How to eliminate costly chargebacks in iGaming
PSPs can eliminate chargebacks in iGaming by offering open banking payments (Pay by Bank). Unlike cards, open banking payments are Strong Customer Authentication (SCA)-authorised, which means they’re much more difficult for players to later dispute. Additionally, chargebacks currently don’t apply to Pay by Bank payments.
Why do chargebacks happen in iGaming?
Chargebacks happen because card payments can be disputed if card details are stolen, misused, or if players claim they didn’t authorise a transaction. Operators lose revenue, pay additional fees, and risk breaching Visa and Mastercard chargeback thresholds.
How does open banking stop chargebacks?
Open banking stops chargebacks because every transaction is:
SCA-authorised: Players must confirm the payment with their bank (fingerprint, Face ID, or login).
Irrevocable: Once authorised, the payment cannot be reversed through a chargeback.
Direct A2A: Funds move directly from the player’s bank to the operator without card networks.
This makes it virtually impossible for a player to claim a deposit wasn’t authorised, and as card networks aren’t involved, there’s no mechanism to claim a chargeback.
What are the benefits for iGaming operators?
No chargeback costs: Eliminates dispute fees and fines.
Lower fraud exposure: Fraudsters can’t use stolen card details.
Higher margins: Operators keep more of their revenue.
Compliance assurance: No risk of breaching card network chargeback thresholds.
What are the benefits for PSPs?
Protect acquirer relationships: No chargeback risk tied to your operators.
Differentiate your offering: Most PSPs still rely on cards; offering Pay by Bank sets you apart.
Win more operators: Eliminating chargebacks directly addresses one of their biggest pain points.
Stronger margins: Lower costs and higher conversion rates improve profitability.
FAQs: Eliminating chargebacks in iGaming
Can PSPs eliminate chargebacks completely?
Yes. With Pay by Bank, chargebacks don’t exist because payments are authorised and irrevocable.
Why don’t chargebacks exist in open banking?
Because open banking payments don’t use card networks, which is where the chargeback rules apply. Additionally, they include strong customer authentication (SCA) using biometrics like fingerprint or face recognition. The player authenticates directly with their bank, removing the possibility of “I didn’t authorise this” disputes.
What if a player needs a refund?
Players can request refunds like normal, and operators can issue refunds directly, but these are controlled payouts — not chargebacks. This means they don’t incur extra fees.
Does Pay by Bank also reduce fraud?
Yes. Since every payment is authorised with bank-grade authentication, fraud using stolen card details is virtually eliminated.
Why should PSPs add open banking to their iGaming offering?
Because it directly removes chargeback liability, protects operator margins, and creates a competitive advantage in a market under pressure from card costs and fraud.