGaming companies to master complex payment needs, while keeping things simple. By integrating directly with local acquirers and PSPs, Payment Orchestration Platforms enable merchants to quickly and efficiently roll-out complicated payment ecosystems in new markets. This can be done at a fraction of the time and cost of integrating directly. The platform can then orchestrate every transaction end-to-end, resulting in a fluid payment journey.
In practice, this means allowing customers to pay how they want, in the currency of their choice, regardless of their location. For merchants, payment orchestration can simplify back-end processes, reduce operational costs and protect them from failed payments, as well as the negative customer experiences that go with them. Furthermore, having access to multiple PSPs means any declined transaction will be re-routed to the next acquirer, ultimately reducing failed transactions and the cart abandonments that tend to follow.
International opportunity, local strategy
The opportunity for iGaming companies to scale internationally has never been greater. To protect conversions and build long-lasting relationships with consumers in new markets, they must prioritise the payments experience. Through payment orchestration, merchants can quickly integrate with several local providers to allow customers to pay how they want. Only by embracing a robust local strategy will merchants be able to offer a truly seamless global payments experience.
