The remote (online) betting, bingo and casino sector accounted for yearly revenues of £5.7 billion in the UK alone in the year to March 2020 but the industry is also contending with an increasingly strict regulatory environment.
The risks associated with online gambling can make it difficult for virtual betting and gaming businesses to get approved for payment solutions. On 14 April 2020, the UK Gambling Commission banned consumers from using credit cards to gamble, citing public safety as a key factor in the decision. In this guide, we will explain how you can find and successfully apply for an online gambling payment processing account.
We’re experts in merchant accounts and card processing for high-risk businesses and can provide advice and support to help you find the right solution for your needs. To get started, simply complete our short form here.
Why Do Online Gambling Businesses Require A High Risk Merchant Account?
Online casinos and other gambling businesses often face difficulties when applying for a merchant account or payment gateway. This is in part because payment service providers generally consider online gambling to be a high-risk industry.
Providers of payment solutions base their assessment of risk within the online gambling industry on the following factors:
- Complex Regulations: Gambling is a heavily regulated industry, meaning merchant acquirers and payment gateway providers must comply with a variety of legal requirements to offer their services to online betting and gaming firms.
- High Chargeback Rates: Gambling websites often struggle to limit chargeback rates. In some cases, gamblers may try to dispute charges after making a loss in what is known as ‘friendly fraud’.
- Fraud and Money Laundering Risks: Money laundering, fraud, and identity theft are all key issues within the gambling industry, and it can be difficult for online casinos to conduct the necessary Know Your Customer (KYC) checks that merchant services providers require.
- High Transaction Volumes: High numbers of website visitors and payments make it difficult for payment solution providers to effectively monitor all transactions for fraud.
As a result of these factors, many businesses find it difficult to get approved by online casino payment processing providers.
How Can Gambling Websites Accept Online Payments?
There are a number of steps that online casinos and gambling operators must take to accept payments over the internet.
Firstly, they will need to open a high-risk merchant account. These are bank accounts that allow businesses to accept customer payments via debit card and a range of other methods.
When a customer funds their online gambling account, the money will initially be deposited into a merchant account before it is transferred to your business’s bank account.
Secondly, gambling companies will also need a payment gateway to handle online transactions.Merchant account providersoften supply payment gateways, but some businesses prefer to use a more specialised provider and apply for a third-party payment gateway that integrates with their merchant account provider.
Payment gateways connect your merchant account and a customer’s bank. This enables the funds to flow into the merchant account – and then onto your business bank account – once the payment is authenticated.
How to Find the Right Merchant Account for Your Online Casino & Betting Business
When choosing a high-risk merchant account provider for your online gambling business, it’s important to consider the following factors:
- Industry Experience: A merchant account provider that already works with online gambling operators may be better equipped to handle the challenges that your business faces. They may also have a better understanding of your business’s risk profile, potentially improving your chances of getting approved.
- Favourable Fee Structures: While high-risk merchant accounts often come with higher monthly fees compared to standard merchant accounts, fees will vary significantly between providers. It is important to shop around and negotiate rates (or use our help to do this for you). The rates merchant account provider offers you will be significantly affected by the sector you operate in as well as your typical transaction volumes (higher volumes typically lead to lower transaction fees).
- Efficient Customer Service: When operating in a high-risk sector it’s vital to partner with a merchant account provider with great and timely customer service. Gambling firms likely do not have time for an email exchange if they have technical issues with their payment processing provider, so look for a partner that offers round the clock customer support over the phone.
Things to Look For in an Online Gambling Payment Gateway
When looking for the best online gambling payment gateway, it’s important to match the features offered by payment service providers with the needs of your business.
The following features are some of the most important things to look out for when choosing an internet gambling payment gateway provider:
- Numerous Payment Methods: It’s important for your online gambling website to accept a variety of payment methods since you are prohibited from accepting credit card transactions in the UK. Many payment gateways make it possible to accept payments by debit card, cryptocurrency, digital wallets, and PayPal. You should also look for a payment gateway that facilitates transactions in a range of currencies if your business caters to overseas customers.
- Fast Transfers: Gambling websites need to make funding the accounts simple if they want to retain customers. Payment gateways with faster processing times make it more convenient for your customers to gamble, ensuring that you don’t lose out to competitors.
