As gaming platforms increase in popularity and diversity, more and more companies are getting involved in the online gaming industry. There are now more games for mobile devices than ever, and casino games are among the most popular. Some casino games use imaginary credits and are just for fun, while others act more like actual casinos and use real money.
Online casinos that use real money are a fairly new concept, so there are many challenges when it comes to compliance with gaming regulations. Digital casinos must be sure to comply with various industry laws and regulations, which almost always requires opening a high risk merchant services account.
Types of Online Gaming Merchants
Online casinos are the most common type of gaming merchant that needs high-risk credit card processing capabilities. Other online gaming merchants needing access to reliable merchant services include digital slot machines, online poker, and online table games. Even games that are not necessarily seen in casinos can apply, such as fantasy sports, multiplayer online gaming, mobile app-based games, and online bingo.
Popularity of Online Gaming
There is no question that online gaming is popular, resulting in a demand for high risk merchant account options. In fact, according to information gathered by the Entertainment Software Association (ESA) in 2017, 65% of American households had at least one member who regularly plays online games and 67% of parents play video games with their kids once a week or more.
Another popular, growing segment in online gaming is fantasy sports. The growing engagement includes draft parties, trades, weekly matchups, and more to create a fantasy sports team with the highest points and most games won by the end of the season. According to Nielsen Scarborough, fantasy sports participation grew from 8.3 million users to 15.6 million users in 2017.
Online gaming is not just something people do as a hobby. An entirely new industry has emerged, known as esports, that is based around professional gamers playing multiplayer video games in a competitive setting. These events involve sponsors, cash prizes, and spectators—further increasing the stakes and adding to the level of involvement in online gaming.
Why is Online Gaming Considered High Risk?
Since online gaming is so prevalent, some may wonder why it is considered high risk in terms of payment processing. Some of this comes from the legal gray areas, since regulations and laws can vary between states. Without clear universal regulations, it becomes challenging to comply with all laws.
The age restrictions associated with many types of online games also automatically qualify online casinos as a high risk merchant. If an underage person plays, there is no legal avenue to get the money and the casino owner could face penalties.
There are also further high risk elements of the online gaming industry due to the fact that it is a digital platform. By default, this digital nature automatically increases the potential for chargebacks. That increase in risk is partly due to the fact that cardholders are not physically present, so they do not sign for their purchases.
Online gambling also tends to have a lot of instances of what’s known as friendly fraud. This term refers to when customers dispute transactions due to changing their minds. Instead of a credit card being stolen and used, a customer just regrets their purchase and reports it as a fraudulent transaction.
There is also a lack of understanding among merchant services providers about how the online gaming industry works. Payment processors don’t want to process credit card payments for an industry they don’t understand. Many businesses for online gambling are also located offshore, which can increase risk due to the difficulty in tracking money.
The newness of the online gaming industry also leads to it being considered higher risk. Since the industry is just starting out, many of the businesses involved are new as well and they have a lack of credit history and experience. This is a marker for a high risk client when being considered by merchant services providers.
What to Look for in a High-Risk Merchant Services Account
Despite the status as a high-risk merchant account, it is possible to find a reliable and affordably priced payment processor for online gaming. Look for a processor that specializes in working with high risk merchants.
The merchant account should also include a high level of security, especially when it comes to transactions. The details should be recorded and archived with easy retrieval in case of disputes. For further transactional security, the processor should collect information related to the time, date, and IP address of the transaction.
You should also keep your own security in mind and opt for a payment processor that has clearly displayed business information, including their contact information. Similarly, the payment processor should display the same information related to your business when customers make a purchase.
Ideally, the processor will also have automatic satisfaction surveys or email receipts so you can ensure that your clients are satisfied with their purchases. A chargeback mitigation program is also essential for high risk merchants. This program should be scalable so that it will continue to minimize chargebacks if your online gaming business grows.
BankCard Services specializes in high-risk merchant accounts to help your online gaming business process payments online. With fraud protection, chargeback mitigation tools, and 24/7 customer service, you can rest assured that your merchant service needs are handled. With BankCard Connect, our payment gateway, it’s easy to process e-commerce payments on any device from one convenient platform. Contact BankCard Services to learn more about how you can get started with a high-risk merchant services account.