28 September, 2022

The US payments problem

PayNearMe VP & Head of Marketing Anne Hay, and VP for iGaming and sports betting Leighton Webb, talk through how deposits and withdrawals are affecting acquisition and retention rates in US markets.

Is now a crucial moment for payment providers to drive greater traffic to US online operators?

Webb: 100%. You could get away with a lesser payment service in the early days more so than you can now. There are also a lot of available payment types, particularly in states like Colorado and Maryland. So there is a lot of competition between payment providers; improving their services is vital to attract the interest of operators. What’s more, new start-up operators are entering the market. These start-ups are focusing on creating better gameplay experiences, which will go after the segment and make sure they have the best payment solution possible.  

At the end of the day, as an operator, you aim to create entertainment. The product needs to be on par with the experience and fun factor you get from an app on your phone. The casual bettor is not going to have patience; if in 15 to 20 seconds they can’t figure out an operator’s payment solution, they are going to leave and likely go to a competitor. It’s because we’re on that curve, moving out of the phase in which early adopters have all signed up; and heading towards the period in which operators will be looking to convert casual players. So now we’re at a critical juncture where early adopters have signed up and casual conversion rates need to go up. We’re seeing this in our discussions with operators, who are aware of players having issues with payments. We hear things like “we know we can’t get away with this anymore” and “we need to put research into ensuring all facets of our payments experience are a better one.” 

Hay: Looking at the figures from our research, about 17% of bettors who had payment trouble just left and never came back to an operator’s site. Our research indicated that 30% of bettors would consider trying to sign up again, which simply means that one in five players will just sign up with one of your competitors. An operator will never get those players back; US trends at the minute show once a player is signed up and happy with one operator, the chances of them switching to another are incredibly slim.  

There are several payment options in demand, which provide a sure way for operators to offer familiarity to players. PayPal is the most in-demand tender type players want, with 64% saying PayPal would be an important service. Apple Pay is high in demand too, with 47% of users saying this would be important for them when depositing and withdrawing funds. Even cash is still important to people, particularly in the sports betting vertical. Cash is still a must-have tender type for any operator that is starting. Essentially, payment types that don’t require players to put in additional finance information are the ones with the greatest level of support, in addition to debit cards which remain a popular traditional payment option. Honing in on choice, 32% of players said in our research they would deposit higher amounts more often if they had access to their preferred payment method. So there is this great retention point in there should operators get it right.  

Is it important for payment providers to improve their offering to convert as many casual gamers as possible? 

Webb: Picking up on choice, it’s all about the right mix that’s important. Operators will reach a point where they have diminishing returns, so it’s having the right mix of providers in your arsenal that provides people the experience people are used to. This all ties into trust: things customers are comfortable doing. Personally, I’m comfortable connecting to my PayPal account vs entering my bank account details and routing number. For other people it’s the opposite, so you have to have the right mix
of options.  

Hay: That’s on the deposit side, but even on the withdrawal side we saw similar numbers. Around 50% would withdraw their funds through PayPal if they were able to. Direct depositing to a bank account was still high, though: 37% of players wanted this option available. There are also options people would like that are less widely available. Cash App is not widely used and 39% of users expressed a desire to use this. Players also expressed a desire to cash out their funds at an ATM, walking into a physical location that’s not a casino to withdraw their winnings. This is a solution PayNearMe offers which isn’t widely available yet, but one that one in four players would like to have access to. 

Furthermore, half of players would play and withdraw more often with their preferred payment choice. So that’s quite high, people would play more if they knew they could withdraw their money faster and the way they want to. This is a trend we’ve found to be more significant for younger men across the board; which isn’t too surprising given the higher value of a win for a younger player, compared to older players with higher incomes. In total, 61% of frequent players said they would withdraw more with faster payouts, so that is a real point where operators can improve the player experience. If you look at it, 40% of players surveyed had to wait longer than 24 hours to receive their withdrawal; that’s a high percentage. Money moves as money moves but there are a lot of new technologies operators can use to speed up the process. There are business models whereby withdrawals can be auto-approved once players have used an operator frequently enough, so it’s just about implementing that. 