- Low Fees: You should ideally choose a payment solution that makes the most sense in light of your turnover and margins. You shouldn’t disregard off-shore providers as they may be able to offer competitive rates.
- Robust Security: Your gambling platform must retain the trust and confidence of your customers by keeping their funds and financial data safe. Many payment processors equip their solutions with systems that automatically detect and prevent fraud, making it easier to limit chargebacks.
- A Strong Compliance Record: To ensure consistent service and avoid legal issues, your online betting firm should seek out a payment services provider with a stellar compliance record that has extensive experience of the unique challenges that the gambling industry faces.
What Your Online Gambling Business Needs In Order To Obtain a Payment Processing Solution
You can improve your chances of getting approved for a merchant account by providing all necessary documents and ensuring that your website meets the standards that payment solutions providers expect.
Site Requirements
Gambling websites typically need to contain the following features to meet the eligibility criteria for a high-risk merchant account:
- Compliant privacy, deposit, and refund policy pages
- Terms & Conditions that comply with all local regulations
- Clearly displayed contact details
- The legal name of the company
- The logos of payment methods accepted by the site (e.g. Mastercard and Visa)
Essential Documents
All reputable payment solution providers require online gambling operators to be properly licenced for the territory they operate within.
This means that your online gambling business will need to provide the correct certifications for licensing under the UK Gambling Commission.
In addition to licensing certification, you will also often need to provide the following documents:
- A complete merchant account/payment gateway application
- Three months of bank statements
- Three to six months of statements showing payment processing history
- Corporate documents to establish ownership of your business
- Photo-ID (often in several forms) to satisfy AML and KYC checks
- Utility bills to provide proof of address
- Domain registration information
Online Gambling & Cryptocurrency: Why Digital Assets Are the Future of iGaming
Online gambling businesses are increasingly looking to cryptocurrencies as they attempt to modernise their approach to transactions.
Cryptocurrency comes with a range of benefits that could serve your online gambling business well, including:
- Enhanced Security: Cryptocurrencies are based on the blockchain. This is a distributed, decentralized digital ledger. Blockchain records all transactions in a permanent and tamper-proof way, potentially making it easier to monitor for and prevent fraud.
- No Chargebacks: Crypto transactions cannot be altered or undone, meaning that businesses may be able to avoid fraudulent chargebacks altogether.
- A Broader Customer Base: A growing number of consumers are buying, holding, and paying with cryptocurrencies. This means that online gambling firms that accept them can interact and transact with a new pool of tech-savvy customers.
- Lower Transaction Fees: Crypto transactions may be subject to lower fees than some traditional payment methods, particularly if funds are paid directly to a business’s cryptocurrency wallet.
Given these positive features, it’s unsurprising that online gambling and cryptocurrency payments go hand in hand. Many virtual casinos already accept Bitcoin, Litecoin, Ethereum and other tokens, and several payment services providers have stepped up to facilitate these transactions.
How to Set Up Cryptocurrency Payment Processing For Online Casinos
There are a number of options available to gambling businesses that wish to accept cryptocurrency payments online.
To begin with, it’s necessary to set up a cryptocurrency wallet. This is the digital equivalent of a real-life physical wallet and will serve as the ultimate destination for any crypto funds you receive.
Crypto wallets have their own unique address that customers receive payments with. Some wallet addresses can be converted into a QR code that can be scanned for simpler transactions.
It’s technically possible to receive payments in Bitcoin and other cryptocurrencies just by setting up a wallet, but many businesses are likely to require further support. Providers such as Coingate and BitPay can set up payment gateways for cryptocurrency transactions – but their support comes at a cost.
How to Find the Best Online Gambling Merchant Account
We’re experienced in finding and successfully negotiating with payment solutions providers on behalf of online casinos and other gambling businesses.
Drawing on our extensive network of connections, we match our clients with some of the market’s most competitive merchant account and payment gateway providers.
Whether you’re trying to choose between online casino banking methods or are struggling to set up a payment gateway, contact us for impartial advice and detailed quotes for services that will suit your unique needs.
Online Gambling Payment Processing FAQs
Are Credit Cards Accepted as a Payment Method for Gambling in the UK?
