Streamlining Transactions in the Gambling Industry with Laurent Reysbosch and Anschana Caravaca-Sasse

Summary

Laurent Reysbosch, COO and Founder of Paytently, and Anschana Caravaca-Sasse, VP Specialist Markets of Kushki delve into the evolving payment solutions landscape within the gambling sector. Discuss the financial benefits of adopting modern payment methods, such as mobile payments, e-wallets, and contactless transactions, and explore the challenges related to security, fraud prevention, and ensuring seamless financial transactions for players

Transcript

Vasco: Hi everyone, welcome again to Bets and Balance Sheets. Today's podcast is about innovation in payments and streamlining transactions in the gambling industry. We're here with Anschana, VP Specialist at Kushki, who has also worked with PXP Financial, Paysafe and Worldpay, so she has really big experience in the payments industry. We also have Laurent, with his new venture as COO and Founder at Paytently, who has also been with Viva Wallet, Checkout and HiPay. So we basically have all the payments companies represented here, with experience. Today we're here to discuss the financial benefits of adopting new payment methods, alternative payment methods and e-wallets, and to explore the challenges of adopting them. To start, I'd like to ask Laurent: in terms of the user experience of adopting these new payment methods, how can we enhance the journey for the players?

Laurent: I think the most important thing for the moment is this. In the past, Visa and Mastercard were mainly the payment methods, but now iGaming is more international, and you have a lot of alternative payment methods in every country. For example, iDEAL in the Netherlands takes around 88% of payments to iGaming websites. You have Bancontact in Belgium, which takes 60%. On e-wallets, you have a lot of users in Germany on PayPal, for example. This is very important for the operator, to offer different payment methods, because they will increase the revenue of the website. Something else we're seeing grow more and more is open banking, with different solutions existing on the market. People sometimes prefer to pay directly from their bank rather than use a credit card to play. That is what we've seen in the revenue and growth of the iGaming business over the last few years.

Vasco: Okay. How is Kushki offering these new payment methods?

Anschana: I would agree with Laurent. I'd just add, and obviously it's a given, that what players are looking for now is for everything to be immediate. We're in a generation where everything is a click away, so they expect the same for payments. I always say it's like a super app, or what Apple does, where on one device you can pay, watch your movies and collect points for buying something. I think we are moving more towards that.

Vasco: And not only on the payment side, but also on getting the money back. How can players get their money from the operator, and get it immediately? Do you think that's a massive challenge for a payments company, and for the operators?

Anschana: I think it's getting less and less of one, but it still is, and it depends on which countries you're targeting. Some countries aren't prepared yet, so technically they can't do it, and you'll have a delay of 30 minutes, a day, two days or even a week. So we still have this challenge in certain areas, but more and more in Europe and elsewhere it's getting better.

Vasco: So it's not only about the payments companies, but also the infrastructure these countries have for operating with them. How can we make payments more accessible to players, but also make them responsible?

Laurent: One of the key things to keep in mind when you add all these payment methods is not to add too many. Sometimes the checkout page of an iGaming website has 30 different payment methods, and that's very complicated. Players look for the payment method they want, live in a country where they can't find the right one, and the operator loses the player. That's the biggest issue. But coming back to winnings and withdrawals, it also depends on the banks. As Anschana said, in Europe it's not the main issue. Instant payout is normally the norm now, and a lot of people can pay out like that. But you also need clear withdrawal pages for the player, because they want to receive their money very easily and very quickly. That is key: when they receive the money back in a second, they're going to play again. For the user experience, you need one-click pay-in and one-click pay-out. That's very important for them, and it's important in the payments industry to help the operator by giving them access to the best user experience on the market.

Vasco: Do you think the user experience involves remembering the payment options people choose initially, and then offering those first?

Laurent: I think it's always based on the country. When you go into a country, you choose two or three of the most relevant payment methods there. Then, when you see a player choose one payment method, of course when he comes back the next day we're going to propose the same one. Something else interesting: if they're playing with a credit card and they've run out of funds on it, we can propose an open banking solution so they can continue to play, up to the limit of the credit card. Of course, to respect everything related to compliance, you don't push them too much. But we can be very creative and propose several payment methods to cover all the payments they want to make on the website.

Vasco: How does Kushki apply this? Do you offer a checkout experience to operators, or do the operators you work with generally have their own?

Anschana: They tend to like their own checkout, because they have their own experience, and not every operator is the same. Some will have players with a lower ATV [average transaction value], where the deposits are smaller and they use more cash. Others will use more cards. They tend to manage that themselves.

Vasco: And from your experience, what are the most common payment methods operators are interested in right now?

Anschana: Well, again, it's a bit of everything, because it depends on the country and on the culture. For example, in LatAm, for small ATVs there are still loads of cash payments, as well as cards. Cards are more important in certain countries as well. So I don't think you can keep it in a box. It depends on the market.

Vasco: Do you think it's easy to spot when a new payment method is rising in a market?

Anschana: Well, if they do it well, yes. You have the example of Pix. In just a few years, like three, it has become massive. COVID obviously helped as well, because before, people would go to a shop to pay [in cash, "poetto"], and now they've moved online. But it also comes back to help from the government, which has been really flexible, helping them with rates and setting it up.

