The online gambling industry is a rapidly growing market, and with it, the demand for alternative payment methods. Traditional payment methods, such as credit cards and debit cards, are not always available or accepted by online casinos. This is due to a number of factors, including fraud concerns, regulatory restrictions, and high fees.
Alternative payment methods (APMs) offer a number of benefits for both online casinos and players. For casinos, alternative payment methods can help to:
- Increase customer satisfaction by providing more payment options;
- Reduce fraud by offering more secure payment methods;
- Attract new players from countries where traditional payment methods are not available.
For players, alternative payment methods can offer more convenience and flexibility, greater privacy and security, and lower fees.
Payment companies have recognized the strength of the partnership opportunities with gambling companies, given the numerous upsides consumers using APMs can benefit from. This has led to massive increases in customers using PayPal at online casinos.
Neteller, for example, is integrated across eight major online gambling sites in the UK, including Coral, William Hill, and 888sport. Skrill is also housed on eight sites, including BoyleSports. Trustly, meanwhile, has found a niche in the world of online casino games and bingo sites and can be used across over 50 online gambling providers.
Paypal, of course, remains the most omnipresent APM given its history and size and there’s no reason to believe that this market share will be diluted anytime soon. In fact, PayPal holds the highest market share, accounting for 59% of the global alternative payments market. MyBank follows with 25%, and Sofort by Klarna accounts for 3% of the total collections with methods other than credit cards.
Some of the most popular alternative payment methods for online gambling include:
- E-wallets: E-wallets, such as PayPal, Skrill, and Neteller, allow players to store their money online and make payments with just a few clicks. They are often the most convenient and secure payment method for online gambling;
- Prepaid cards: Prepaid cards are a good option for players who want to control their spending. They can be purchased with cash or by linking to a bank account, and they can only be used for the amount of money that is loaded onto them;
- Cryptocurrencies: Cryptocurrencies, such as Bitcoin and Ethereum, are becoming increasingly popular for online gambling. They offer a high level of security and anonymity, but they can also be volatile, so it is important to do your research before using them;
- Bank transfers: Bank transfers are a traditional payment method that is still widely accepted by online casinos. They can be slow and expensive, but they are a reliable way to make payments.
APM choices
The use of alternative payment methods is growing rapidly. As of 2022, 89% of payments are made digitally, and 62% are made using multiple modes, according to a McKinsey report. This trend is predicted to continue in 2023 and beyond. Online gambling is expected to be a sector that benefits majorly from the growth in APM usage.
As more and more players demand more convenient, secure, and affordable payment options, the use of alternative payment methods is likely to continue to grow.
Here are some additional things to consider when choosing an alternative payment method for online gambling:
- Security: Make sure that the payment method you choose is secure and that your personal and financial information is protected;
- Convenience: Choose a payment method that is convenient for you to use. This may include factors such as the availability of the payment method in your country, the speed of transactions, and the fees charged;
- Fees: Be aware of the fees associated with the payment method you choose. Some payment methods charge higher fees than others;
- Regulation: Make sure that the payment method you choose is regulated by a reputable organization. This will help to protect you in case of any problems.
White Paper outcomes
A big-picture issue for the APM providers who operate within the UK’s online gambling landscape will be the full outcome of the government’s gambling white paper.
Released in April, the weighty document outlines measures to be taken to try and stem the worrying growth in problem gambling seen in the country. Such measures include the introduction of strict stake limits depending on age and gambling regularity and specific rules around where and when gambling companies can advertise.
One of the most publicized aspects of the white paper was the announcement that Premier League football clubs would no longer be able to feature gambling companies as sponsors on their teams’ shirts from the start of next season.
Given the popularity of online betting amongst football consumers, this, the government contends, will hopefully drive down the numbers of those feeling compelled to gamble multiple times a week.
Though the white paper was launched five months ago, the document is undergoing Parliamentary readings and consultations, meaning changes can be lobbied for and made by those on both sides of the gambling advertisement debates. This includes anti-gambling pressure groups and the gambling industry itself.
Once these are taken into consideration, gambling companies may well have to change their processes and operations to accommodate how they offer free bet incentives, and this could directly impact the effectiveness of the APM systems they use.
It is not out of the question that we could see APM providers exit contracts with online casinos or betting sites if they do not believe that placement on their site is drawing enough transactions through punters, which historically relies quite heavily on free bets and other incentives.
Digital payment methods, within which APMs sit, are booming in relative terms globally and will likely continue to do so. One area to watch in the coming years will be how they are used by consumers in developing markets. These countries are considered to be underdeveloped in contrast to the economy of the United Kingdom and typically have less efficient infrastructure through traditional banking.
Online casinos have a significant opportunity in the years ahead to make use of the markets to drive up market shares. Closer to home, meanwhile, it appears that the proliferation of online casino platforms will continue for years to come and alternative payment methods will remain a strong driver of userbase growth for these operators.