No, the UK Gambling Commission banned businesses from allowing consumers to gamble using credit cards on 14 April 2020. The ban applies to bookmakers operating from physical premises and internet gambling businesses alike.
What Online Gambling Payment Methods are Available to UK Operators?
While credit cards cannot be accepted as a payment method for online gambling in the UK, there are many alternatives available. With the right payment solutions in place, internet gambling businesses can accept:
- Debit cards
- Cryptocurrencies
- Mobile payments (including Apple Pay and Android Pay)
- E-Wallets
- PayPal
As a seasoned expert in the field of online gambling payment processing, I bring a wealth of knowledge and practical experience to guide you through the intricacies of this dynamic industry. My understanding of the complexities involved in obtaining high-risk merchant accounts and navigating the challenges of online gambling payment solutions is based on a deep engagement with the subject matter.
The online betting, bingo, and casino sector, as of March 2020, generated a substantial £5.7 billion in annual revenues in the UK alone. However, this lucrative industry is not without its challenges, particularly in the face of stringent regulations and the evolving regulatory landscape. As of April 14, 2020, the UK Gambling Commission banned the use of credit cards for gambling, emphasizing public safety as a primary concern.
Navigating the payment processing landscape for online gambling businesses involves overcoming several hurdles. Factors contributing to the industry's high-risk classification include complex regulations, high chargeback rates, risks associated with fraud and money laundering, and the challenge of handling high transaction volumes effectively.
In this guide, I'll shed light on the steps involved in obtaining a high-risk merchant account and payment gateway for online gambling businesses. Let's explore the key concepts covered in the article:
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High-Risk Merchant Account:
- Definition: A specialized bank account that allows businesses, particularly those in high-risk industries like online gambling, to accept customer payments via various methods.
- Importance: Vital for online casinos and gambling operators to conduct financial transactions.
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Payment Gateway:
- Definition: A service that facilitates online transactions by connecting a merchant's bank (merchant account) to a customer's bank, ensuring secure and authenticated fund transfers.
- Role: Handles the flow of funds from the customer's account to the merchant account after payment authentication.
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Challenges in Obtaining Payment Solutions:
- Complex Regulations: Stringent legal requirements that payment service providers must adhere to when offering services to online betting and gaming firms.
- High Chargeback Rates: Difficulty in limiting disputes, particularly 'friendly fraud,' where gamblers dispute charges after losses.
- Fraud and Money Laundering Risks: Challenges in conducting necessary Know Your Customer (KYC) checks for online casinos.
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Choosing the Right Merchant Account Provider:
- Industry Experience: Opting for a provider with experience in working with online gambling operators enhances the chances of approval.
- Favourable Fee Structures: Considering monthly fees and negotiating rates based on industry, transaction volumes, and turnover.
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Online Gambling Payment Gateway Features:
- Numerous Payment Methods: Acceptance of various payment methods, excluding credit cards in the UK.
- Fast Transfers: Important for user convenience and retaining customers.
- Low Fees: Choosing a payment solution based on business turnover and margins.
- Robust Security: Prioritizing the safety of customer funds and financial data.
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Cryptocurrency in Online Gambling:
- Enhanced Security: Utilizing blockchain technology for secure and tamper-proof transactions.
- No Chargebacks: Transactions are irreversible, reducing the risk of fraudulent chargebacks.
- Broader Customer Base: Attracting tech-savvy customers interested in using cryptocurrencies.
- Lower Transaction Fees: Potentially lower fees compared to traditional payment methods.
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Setting Up Cryptocurrency Payment Processing:
- Creating a Cryptocurrency Wallet: A digital wallet serving as the ultimate destination for received crypto funds.
- Payment Gateways for Cryptocurrency Transactions: Utilizing services like Coingate and BitPay to set up gateways for crypto transactions.
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Online Gambling Payment Processing FAQs:
- Credit Card Ban in the UK: The UK Gambling Commission prohibits the use of credit cards for gambling.
- Accepted Payment Methods: Alternatives include debit cards, cryptocurrencies, mobile payments, e-wallets, and PayPal.
In conclusion, my expertise in online gambling payment processing allows me to offer valuable insights and guidance for businesses navigating the complexities of this high-stakes industry. Whether you're seeking a high-risk merchant account or exploring cryptocurrency payment options, I am here to provide informed advice and assistance.
