Gambling is one of mankind’s oldest pastimes. In recent times online gambling has become immensely popular. Mobile technology has made huge advances and has become a very convenient platform for online gaming and gambling. Some casino-type games are just for fun and don’t involve any real money, while others do involve actual money and are a real gambling experience.
Online casino games are not only convenient and fun for gamblers, but also can offer a wider range of games than might be found in a physical casino, such as fantasy sports, sports betting, multiplayer games and bingo, as well offering as more traditional games such as slots, poker and other table games.
And online gaming has become more than just a hobby for some. Much like traditional professional gamblers such as poker players who travel from tournament to tournament, the digital realm has an equivalent in the form of the esports industry, with professional players, sponsors, cash prizes and dedicated fans and spectators.
All in all, the online gaming industry is very big business indeed.
The old expression “the house always wins” implies that casinos make huge amounts of money, and indeed they can do so if well run. So, if online casinos can make so much money, why are they considered high risk?
There are many reasons why online gaming is considered high risk by banks, financial institutions, card networks, and payment processors.
The first consideration is the legality of the industry itself. Gambling is not legal in many places in the world. And it can even be more complex than that, with some countries allowing gambling in certain states but not others – the USA is a prime example of this. It can also get much more complicated, with laws in some jurisdictions allowing online offshore gaming, but others not. With a high level of legal complexity across multiple countries and territories it becomes very challenging to comply with all laws. Financial organisations do not like ambiguity.
The next consideration is that the online gambling business is a digital realm and the card is not physically present. This results in the industry having a very high incidence of chargebacks for various reasons:
- There is a lot of friendly fraud, where the player simply gets upset that they did not win and then tries to claim that the transaction was fraudulent
- Online casinos are a popular place for criminals to test stolen card credentials, so there is a lot of legitimate card fraud
- Family fraud is a term that means a chargeback is filed because the player was a minor, usually using an adult’s account without the adult’s knowledge. This could be accidental or on purpose. Gambling is age restricted, and if there is a chargeback because an underage person played there is very little chance of recouping money. There could also be serious repercussions from regulators for these types of incidents
Online gambling also has the potential for several unique types of fraud and criminal activity, which obviously increases risk.
Any business that has a very large volume of transactions is also considered high risk by financial institutions, and online casinos do very large volumes.
The above-mentioned are just a few reasons why the online casino business is considered high risk.
All of these factors have created an environment where there is a need for specialist service providers for the online casino business, including high-risk merchant accounts and payment processors, as well as offshore licensing providers.
When you are looking for specialist providers like payment processors, it is important to look for several things:
- Is the provider experienced in the online casino business?
- Does the provider have a high level of security?
- Are they compliant with requirements such as PCI-DSS?
- Do they offer fraud prevention tools?
- Do they have a chargeback mitigation program?
- Do they offer chargeback insurance?
- Are they transparent in their costs?
- Do they offer the services you actually need – such as multi-currency facilities?
- Are they clear about when and how you receive your funds?
- Do they have excellent customer and technical support?
- Do they offer great and accurate reporting tools that you can easily access yourself?
- Are their terms and conditions clear and unambiguous?
As you can see, price should not be the only deciding factor when choosing specialist service providers. At Baer’s Crest we understand the online gaming and casino industry very well, and we have assisted many businesses in achieving their goal of having a successful online casino business by providing high-risk merchant services. Talk to us about how we can help you with your business.