Choosing your next payments provider

Starting the buying process

As payments continue to get more sophisticated, the process of selecting a partner becomes even more difficult. Requirements spill into more departments. Buying committees grow. Use cases that were once top of mind take a backseat to new priorities.

But alas, decisions must be made, software must be purchased and transactions must continue.

We assembled this buyer’s guide to help businesses like yours get up to speed on what’s happening in the world of iGaming payment software so that you can confidently decide on your next provider. In this guide, we present our view as to what’s changed in the payments landscape, what problems are most commonly addressed with a modern payments system and offer advice on how to assemble a list of requirements before you undergo a purchase cycle.

Using this guide

First, let’s define the scope of this buyer’s guide. Like shoes and insurance, payment software is never one-size-fits-all. The needs of an ecommerce business will vary greatly from the needs of an online gaming operator, and there is no payment system that can accommodate every business. 

This guide is aimed at helping those who need to provide deposit and withdrawal (payout) capabilities for an iGaming app or website. When we use the term “iGaming,” we’re referring to online casinos, online sportsbooks, social and sweepstakes gaming platforms, daily fantasy sports, iLottery, lottery courier and other similar verticals that provide online betting entertainment. We’ll refer to those that run these types of iGaming apps and sites as “operators”. 

To limit the scope, we’ll focus on the U.S. market to avoid the many different requirements that international operators must consider when purchasing a global payments platform. 

The state of iGaming payment software

As more states continue to legalize and regulate sports betting following the repeal of PASPA in 2018, the requirements for choosing payment software have changed within a relatively short span of time. These changes have been driven by many trends, but in particular by a few macro trends. 

Consumer behavior

Many operators benchmark their payment experiences against industry peers and standards. But consumers don’t perceive payments the same way. They are comparing every online payment interaction they have on an equal basis. That means your payment experience is being compared to the likes of Uber, Amazon, Starbucks and Venmo. 

These user-centric brands have set new standards that have shaped consumer payment behavior. Some of the shifts include: 

• Mobile-first: The ubiquity of smartphones and connected devices have caused a shift in the way consumers use the web. Mobile payment experiences are now the standard, with desktop and offline payments falling more out of favor every day.
• Alternative finance: There was a time where most consumers could pull out their checkbook to pay you. Today, many younger generations are migrating to non-bank financial institutions to send, store and receive funds—including wallets such as PayPal and Venmo. 
• Faster everything: Smartphones and modern apps have reduced the need to remember, well, anything. Once players get past the registration/KYC process, they don’t want to fill out any more forms, dig up bank account numbers or even be required to log into payment interfaces. They expect payments to be as quick and seamless as swiping to order an Uber or a pizza.

Technology advancements

Changing consumer expectations have increased the complexity of payment systems that businesses need to offer. This desire to have everything faster, more secure and more convenient has caused the underlying technology to change by leaps and bounds. 

New payment rails have introduced complexity in the integration, processing and settlement process for many operators, leaving many perplexed on how to offer a traditional rail like ACH alongside a proprietary one offered by P2P wallet providers. 

Payment systems are no longer standalone systems, either. With the proliferation of the cloud and APIs, it’s expected that a wide variety of software platforms “talk” to each other. Payment technology must now speak to a system of record (such as a CRM or player account management platform), while also passing data back to a data warehouse, a messaging platform, a business intelligence platform and dozens of other mission critical systems. 

Interconnectedness is no longer a perk, but a base requirement.

Regulatory considerations

Operators don’t have it easy when it comes to staying on top of the ever-changing regulatory landscape of online gaming. Plus, multi-state operators need to be aware of these shifting regulations on a state-by-state basis. These regulations even come down to payments; for example, a specific tender type may be allowed in New Jersey that’s not allowed in Ohio. 

Getting to market as a new operator or operating in a new state comes with a slew of compliance hurdles. Keep in mind that gaming payments sit at the intersection of two highly regulated industries: gambling and money movement. When an experienced payments partner who understands the nuances of this intersection can help navigate onboarding and compliance requirements efficiently, operators are able to get to market and gain market share faster.

