Payment providers and licensed operators need to work together to educate consumers, banks and credit card companies in order to improve the overall experience and help reverse the slow adoption of online gaming in the U.S.
Ninety percent of consumers in the U.S. try their credit cards first when making a transaction online. As it relates to gaming, credit card transactions are often denied. The good news is there are alternative payments methods to help bridge the issue; the bad news is that most consumers are dependent on credit cards for many online purchases.
Currently, the issue with online credit card payments lies with Merchant Category Codes (MCC), which are assigned to a business by the major credit card associations. Credit card issuers then have the right to accept or reject any MCC that they desire. With only about 4% of the U.S. population able to legally gamble online, many of the issuing banks have not yet been motivated to change their MCC acceptance policies to allow transactions with licensed online gaming operators.
As payment solutions providers and operators continue to work with credit card companies and banks to fix the current issues, we want to continue to provide customers and operators with as many approved transactions as possible. There are several things that can improve payment experiences across the gaming industry.
Gaming operators should adopt several forms of payments. There are four primary forms of payments in the U.S.cash, credit card, ACH and stored value prepaid cards. Online gaming site operators should adopt as many alternative payment methods as possible and inform customers how to use the methods to complete transactions successfully.
Education is also important. We typically see consumers depending on credit card transactions for all online transactions. The alternatives are there, and its up to the operator to promote and educate on every payment method that they accept. Operators should consider posting an FAQ online to make alternative payments less foreign to consumers and easier to understand.
Consumers will also respond to incentives. Sometimes educating the consumer on alternatives isnt enough to yield adoption. Operators should consider running promotions encouraging consumer to use alternative payment methods on their sites. This will help motivate consumers to consider alternative methods and stop their frustration when traditional card methods are denied.
The gaming industry should also embrace new payments technology. Technology can be an amazing tool for communicating early in the payment process whether or not a card is going to be accepted. Each bank has a BIN number (the first four digits on a credit card). As we learn which banks have low MCC acceptance rates and/or are not accepting payments for online gaming transactions, operators can communicate in real-time to consumers as they begin typing in their credit card numbers. If a known low acceptance BIN appears, a notice can pop up suggesting that the user choose an alternative method. This can help reduce consumer frustration and enhance the overall user experience.
Were just six months into online gaming in New Jersey, so its natural to have growing pains. The U.S. also doesnt have dozens of payment methods like many countries in Europe. As more states begin to legalize online gaming and millions of consumers depend on the payment systems working, banks and credit card companies will begin to loosen MCC regulations. Until then, alternative payment sources will be the catalyst that improves adoption rates and increase the number of successful transactions in the online gaming industry.
Neil Erlick is executive vice president of business development at Optimal Payments Plc.