Alternative payments in iGaming now non-negotiable?

Why offering more payment choice has become almost table stakes for iGaming operators.

There’s no global way to pay. Quite the contrary, payment habits are strongly national. They’ve been formed over time by various cultural, political, economic and technological factors.

When it comes to pay-ins and payouts, players and prospects are unlikely to do something different just to game on your site. So, alternative payment types in iGaming are now non-negotiable.

We examine the reasons behind payment proliferation and how iGaming operators can set themselves up for success in a multi money world.

Alternatives now mainstream

Alternative payment methods (APMs) refer to any type of payment that isn’t card. This includes bank transfers, digital wallets, prepaid vouchers and more. The term ‘alternative’ is a misnomer because these payment methods are mainstream in many markets – and indeed are the preferred way to pay.

For example, the Dutch bank transfer scheme iDEAL accounts for more than 70% of online purchases made in the Netherlands. And BLIK, a similar scheme in Poland, is used by more than half of the population and is growing strongly at 20% year on year.

As commerce has digitalized, so has payment. Over the past decade, digital transactions have increased fourfold worldwide, according to Capgemini research. Greater digitization points to greater fragmentation rather than consolidation of payments.

Local and alternative payment methods are proliferating. Consequently, iGaming operators with cross-border expansion plans must combine global growth ambitions with local payment implementations.

The decline of cards

Much of the growth in digital payment in the online space has come at the expense of cards. Global card brands have spent decades building their acceptance networks, yet only around 32% of global e-commerce value is paid for with a card. That’s down from 56% a decade ago and is predicted to fall further to 20% by 2030, according to card acquirer Worldpay.

In other words, two-thirds of consumers today are paying online with something other than a card. iGaming operators must localize their payment offerings to avoid losing players, which is a real possibility in some regions for a couple of reasons.

Firstly, large parts of the addressable customer base are not financially included. According to the latest World Bank Findex data, adults with a financial account in Latin America range from 86% in Brazil and 85% in Chile down to 59% in Peru and 53% in Mexico. Similarly, in Asia Pacific, banked adults range from 97-99% in Korea, Singapore and Japan to 71% in Vietnam and 50% in Philippines.

Secondly, not everyone has, uses or trusts payment cards online. Several markets, including Brazil and the UK, ban the use of credit cards for gaming. Some gamers are too young to qualify for a plastic card. Consequently, missing APM options like PIX in Brazil, MoMo in Vietnam or Swish in Sweden may make it impossible to accept player deposits.

Smarter, more seamless gaming

iGaming is moving from a channel-centric to a customer-centric model. The distinctions between online, in-app and land-based gaming are falling away. Operators are expected to meet players when, where and however they want to play.

At the same time, developments in mobile technology are blurring traditional distinctions between in-store and online payment types. Direct bank transfers, account-to-account (A2A) payments and other so-called ‘push’ payments are becoming increasingly popular and accepted in-store.

Similarly, mobile contactless payments typically associated with ‘tap and pay’ at physical terminals are now also possible online or in-app. We predict that APMs will follow customers wherever and however they transact: at home, abroad, online or in-store. After all, payment choice tends to be a matter of habit. No-one is looking for a new way to pay.

Payments as a strategic driver

We predict that APM ‘push’ payment types will overtake ‘pull’ payments, such as cards. These APMs will be based around bank accounts and other funding sources, so much so real-time, guaranteed payments will become the norm.

iGaming operators need to consider how they harness payments as a strategic business driver. And leverage it in everything from revenue collection to player loyalty, business expansion to fraud prevention.

The challenge is that while payments have gone digital on the customer-facing front end, money movement on the back end is still largely analogue. That generally means it’s expensive, slow and often lacking in transparency, especially for cross-border payments.

Payment complexity, simplified

Choosing the right payment infrastructure and partners are key. Partnering with local payment service providers seems a good idea on paper, but there are downsides.

Poor APIs, documentation, long implementation times and endless testing for every APM integrated is a time-, effort- and budget-intensive way to create and sustain a competitive advantage.

Inpay can simplify the process with local payment rails. This side-steps the unscalable model of optimizing payment in each country or region where you’re active.

Access to our entire global network is via a single, simple API connection, file upload or bespoke integration. So, you can skip the boring but important back-end stuff. And focus instead on growing your business via front-end activities that add value and stand-out, such as a great UX.