Bottom Line: These trends, among others, have significant implications when selecting a payments provider. For those who haven’t engaged in the buying process in a few years, selecting a partner can be a complex and foreign process.

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Modern use cases

Let’s start with the basics: a modern payment platform should seamlessly move money between your business and your customers with minimal manual intervention, integration management or interruption. The payments software you never think of after integration is the one that is working as planned. 

But simply moving money between parties reliably should be the baseline for your decision-making process. Modern platforms can, and should, touch many parts of your business and allow you to deploy valuable capital and resources toward growth, cost reductions and profitability. 

When picking a new payments provider, the platform should allow you to do the following:

Enable fast, frictionless payments

The more difficult it is for your customers to fund their account, the more likely they’ll abandon their deposit attempt and even switch to a competitor’s app. In fact, consumer research conducted by PayNearMe showed that a positive payments experience was the most important factor for 49% of frequent bettors.

Payment providers should remove as many barriers to payment as possible by eliminating common roadblocks.

Examples may include: 

• Limited payment types / channels
• Navigating confusing app or website flow
• Excessive typing (i.e. deposit amount, account number, etc.)

Prioritize instant payouts

Betting is a fast-paced recreational activity. When players win, they expect to be able to collect their winnings quickly and easily. Otherwise, the feeling of being entertained is lost, defeating the point of betting in the first place. When players experience payout delays, they often do one of two things: call or chat with customer support to get a resolution or immediately take to social media to complain about the betting app. These responses result in either negative financial impact (due to the high costs of customer service) or negative reputational impact. 

And speaking of reputational impact, player loyalty is not an easy thing to maintain in a crowded market. Recent consumer research found that 49% of bettors would switch betting apps or sites if a competitor promised faster withdrawals. 

This tells us that players have high expectations when it comes to a positive payment experience, and they’re willing to throw loyalty out the window to pay and be paid faster. 

Reduce costly exceptions

Payment exceptions, such as a non-sufficient funds error (NSF), chargeback or decline, are a major cost driver in iGaming. A modern payments platform should have tooling in place to both reduce exceptions as well as ways to speed up resolution. 

For example, the ability to set custom rules that can identify payment methods that often result in chargebacks or reversals and either block them up front or prevent them from withdrawing can result in a significant reduction in payment failures.

Automate and speed up back-office processes

Much of the cost and hassle associated with payments happen somewhere after the transaction. Operators are often managing several different payment providers for different tender types, which further complicates an already complicated reconciliation process. Consolidating and reconciling massive volumes of transactions is a strain on resources. And for emerging operators who may be running lean on internal resources, most would rather have their team focusing on customer acquisition and retention rather than back-end reporting tasks. 

Your payments provider should aim to automate or consolidate processes that eat up employee time and effort, instead enabling those employees to focus on more pressing tasks.

Eliminate the need for excessive point solutions

Stacking point solutions onto your payments experience can quickly add friction to the process and drive up costs. For example, third-party risk and fraud mitigation tools add another layer of integration and development work and require the ability to work seamlessly with your already-established systems. In addition, adding third-party payment types or channels can create inconsistent user experiences for players, driving them to call support and damaging their impression of your brand. 

Aim to find a platform that provides a complete payment stack for deposits and payouts, and incorporates native functionality for mission critical applications such as fraud, chargeback management, reporting and more.

Provide flexibility for tomorrow’s needs

Today’s bleeding edge can quickly become tomorrow’s legacy technology. It’s critical to choose a payments platform that is extensible and configurable to meet your needs as your business grows and the payments landscape inevitably evolves. For example, your platform should be able to add new payment tenders as they become mainstream, or be able to add redundancy as your card processing volume increases. 

In addition to flexible technology, it’s important to partner with a provider that has a roadmap and support structure that aligns with your vision. The old cliché rings true here: pick a partner, not a vendor.

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Purchasing considerations

When you’re ready to begin evaluating your options, it’s important to know what to look for in a provider that can help you solve your biggest problems.

