What’s Wrong with Current Payment Systems and How to Provide A Better Experience for Your Bettors
Instant access to sports betting winnings is a game-changer. Bettors who gain immediate access to their earnings are much more likely to keep betting on other events, as well as, and more importantly, building trust with that particular sportsbook. As for the All the Ways Players Pay report, 37 percent of U.S. bettors consider quick and easy payouts as the most important factor when selecting an online sportsbook. Moreover, 79 percent of players develop a negative perception of a sports betting provider after receiving funds later than expected.
Credit and debit card transaction declines is one of the major issues that bettors face today. Banks often classify betting companies as high-risk payment providers due to the risk of money laundering, fraud, and high chargeback rates. Thus, fourteen percent of bettors in the U.S. encounter card declines on a regular basis.
Transaction declines, however, present opportunities for payment providers. Seventy-three percent of bettors will try to continue a transaction with another payment method and it is imperative for operators to provide alternative payment methods, such as digital wallets or eCash. Interestingly enough, thirty-five percent of bettors prefer to use digital wallets when dealing with high-volume wagering.
Crypto betting is gaining more popularity as well. Based on Bitcoin Strip data, players are placing over 300 bets per second on crypto gambling sites. Much of this interest revolves around faster withdrawals, bigger limits, lower fees, and enhanced security. Adding cryptocurrencies to your sportsbook, however, introduces technical, regulatory, legal, and strategic issues.
As Alexander Bant, Chief of Research in the Gartner Finance practice emphasizes: “While volatility of cryptocurrencies remains a concern, anticipation of clearer regulatory guidance, and the advent of CBDCs (central bank digital currencies), now offers CFOs more avenues to pressure-test use cases for digital currencies.”
When considering offering cryptocurrency wagering as an option, sportsbooks should think through an appropriate IT stack, procedures for addressing ongoing regulatory guidance, scalability, and more. Touching on juridical aspects, betting with cryptocurrencies is only legal in New Jersey, Nevada, and Delaware. The Unlawful Internet Gambling Enforcement Act (UIGEA) regulates this limitation.
The complexity and the encrypted, distributed nature of Blockchain results in technical scalability challenges. The latest data shows that Blockchain can handle only up to 8 transactions per second. When released, Ethereum 2.0 promises to solve this problem by being able to process 1,000 transactions per second.
Another challenge related to cryptocurrencies is a lack of universal standards. More than 6,500 Blockchain-based projects are using different protocols, coding languages, and privacy measures. This makes mass adoption almost impossible.
To enhance user experience and add a bit of creativity, payment solutions such as reloadable cards can also be connected to merchant rewards and loyalty features. Potential partnerships between wagering companies and restaurant chains, hotels/resorts, or other retail outlets can become a smart incentive for bettors to spend more money.
Serving Alternatives for Your Bettors
The current regulations place restrictions on the form of payments players are allowed to use, creating friction for bettors and leading to potential lost profits and bettors, as a result. Therefore, it’s imperative for operators to provide various alternative payment methods. Some states, such as New Jersey, allow up to fourteen payment methods when it comes to sports betting. So don’t miss your chance to increase conversion and lower churn rates by adopting proper measures to provide bettors with all possible payment options.
By Russell Karp,
Vice President of Media and Entertainment Practice at DataArt
Originally published at https://www.linkedin.com.
