The Benefits of a Diversified Payments Stack

For many emerging operators in the online gaming industry, the payments puzzle can be a difficult one to solve. Regardless of the gaming vertical—iCasino, online sports betting, social and sweepstakes gaming or daily fantasy—operators ask the same questions when it comes to payments: 

• What payment types do players prefer? 
• What tender types will increase acceptance rates and boost player conversion? 
• How can we speed payouts to maximize retention? 
• How do we integrate with those payment technologies quickly and easily? 
• How do I keep my costs in line to maintain healthy margins?
• Do we really need all of those payment types? 

In two separate research studies, we’ve looked at iGaming and online sports betting player preferences to determine which payment methods matter to them, and how the payments experience impacts their loyalty to an online betting platform or app. Using this data, let’s answer the tough questions operators have when it comes to choosing their payment partners. 

What payment types do players prefer?

In research conducted by Sapio for PayNearMe, we asked bettors to share which payment types were most important to them. While certain payment methods stood out, it’s important to note that most bettors ranked a wide variety of methods as “important” or “very important.” What we learned from this is that bettors consider choice to be an absolute must. 

Perhaps a bettor primarily uses a linked bank account to deposit funds to their betting app of choice, but today they have a balance in their PayPal wallet and would rather use that. Or maybe they’ve historically used a credit card but have been trying to cut down on usage, so they opt to deposit with cash for more control. 

Diversifying your payment stack shows players that you have their needs in mind, giving them the flexibility to deposit and withdraw the way they prefer on any given day, enhancing their loyalty to your brand. 

What tender types will increase acceptance rates and boost player conversion?

While the card payment acceptance rates for online betting have improved in recent years, there are several tender types that can provide much higher acceptance rates—resulting in lower costs for operators. For instance, with a guaranteed ACH solution such as Trustly Open Banking, bank account data is retrieved in real time to approve deposits, resulting in lowered decline rates. In addition, compared to credit card fees, guaranteed ACH can lower the cost of processing deposits by up to 50%. 

Alternative payment methods such as PayPal and Venmo offer quick and secure transactions, and the new generation of online bettors gravitate toward these methods. When players are familiar and comfortable with digital wallets, the deposit process is quick and seamless. 

And then, of course, there’s cash—a method operators shouldn’t count out. With a cash-at-retail deposit solution, your acceptance rates skyrocket. Unlike cards which can be rejected or charged back, or bank accounts which can have insufficient funds, once a cash transaction is completed it’s final.

According to the same research referenced earlier, 32% of bettors stated that if they had access to their preferred deposit types, they would make larger deposits more often. By offering payment types that boost player acceptance, you’re also boosting retention. 

How can you speed up payouts to maximize retention?

In research conducted by Betting Hero for PayNearMe, 49% of surveyed bettors said they would switch from their preferred betting app or site if a competitor promised faster withdrawals. Payouts are a critical piece of the player experience, and a slow or difficult payout process can make or break player loyalty. 

When iGaming and online sports betting was legalized years ago, bettors may have been willing to wait days for a payout, but those expectations have changed. We now live in a Payments 3.0 world where players expect hyper-personalized experiences. E-commerce is fast. Streaming is fast. One-click payments are now the norm. In short: speed matters. Instant payouts build trust, and operators rely on trust in a highly competitive online gaming market. 

E-wallets (e.g. PayPal) and instant bank transfers through guaranteed ACH are a couple of the options players have to expedite the withdrawal process. If operators aren’t offering these, they could be hurting their retention efforts. 

How do I keep my costs in line to maintain healthy margins?

An optimized payment stack can help operators lower their cost of doing business by balancing higher- and lower-cost tender types. For instance, solely offering standard ACH (as opposed to guaranteed) lowers your cost per transaction, but high failure rates and NSF fees can quickly nullify those savings and add operational stress. Guaranteed ACH might have a higher transaction cost, but saves on the aforementioned drawbacks. 

By diversifying your payment mix—and even having some control over how you promote certain tender types to certain players—you can increase conversion rates and LTV while balancing out your acceptance rates and transactional costs. Going further, offering all of these payment options through a single insights-based platform gives you access to the data you need to effectively perfect your cashier based on the performance of each tender type. 

How do we integrate with those payment technologies quickly and easily? Do we really need all of those payment types? 

For the sake of time, we’ll combine the final two questions and answer the latter first. To keep it brief: yes, you need a diversified payment mix if you want the best shot at attracting and retaining players. The good news is that it’s not nearly as hard as it seems. 

For emerging operators especially, it’s intimidating to plan how to optimize their payment stack. Many assume they’ll have to integrate with several different providers, which adds stress on internal development resources, complicates the settlement and reconciliation and slows down their time to market with multiple contracts and multiple onboarding processes. In short, it’s a vendor management nightmare.   

Luckily, we can assure you that assumption is incorrect. With the right payments provider, operators can gain access to all the ways that players want to pay and be paid—all from one platform, through a single contract and integration. In addition, a provider experienced in the online gaming space will help you navigate the compliance and onboarding process, getting you to market quicker with a user experience that rivals the biggest names. 

Best of all, the right payments partner is able to future-proof your business by making new and in-demand tender types available as soon as they’re approved for use in online gaming, putting you one step ahead of the competition. 

Trust PayNearMe to provide an optimized payment stack

PayNearMe’s revolutionary end-to-end payments platform gives operators a complete deposit and payout solution—including cards, guaranteed ACH, PayPal, Venmo, Apple Pay, and cash—that maximizes your revenue by boosting player satisfaction, lowering conversion costs, improving reliability and future-proofing your business. 

With built-in risk and fraud tools, payment data insight tools, processing redundancy and more, PayNearMe provides more than a basic payment gateway to lower the cost of business operations while safeguarding you and your players. 

To learn more, contact our team or request a platform demo.