There are countless decisions you will need to agree on internally, and it’s not practical to include every single feature or capability in this guide. Instead, focus on these critical areas while you make your decision:

1. Deposit and payout options 
2. Money movement
3. Customer experience
4. Back-office / management tools 
5. Fraud
6. Reliability 
7. Risk, compliance and security
8. Configurability 
9. Integrations
10. Support 
11. Pricing structure

We’ll dig into the main evaluation criteria for each of these capabilities, and provide a set of seed questions you can use to influence your purchase process.

Deposit and payout options

How will your players make payments and get paid? This is often the first and most obvious capability to look for in a provider. Gone are the days of simple gateways that only enable payments by ACH and card. Today’s customers expect to pay and be paid how, when and where they choose, with a variety of payment methods and channels. 

Today, the most widely expected options for iGaming include: 

• Debit and credit cards
• ACH or guaranteed ACH (online banking)
• Pass through wallets, such as Apple Pay and Google Pay
• Stored value wallets, such as Venmo and PayPal
• Cash payments (via an off-site cash at retail network)

By giving players the payment options they’re comfortable with and prefer using, you’ll be able to attract and retain more players, lower your cost of acceptance and drive down exceptions.

Money movement

Understanding how money flows in and out of the platform can have serious implications in your decision process. Consider how the payment provider manages the flow of funds, how quickly they can settle funds back to you and if they can handle the volume of transactions you plan to process—particularly during high-volume events such as the Super Bowl or March Madness. 

In addition to this, you need a partner that can handle your payouts (disbursements) out of the platform. Like payments, disbursements must meet the needs of your players while offering safeguards for your business. 

Modern platforms should offer multiple disbursement options, such as debit, ACH and alternative payments such as Venmo and PayPal. This gives you several real-time options to move funds quickly and securely, which we already know is incredibly important to players.

Customer experience

Earlier, we talked about changing consumer expectations driven by frictionless experiences from companies like Uber, Amazon and Starbucks. These companies have made payments seamless, reducing the amount of data entry, clicks and time required to complete a transaction. 

The less friction in the payment experience, the more likely an individual is to complete the transaction on the first attempt and continue on in the betting user flow and convert to a paying customer.

You should strive to choose a platform that emphasizes frictionless payments across all touchpoints. For example, you may focus on the following features when making an evaluation: 

• Remembering past payment accounts and preferences to speed up future payments
• Personalized links that don’t require a login or password to complete a guest payment
• Tight integrations with wallet providers that keep customers in the payment flow

Frictionless payments are the crux of whether or not a player converts and whether they choose to remain loyal to your app, increasing their lifetime value. 

VIP player programs may also be a key component of an iGaming operator’s business model. These programs not only boost player engagement and loyalty but also significantly reduce churn. When executed effectively, they help operators stand out from competitors and drive revenue growth by fostering long-term relationships with high-value players. A successful VIP program requires several essential capabilities across operational, technical, and strategic areas. 

Advanced player segmentation and data analytics are crucial for understanding player behavior and identifying potential VIPs. This involves using sophisticated algorithms or AI-powered tools to track betting patterns and activity. Financial capabilities are also vital, as VIP players expect faster payouts, diverse deposit options, and higher transaction limits, all while maintaining compliance and security. 

To manage risk, operators must ensure compliance with anti-money laundering (AML) regulations and promote responsible gaming. A scalable, real-time data infrastructure is also necessary to handle VIP activity during peak times and integrate seamlessly with the sportsbook platform. Enhanced security features and fraud detection tools further safeguard VIP transactions, ensuring a smooth and secure experience for high-value players. We’ll dive deeper into fraud a bit later.

Back-office / management tools

While customer-facing experiences often get touted first and foremost by payment providers, the tools for managing payments can be equally important in your evaluation process. After all, every minute spent managing your payments is a minute withheld from another critical area of focus at your business. 

Look for a platform that offers a robust set of back-end tools that improve operational efficiency, automate repetitive tasks and give you more control over the payments experience. 

Reporting is one area to key in on. You’ll want to make sure that daily tasks such as reconciliation and settlement are easy to complete, especially if you find your team currently reconciles multiple payment files from different partners today. A single file with all payment types and channels, and clear delineation of exceptions (such as chargebacks and returns) can be a blessing for your accounting and finance teams. 

