With the payments industry growing in both significance and stature, Gambling Insider hears from Passport Technology CEO Cleve Tzung, Trustly Director of Gaming John Mallia, Trust Payments Group CEO Daniel Holden, and Neosurf COO Andrea McGeachin, with the payments experts delving further into the latest issues and challenges facing this crucial aspect of the gaming industry.
As ever, security is a crucial aspect of the payments sector, and many companies are now having to accommodate the recently introduced PSD2. Other companies, meanwhile, have an eye on the future, and any new challenges and trends it will bring. But all companies, of course, are living in the here and now, with payments witnessing plenty of change in just a short space of time.
Payments certainly isn’t as simple a topic as one may imagine. There are many different types, factors, players – and several other issues – that ensure much diversity across the sector.
Passport Technology’s Tzung breaks payments down from a brick-and-mortar and online perspective, explaining that, in 2022 “consumers tend to gravitate towards using whatever is easiest and fastest.” He notes that cash is still king in brick-and-mortar casinos, saying that “regulatory and technology challenges with digital wallets have created enough confusion and hurdles to be a real barrier to brick-and-mortar adoption, so consumers have mainly continued to access cash through kiosks.”
Neosurf, on the other hand, focuses on prepaid vouchers. McGeachin told Gambling Insider that prepaid vouchers for gaming is far from dead, before saying that “in establishing brand loyalty, understanding consumer preferences is paramount.”
This method, as she suggested, provides players with the ability to control spend through limitations, allowing both spend management and helping any players who prefer to maintain discretion around their gaming spend.
How have payments evolved?
According to Trust Payments Group CEO Holden, digital commerce has jumped ahead five years in one due to the interruption from Covid-19. He explained the changes that have been witnessed within payments post-pandemic are here to stay, warning that businesses have to adapt their old, archaic systems to support this ‘digital leap.’ Even established players, Holden suggested, struggle to constantly keep up and innovate in such a fast-changing and volatile environment.
He believes that two fundamental behaviour shifts have taken place over the past two years; “Expectations have risen and acceptance levels of digital services across generations have followed suit. No one wants to wait in the queue in gaming anymore, and self-checkout has become the norm.”
He added that businesses require the infrastructure to support such digitisation, noting that there are companies within the industry that can provide tech to make it easier for gaming businesses to be empowered by data, to ensure driving loyalty and increasing the lifetime value of their customers.
Again focusing on both online and brick-and-mortar casinos, in terms of evolution over the years, Tzung explained that the former has benefitted greatly from the increase in sports betting adoption and acceptability in various states; while the latter has focused more on automation and pushing more traffic away from the cage to the kiosk.
For Neosurf COO McGeachin, several factors come into play when explaining the evolution of this crucial aspect of gaming. She explained that the reality is the payments ecosystem has evolved in parallel with online and digital innovations, along with the consumer and regulatory demands that have accompanied them.
“It’s easy to take ‘payments’ for granted,” she began. “Almost as a given that whatever the product or service there will be a functional means of settling. But without that functional means the world would revert back to barter, and markets as we know them would disappear.”
McGeachin continued by suggesting that all payment solutions must now address the same issues; which range from security, compliance and speed, to convenience and personality.
Players demand the likes of privacy, security, speed and as few steps as possible, while the regulator has heightened addressing compliance with player protection and money laundering protocols. “These two factors are absolute prerequisites and all payment solution providers operate now on a broadly level playing field,” she added.
“It is true that our only constant in payments is change, being smart and always focusing on conversions and the players, and adding the latest nuance to a country or territory regulator’s new format of control then has
its place and can be delivered easier.”
Payments companies prepared for PSD2
As is the case with many verticals and areas of the wider gambling industry, security is important as ever. Rules and regulations are increasingly talked about, particularly when it comes to issues like responsible gambling and player welfare. As the sector evolves, so does the security within and around it.
Payments is another area within gambling where security is hugely important, with all involved in this specific aspect forced to pay close consideration to payment security, to avoid any unnecessary troubles or challenges.
Both Mallia and Holden agree that the Revised Payment Services Directive (PSD2) – an EU Directive that is administered by the European Commission to regulate payment services and payment service providers – is one area of payment security that has taken on particular significance in recent times.
