Why alternative payment methods are more popular than ever before
The best betting and casino companies aim to create a secure system through which players can buy their bets
The best betting and casino companies aim to create a secure system through which players can buy their bets. This is especially important during this era of cybercrime when players have become increasingly conscious of the kind of channels that they send their money through. Due to the high number of online scams, many players want to conduct their transactions on a system that is, as much as possible, scam-proof.
There are many payment models that players can use to buy their bets. However, some of them may not provide the level of service necessary to meet the players’ expectations. In this regard, players are becoming ever more demanding and this has led to the increasing popularity of alternative payment methods and systems.
In this article, we are going to explore different payment methods as well as discuss some unique iGaming payment solutions from FinXP.
What are alternative payment methods?
Alternative payment methods (APMs) are defined as a way of paying for goods or services which are not made via cash or major card schemes (Visa, MasterCard, American Express). This includes prepaid cards, mobile payments, e-wallets, bank transfers, and ‘buy now, pay later’ instant financing.
It is important to offer APMs because not all players prefer to pay using the card schemes. If players are not able to find their preferred payment method, they are more likely to abandon your brand, in the process losing you a customer. As a merchant, you need to be able to understand the local payment preferences of your market while at the same time offer the latest in payment technology. In general, APMs in Europe are significantly growing in popularity.
Why are players moving away from paying with card schemes?
Unfortunately, there are many disadvantages to having customers pay via a card scheme.
The first has to do with low conversions. Once players have successfully executed a deposit, payment failures are up to four times higher with cards when compared to other payment methods especially account-to-account transfers. This means less efficient deposits for players, more time managing failed payments and more customer service queries that can ultimately lead to customer churn.
Speed is another issue when using card schemes. Card deposits take up to three days to settle, while withdrawals can take up to five days. Slow or problematic withdrawals are a key source of frustration, complaints and bad reviews – and ultimately more churn. The feeling of winning but then not being able to access your prizes can be very irritating in today’s culture of instant gratification. According to recent YouGov research, quick payouts are among the top priorities for players when choosing a gaming operator.
Another major issue when promoting card schemes is their high operational cost for the merchant. Transaction fees when using card schemes can be more than 2x more expensive when compared to alternative payment methods. Furthermore, card schemes provide players with the ability to perform chargebacks which result in extra costs for the merchant.
Beyond the above disadvantages, there are also other regulatory challenges. In the UK, the GB Gambling Commission has introduced a ban on the use of credit cards for all forms of online and land-based gambling. Similarly, in Germany, online casinos targeting German consumers will no longer be able to use Visa or Mastercard services. This trend does not look promising for card schemes as a payment method in the European iGaming industry.
Introducing Real-Time Payments by FinXP
Real-Time Payments by FinXP (RTPF) is a new account-to-account payment method that brings a lot of important benefits to merchants while still allowing players to enjoy a great user experience. Importantly, RTPF is a secure and reliable payment method that gives peace of mind to both players and merchants alike.
One of the biggest advantages of using RTPF is that since its an account-to-account payment method, the player’s account is immediately debited once the transaction is approved. This reassures the merchant that the funds will arrive, especially since chargebacks are not possible using RTPF. This scenario allows operators to provide a superior user experience by allowing players to immediately begin playing right after they create a gaming account and deposit funds.
Perhaps one of the biggest benefits for merchants are the low transaction fees. RTPF fees are not only lower than credit card transaction fees but they are also potentially lower than many other APMs that are based on bank transfers, such as Trustly and giropay.
Furthermore, the fact that RTPF enjoys very low risk of fraud is a big plus for merchants.
The downside to RTPF is that for now it is only available for German and Austrian customers. On the bright side, FinXP is currently working hard to make RTPF available throughout most of Europe by the end of the year.
Conclusion: APMs vs Card Schemes
Payment Methods like RTPF provide gaming operators with an opportunity to differentiate their offering and drive customer loyalty. Research shows that bank transfers are the preferred way to pay into gaming services in the UK, Germany and in the Nordic countries.
Cards have had their time. 2021 is the year that alternative payment methods such as RTPF come into their own in iGaming.
For more information, please visit https://finxp.com.
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