Many businesses opt to use a payment gateway to build their payment infrastructure with the goal of reducing overall processing costs. However, they often encounter difficulties in tracking transactions because of inconsistent identification methods. This issue becomes particularly problematic during the process of disputing customer chargebacks, making it a challenging and frustrating experience. 

In addition, you may want to use your payments data in other systems, such as third party BI tools or data warehouses. Having a strong set of reporting capabilities and export options will enable you to do more with your payments data—allowing you to optimize your payments mix, lower costs and use payments data to improve other parts of your business. 

Other areas to keep in mind when evaluating back-office and management features include: 

• User provisioning and roles
• Withdrawal review / approval flows 
• SSO 
• Data configuration / field mapping

Fraud

The online gaming industry had the highest rate of digital consumer fraud in 2023 at 10.9%, according to a TransUnion report. Many operators try to combat rising fraud rates by adding headcount to their risk teams, but it’s a cost-prohibitive and unscalable solution. Instead, iGaming operators should seek out a payments provider with embedded fraud capabilities.

There are several critical factors that ensure robust fraud protection and a seamless player experience. The payments provider should offer advanced fraud detection tools, including real-time transaction monitoring and machine learning to detect suspicious activity. Multi-factor authentication (MFA) and encryption are essential to protect sensitive data, while a streamlined withdrawal review interface improves operational efficiency, reduces errors, and ensures compliance with AML and KYC regulations. 

Additionally, operators should look for a partner with effective chargeback and dispute management tools, offering proactive prevention and quick resolution processes. Customizable fraud prevention rules and behavioral analytics are also vital for tailoring fraud prevention to specific needs. Round-the-clock fraud support ensures immediate response to payment issues, while a provider with a strong industry reputation and proven experience will provide reliable, specialized solutions. Ultimately, selecting a payments partner with these capabilities helps operators mitigate fraud risks, enhance regulatory compliance, and deliver a better overall player experience.

While operators often focus on foundational fraud detection measures, they may overlook critical elements such as behavioral analytics, customizable fraud prevention rules, and real-time alerts. A holistic, multi-layered approach that addresses these common gaps is necessary to effectively prevent and address payment fraud in the iGaming space.

Reliability

Every minute your payments provider is down can result in a significant loss for your business, especially during high-volume betting events. Choosing a reliable partner can be difficult to evaluate, but is a crucial piece of the buying process.

First, aim to minimize preventable downtime. Look for a partner that does zero downtime product releases that don’t require planned maintenance windows every time a new feature or update is pushed. These should ideally be done in the cloud and without intervention from your IT or development team to complete. 

Unplanned downtime is more difficult to evaluate for, as many factors can contribute to an issue. In general, you may look for a payments provider that has multiple safeguards in place to mitigate unplanned outages. These may include:

• Cloud-based architecture with multiple server locations 
• Scalable architecture to account for spikes in payment volume 
• Redundant card processing to route transactions in the event of a downstream outage
• Proactive monitoring and alert systems
• Multiple acquiring banks to protect against solvency issues
• Defined processes for failover testing 
• A strong business continuity plan 

This is even more critical for the iGaming industry due to strong seasonality and heavy processing days. A sports book with an outage during playoffs? Don’t let it be you.

Risk, compliance and security

For most organizations, a separate and thorough information security and compliance review will take place to cover a wide range of requests. Most buying committees should default to their internal security, risk management and compliance teams for this process, yet there are basic areas that can be covered up front to ensure the platforms and partners you are evaluating meet base level requirements. 

For example, all modern payment platforms should adhere to PCI-DSS, NACHA and other industry compliance standards. Ensuring you have a Level 1 PCI partner is a simple question that can help you evaluate smaller providers from more established partners, as this tier is based on card volume and audits.