Commenting on this issue, Trustly’s Mallia told Gambling Insider that in terms of the evolution of digital account-to-account payments, the “Second Payment Service Directive (PSD2) accelerated the UK gaming payment landscape, requiring banks to open up APIs to third-party providers. This change has led to a better and more reliable product.”
Focusing specifically on Open Banking, he explained that users can now make deposits and withdrawals in a few simple steps, including through authentication methods like finger ID. This, coupled with “the fact that smartphone technology has dramatically evolved in recent years and that most transactions now take place in a user’s palm rather than on desktop,” means Open Banking has enabled a “far more seamless payment option for users.”
For Holden, the new PSD2 has had a big impact on Trust Payments, allowing the group to help merchants in tackling the substantial increase in online fraud, a figure that he explained climbed 66% between 2011 and 2016. It has also allowed the company to educate merchants on the rise of the API economy, “making systems easier to talk to each other with a huge impact on banking.”
Holden continued by explaining that PSD2 provides both standards and structure to allow companies to access customer bank accounts. Delving into the rules and regulations further, he noted that “Strong Customer Authentication (SCA) is a requirement of the EU PSD2 mandate, where all electronic commerce payments are performed with multi-factor authentication, to increase security of the transactions and help prevent fraudulent use of payment cards.” Notably, Holden added, several issuers have been actively soft declining transitions that have failed to include SCA, as this process has been introduced.
“The industry still needs to understand the implications of a lack of SCA under PSD2 – with the potential loss of the ability to shift liability to the card issuer for ‘attempts,’” said Holden. Trust Payments has been actively educating its customers on this specific issue, and will continue to do so in the near future.
Holden also mentioned that there are ways in which payments companies can ensure gaming payments remain risk-free, explaining that essential solutions are optimised for user experience and are simple to deploy: “Strong data and fraud management are critical to mitigate these eventualities, and businesses have a responsibility to create a safe and regulated payment environment for their customers.”
Companies can offer advanced fraud prevention tools to monitor customer behaviour and to prevent fraudulent activity, as well as blocking jurisdictions or card types where gambling is illegal or unregulated. The merchant, therefore, needn’t worry; with payments companies able to take care of it should they focus time and effort on this specific area.
One eye on the future
For Trustly’s Mallia, Open Banking is the future. He believes the fact it continues to gain traction is evidence enough to suggest this is where the industry is heading, and indeed what users want. “The industry will keep changing with the evolution of technologies, resulting in better user experiences for the users and additional features,” suggested Mallia. “What won’t change is the users’ needs for ever-more reliable, fast and seamless user experiences.”
Passport Technology’s Tzung, meanwhile, believes it will be easier access to cash on the casino floor that drives the evolution of payments. In short, this means more transactions will move away from the cage, including additional integrations with mobile phone capabilities, such as facial recognition.
“We’ll see some innovation around ATM processing that will create opportunities for surge pricing and tier-based pricing,” added Tzung. “Integration with loyalty will be a major change that creates possibilities for behavioural shifts and an alternate currency based on a casino’s loyalty points.”
Of course, one major talking point that continues to rear its head when it comes to the future of payments is the shift to a cardless society. Perhaps it is a question of when, rather than if. Different industries will certainly have different stances on this particular issue, while the country/region in question – and its rules and regulations – will
also be a major factor.
When asked by Gambling Insider if the gaming industry in particular can expect a complete shift to a cardless society, Trustly Director of Gaming Mallia replied: “Due to the introduction of Secure Customer Authentication and the credit card ban for gaming, account-to-account payments are fast growing in popularity. With the UK gaming market being a traditionally card-oriented market, it’ll take time for the balance to be truly tipped.”
But with frictionless authentication methods built in, lower costs for operators and customers along with simpler affordability checks, he noted, it is “only a matter of time before account-to-account payments become the dominant choice and cards become a thing of the past.” Mallia added that the rate at which this change will occur will also continue to accelerate.
For Neosurf’s McGeachin, however, cash does still have a role to play, but is now a choice factor. “As such,” she continued, “cash competes with digital solutions and as generations pass, it becomes less relevant.“Though it could be said that it has no place in the online world, and frequently lacks speed and convenience, it fulfils an important role in communities who struggle to access the digital offerings, and/or continue to prefer cash.” Thanks to increasingly efficient assessment tools, though, access to digital is easing and compliant conversions are increasing. The future is bright. Gaming is changing – and so too payments with it.