Interactive ONLINE PAYMENTS
Don’t gamble with global online e-commerce spend
The arrival of industry regulation and the widespread usage of alternative payment methods (APMs) in e-commerce means APMs should underpin any growth strategy. Recent Worldpay research found that 43 per cent of global online e-commerce spend is now made using APMs and this figure varies significantly by market, especially within gambling.
To achieve success, gambling operators need to understand both gambling specific behaviours, as well as anticipating and capitalising on any shifts in the broader digital consumer trends.
THE ALTERNATIVE PAYMENTS LANDSCAPE Most gambling companies are already familiar with APMs (any payment type that is not a credit or debit card). Historically, local bank and card issuer restrictions meant operators were almost obliged to adopt APMs in order to support any international growth aspirations they may have.
To achieve global success, one of the fundamental decisions operators must get right is the choice of payment methods to offer in each of the countries they operate. Offering players a choice of locally preferred payment methods and the ability to pay in their own currency directly impacts the volume of successful transactions and ultimately player conversions.
In addition, with the right payment mix of cards and APMs, operators can often achieve lower fraud risk than with cards alone. Locally recog- nised payment methods are particularly benefi- cial when converting consumers who failed to deposit using cards or in markets or player demo- graphics where card penetration is low.
At present, cards and e-wallets are the main pay- ment types gambling operators need to provide, though there are notable differences by region and even individual country. The popularity of e- wallets is growing throughout e-commerce gener- ally and it is considered to be underpinning the wider growth in APMs use. E-wallets now repre- sent five of the top 10 alternative payment meth- ods available, according to recent research from Worldpay.
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As well as being increasingly popular in e-com- merce generally, particularly with younger users, the adoption of e-wallets in gambling has been driven by a number of factors such as ease of use, the ability to receive winnings payouts and the fact that e-wallet supported mobile much earlier than other APMs. Skrill (formerly Moneybookers) is already well established in many markets and has been joined by regionally focused products such as Webmoney, Yandex and payment heavy- weight PayPal in regulated markets such as the UK.
Despite the broader increasing popularity of APMs, many of the major global providers, such as AliPay, TenPay, Konbini and Klarna, don’t sup- port online gambling at present. Three of these companies are forecast to have the highest growth rates of all alternative payment method providers.
While there is no suggestion that any of these companies will permit gambling in the future, the potential opportunity if they did would clearly be significant.
REGIONAL DIFFERENCES IN PAYMENTS Four country segments are emerging in the gam-
bling payment space based on APM share of spend and market growth - “card growers”, “alternative future”, “card centric” and “alterna- tive ready”.
Western European countries are more card-cen-
tric in general with markets such as the UK and Ireland having high card penetration and much lower APM share than other regions. Regulation in these markets means banks are more open to processing gambling transactions, meaning higher card acceptance rates for operators and reduced
Alan Watson is VP Gambling at leading international payments company Worldpay, where he is responsible for developing the vertical strategy. Before joining Worldpay, Alan was Head of Sportsbook at Sportingbet Plc, where he oversaw the sports betting product strategy and development across both desktop and mobile devices. Prior to this, Alan worked for Monitor Group, a global strategy consulting firm, where he advised on Marketing and Corporate Strategy projects. Alan holds a Master’s Degree in Engineering from Cambridge University.
Many of the major global providers, such as AliPay, TenPay, Konbini and Klarna,
don’t support online gambling. Three of these companies are forecast to have the highest
growth rates of all alternative payment method providers.
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