In addition, look for platform features that reduce your risk and compliance scope, such as:

• Built-in tools for managing chargebacks, returns and other exceptions 
• Risk management thresholds to remain within industry compliance standards
• Capabilities to reduce card payments taken over the phone 
• Business rules that can mitigate large-scale fraud or malicious practices

Security, risk and compliance failures may seem rare, but any of these can disproportionately affect the livelihood of your business and can come with significant fines, penalties and losses. Choosing a partner with meticulously audited and documented safeguards is important for businesses of all shapes and sizes.

Configurability

When evaluating a payment service provider, it’s crucial to look for one that offers multiple ways to integrate while also offering features that streamline operations, reduce liabilities, and improve the player experience.

A hosted solution offers a pre-built, turnkey solution enables quick deployment of cashier functionality without requiring development work. This solution removes PCI compliance obligations and fraud liability from the operator, allowing you to focus on your core business.

For a more customized approach, an embedded integration is an excellent option. It uses a drop-in payment flow to capture player and payment data, either tokenizing or completing a transaction. The flow should be tailored to the operator’s branding, providing a seamless transition between the operator’s site and the payment service provider’s interface. This solution requires less development work than a full API integration and can be implemented quickly using a lightweight JavaScript library that loads within an iframe.

Operators who want full control over their payment interface can opt for a Full API Integration, which provides the ability to completely customize the UI/UX of the cashier pages and automate workflows. This gives operators maximum flexibility while using the same reliable infrastructure as the embedded client.

Incorporating these capabilities helps operators simplify payment processes, reduce development efforts, and create a more secure and player-friendly experience.

Integrations

Being able to send and receive payments data across other systems has become vitally important for operators. Strong integrations can reduce manual data inputs, improve employee workflows and reduce the risk of double payments, support calls and other costly scenarios. 

At a bare minimum, you’ll want to have full, two-way integrations that can push and pull data in real-time, enabling you to post payments in all systems, create real-time automations and rules and display real-time balance information to customers to avoid confusion. 

Sophisticated operators should also look for open APIs and strong documentation to build new integrated capabilities, allowing you to connect to other third-party systems that require access to payments data.

Support

A payments platform is only useful when it’s working properly for your business. This is where you must evaluate the actual partner you’re working with, in addition to the technology they provide. 

For example, if an issue arises during peak processing times, how quickly can it be resolved? If your priority is to get to market quickly, can your payments partner support your onboarding timeline and provide one-on-one help to navigate any hurdles? If you need to extend your capabilities or create a more complex configuration, what resources are available to you? 

Support can be broken down into several areas that should be evaluated in your buying process. These include:

• Initial onboarding and implementation
• Account management for ongoing training, usage tips and best practices 
• Professional services for advanced configuration and technical support (i.e. if you plan to migrate to a new system of record or add a new integrated point solution)
• Emergency support for critical issues (phone, email, tickets, real-time messaging)
• Self-service support and documentation 

A strong support structure ensures that your investment is protected, and enables you to continue extracting value from your payments system long after the time of purchase. 

Pricing structure

It’s no surprise that cost will play a role in your decision to choose a payments provider. However, if you’ve made it this far into the guide, it should be obvious that cost alone can not drive your decision on choosing a payments platform. 

When looking at cost, it’s important to go beyond the advertised per-transaction rate and dig deeper into the different ways the platform can affect your total cost of acceptance. For example, if you can eliminate several point solutions from your current payment stack (such as risk and fraud tools, redundant processors and multiple vendors for alternative payments), these should be factored into your decision process. 

Finally, there are many ways to offset the cost of acceptance based on how transactions are billed. For instance, some operators choose to attach a convenience fee for certain types of transactions that typically come at a higher cost. The right payments partner can give you flexibility to charge convenience fees for certain payment types and channels, while keeping others free to the consumer. 

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Conclusion

Choosing the right payments provider can be a complex and incredibly important decision for iGaming operators. The right provider will partner with you to ensure you are successful and should be motivated to help you increase operational efficiency, drive down the cost of acceptance and delight your customers at every step of the payments process. 

At PayNearMe, we’re dedicated to making payments easy, safe and reliable for our clients and their customers. We encourage you to use this guide to evaluate all your options, but welcome your interest in choosing us to become your payments partner for the long-term.

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