Alternative payment types, powered by open banking, are rapidly growing in popularity - especially among younger people. They will not only deliver huge savings on card fees but will also create a far better user experience for your gamers.
In this blog, we explain how technology, regulations and payment options have changed in recent years, and why it’s finally game over for high fees and payment friction.
High fees seem like just the beginning
For too long, the iGaming sector has heard the same excuses - it can be perceived as high risk. That means fees can be as high as 3-5% for each transaction. But as we will explain, it’s not just through high fees that legacy payments are harming your business.
Old tech hurts experience and conversions
Legacy payment technology and infrastructure adds friction that harms your customer experience and conversion rates including:
Slow checkout as manual entry of card details, security codes, and billing information interrupts the immersive iGaming experience.
Declined transactions due to outdated security measures or insufficient funds likely to be higher with card payments.
Outdated identity verification creates major barriers to conversion and customer experience.
Open banking payments are a game-changer
Open banking was introduced by the European Economic Community (EEC) in January 2018 to foster greater competition within the financial sector. It forced financial institutions to securely share customer financial data with third-party providers through Application Programming Interfaces (API) technology.
These APIs enable data access and the creation of innovative financial products and alternative payment types. In the UK, there are already around 750,000 companies using open banking products to help them reduce the costs and inefficiencies of legacy payment systems.
The payment types in demand by younger generations
Mastercard and Visa have both been around for 60 years or more. Younger consumers are looking for new and more convenient payment types.
In a 2023 report, EY stated that Gen Z and millennials are showing a high propensity to use Alternative Payment Methods (APMs). This demographic alone is projected to have over 87 million APM users by 2026. The survey also revealed that over 85% of businesses that accept payments across industries are planning to accept new types in the next one to three years.
Open banking payments use direct bank account (A2A) transfers as well as the ability to pay using other modern methods such as digital wallets, including Apple Pay or Google Pay, for the added convenience of making payments with stored payment information and biometric authentication.
Not only can open banking payments improve the user experience but it paves the way for increased revenue and closer relationships with players within your iGaming ecosystem.
Benefits for iGaming companies
Lower costs are often the driving force behind adoption of open banking and alternative payment types, but the benefits are much broader.
- Reduce costs – iGamers make payments directly from their bank accounts to you so there are no intermediaries. This means you pay a low fixed fee of just $0.30 per transaction for every open banking transaction you accept with zero additional fees.
- Eliminate chargebacks – Payments are made directly between you and your customers via Account to Account/Pay By Bank transfers so there are no schemes such as Visa and Mastercard involved and so chargebacks are a relic of the past.
- Fight fraud – fraudsters can no longer pay using stolen credit cards as open banking payments require biometric authentication and KYC checks.
- Enhanced customer insights - use open banking data to analyse your players’ behaviours and financial circumstances so you can make more informed and sensitive decisions.
Take customer experience to the next level
iGamers will feel immediate benefits of using open banking payment methods.
- Seamless experience - iGamers can seamlessly make purchases without the hassle of entering card details, expediting the payment process, and enhancing the iGaming experience.
- Delight customers – They can receive winnings faster as open banking streamlines the payout process, so you can swiftly disburse winnings or rewards to players’ bank accounts.
Implementing open banking payments is simple with Yapily APIs.
- Coverage +20 countries and over 2000 banks across the UK and Europe are seamlessly integrated into our open banking infrastructure platform
- 550 million accounts throughout Europe to keep you connected across borders Yapily is equipped with enhanced KYC and embedded Strong Customer Authentication to keep your business compliant and protected against fraud.
- Benefit from business and retail connections for a more connected experience
- Faster onboarding for your players with real-time confirmation, so you can get them playing their first game, faster!
- Yapily’s whitelabel toolkit ensures we integrate into your business seamlessly. Our pre-built modules and white label products sync with your brand, so you own the user experience.
- With a faster onboarding and range of flexible payment options, you’re sure to see your players returning for the next game!
Next steps for open banking and the iGaming industry
The iGaming industry can free itself from the limitations and cost of archaic payment systems. Open banking and Alternative Payment Methods are gaining in popularity, especially with younger consumers. Switching to these innovative payment solutions will solve the longstanding grievances of high fees, outdated technology, and poor user experiences.
As well as reduced transaction costs, iGaming companies can eliminate chargebacks and enjoy fortified fraud prevention. Yapily offers broad coverage across multiple countries so iGaming companies can deliver a next level experience for their players.
Discover more of what Yapily has to offer the iGaming industry today.
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