Webb: It’s also worth noting that the speed of withdrawal can have an impact on the frequency of betting. If a player is waiting for a withdrawal longer than 24 hours, they may be reluctant to place another bet until they have received their withdrawal. Players want to be able to use their winnings to place another wager.  

What can be done to optimise the player experience?

Hay: Optimising the player experience is really about removing as many barriers as possible that a player might face when depositing funds or trying to make a withdrawal. From the research, players indicated that slow transactions, long waits and payment declines were major obstacles to overcome. Overall, 52% of bettors said they had issues with declined payments when signing up for a new betting application,
and a percentage of that number have said they refuse to try and sign up again as a result. So it’s clear payment declines are still an issue. 

Webb: One of the main issues around payment declines is that the banks being used are not supported on an operator’s site. This is because several banks are not supporting something called Gaming High-Risk Transactions, so people with these bank accounts will see their cards declined on an operator’s site. The second part of this issue is: what is the operator doing to save its potential client? Operators should be redirecting players to use a different tender type that is accepted. There’s a lot of work that needs to be done on this. On many operator sites, there is no information available, aside from letting a player know their deposit has been declined. The 17% of people who leave and never return to an operator cite confusion over their declined card. People become immediately frustrated and want to move on to other things. This is a big pain point for operators today within the overall depositing process.  

How can payment deposits/withdrawals become more streamlined?

Hay: Imagine a note that just said, “Your card has been declined, here are three other options.” Just a simple message like this can create such a  difference; it’s messaging that isn’t commonly available to players in the US today. If you were to receive that message you may think “oh, my bank doesn’t take it, let me try PayPal, let me try Cash App,” as opposed to “I’ve no idea why you declined my transaction, but I’ve already put my details in one time, I’m not doing that again!” Imagine how much easier it would be if you were given three other acceptable offers when your bank card was declined. Even having cash as an option could make a big difference. If all else fails, cash has universality in the US so this would largely be accepted by many as an alternative tender type. This way, the player always has a way to place a bet. 

Across the board, players indicate the biggest pain point on both the depositing and withdrawal side was when the process took too long. In total, 29% of players faced delays when depositing, while 39% had an issue with the length of time it took to withdraw funds. So if the barriers that are there were taken away, there would be a significant increase on the ROI of many operators. Even if  it’s a couple of percentage points, that still equatesto a lot of money for the operator. Casual bettors are facing issues, too. Also, 11% of casual bettors are not receiving the funds they withdraw for up to a week. If you’re a casual player and it’s taking that long, you’re going to be put off betting very quickly. 

Webb: Some players are not receiving their funds for up to a week, but critically they’re not being told why. Players aren’t being told what to expect; they aren’t being run through the process of depositing and withdrawing by the operator. So it’s really about operators optimising their services to things which are as clear and seamless for the customer as possible. Operators should be able to tell players at the point when a player is typing in their bank number whether their card is acceptable or not. This is just one example of how operators can streamline the process, saving potential customers time and speeding up the onboarding process. It’s all about optimisation and being pixel perfect. Every additional step a potential player has to go through is an opportunity for them to drop out of the flow. This isn’t iGaming-specific, it’s a universal issue for payments. If you can improve every touchpoint, you will improve the overall operation drastically and see far greater conversion numbers. There are also issues around privacy and trust; 28% of casual bettors find this a concern in terms of the information they share or are asked to share on an operator’s site. Of those that expressed concern, providing information a player does not want to disclose would drive 26% of players to leave a betting app. So operators need to think about privacy, trust and what information players would be willing to share and who with. This is a pain point for casual bettors, in particular. If these issues are not addressed it’s ultimately going to lead to several players leaving online sportsbooks.  

Hay: To conclude, I think it’s important to note that a player acquisition is not made until a deposit is made. So payments are an integral part of acquiring and retaining players. Players want to think about the match they’re betting on or the game they’re playing; they don’t want to be thinking about payment types. Consumers expect payments to be seamless just like in all the other aspects of life. So removing deposit and withdrawal barriers clears this path for players to bet more frequently. When players don’t have to consciously focus on payments, this drives up interaction with the application or website, improving a player’s experience. This is really what is going to win for operators at the end of the day.