Vasco: In terms of strategy, obviously everything that is new comes with risk. How do you safeguard sensitive player data when you implement new payment methods?

Laurent: Generally speaking, the payment methods themselves have all the security: 3DS, everything related to that. If you're on the open banking side, for example, and open banking is a new payment method, it's directly linked to the bank of the player, so you're 100% secure, with no chargebacks. That is the most important thing. But coming back to it, there are payment methods like crypto that everybody wants. I remember launching crypto on a big iGaming website five or six years ago. I was the first one to launch it, and for six months nobody made a deposit in crypto. Sometimes it's important to be sure that a payment method is mature enough before you open it. A lot of gambling merchants and operators want a new payment method because they say they're going to be the first to offer it, and they think they'll receive a lot of new deposits, but generally that's not the case. Sometimes you put in a new payment method and for six months you don't have any transactions on it, and people always use Visa or Mastercard, the brands they know. Crypto is more and more used now, but generally it represents three to five percent of deposits, depending on the country. That's the most important thing, I think. Depending on their size, operators may have their own payment manager or team to manage this, but I think they need to ask for advice from the payments professionals, which is what we are here for. We can advise them: "Guys, don't put in so many payment methods, put in this one because you're targeting this country." We are there to help them choose the best payment methods and increase traffic and success rates.

Vasco: You mentioned chargebacks and 3D Secure, but in certain markets, like America, that doesn't exist. How do you help operators fight chargebacks, considering those are very high-risk transactions?

Laurent: On the chargeback side, there are a lot of different partner tools, risk and fraud tools, that they can implement. I don't want to name a lot of brands here, but there are a lot of different aspects to it. The big gambling websites also have their own security checks, because they can identify the player's KYC and know if it's a VIP player. I think the best option is always to apply 3DS on the first transaction, and on the second or third as well, to secure the transaction. Then, once you're confident about the player, you can bypass 3DS, and sometimes add some additional checks. Today, with the technology and all the fintechs that exist, there are so many solutions to do that. The majority of the big websites do it in-house, but I think it's also important to get advice from risk and fraud professionals, who can help.

Vasco: Do you think the same happens in Brazil, for example, or LatAm? How do we protect players and operators from fraudulent transactions?

Anschana: In LatAm, for example, 3DS is also getting there, though obviously it's not as mature as here. It's all about education, as Laurent was saying. You have third parties that can help you with that. But you also have to understand the market. Take the States, which you asked about: you have land-based casinos trying to go online, so they need to understand this, and maybe need more support than someone going into a joint venture with someone in Europe who already has the tools. So it's more about education and regulation. It always ends up coming back to regulation. Back to the crypto example, loads of operators want to do crypto but they can't, because of the challenge of source of funds. That limits what you can offer.

Vasco: There's also a lot of education about the player experience, telling players how to use certain payment methods, even the new ones, or what it means to have 3D Secure. I still remember when we implemented [it], and it was just very annoying to get a message on your phone every time I had to use my card. But on the operator side, how can we help and educate operators on the risks of implementing certain payment methods over others? We all want to increase revenue, but at what cost? How can we make them aware of certain risks of payment methods? Is that something we do?

Anschana: Yes. Again, it's about having an open conversation with them. But you can't be too strict either, because then you get false positives and you disable payments that might be good. So I think it's a mix of all the technology that's going on now with AI, but it needs a human being as well, who understands the patterns. Obviously, AI can trick you a bit too. Fraudsters can attack you with certain rules or tactics to make your system do something, and then you need someone else to catch it. Again, there's plenty of information out there, and operators are generally willing to listen.

Vasco: Do you think operators are interested in that part, or are they generally more focused on enabling more payment methods?

Laurent: It depends, of course, on how mature they are. All operators want the biggest traffic, fewer chargebacks, more payment methods, everything. But you can't have everything, so you need a balance. The quality of the traffic matters too. I always say to merchants: for the same country, I've seen a big difference in success rates. In France, for example, one merchant has an 82% success rate and another 69%, with exactly the same integration and exactly the same payment method. I ask why, and when I look at the quality of the traffic, I see that people are trying to do the 3DS 12 times in one minute, which decreases your success rate. I think you have to go deeper into the detail. Your merchant might say, "Look at your success rate, it's not good." No, maybe it's the quality of your traffic. Look, there's a guy who tried 30 times to make a deposit with 3DS, and that decreased your success rate. It's one guy who did that. Maybe they call and say, "Guys, there's a problem, I never do 3DS." But we need it in France, for example. That's the kind of conversation you need to have very closely with your merchant. For me, it's the most important thing.

Vasco: Is there anything operators sometimes don't think about, or don't pay enough attention to, that they should when implementing new technologies?

Laurent: I think the problem is always the competition. They look at the competitor's website and say, "Oh, the other one offers Pix, so we're going to offer Pix." Yes, you can offer Pix, but you've never had one player from Brazil on your website. Why do you want Pix? "Because my competitor has Pix." But do you work in Brazil? That's the kind of conversation you need to have with them, because sometimes they don't think about it. They just want an additional payment method. And like I said, if you put too many payment methods on your cashier, you're going to have issues with your players, because they won't find the route to make a deposit correctly. That's something they need to bear in mind. But I think they are getting better and better at it.

Anschana: Sometimes you even feel they're teaching us as well, which is good, because we have to listen both ways. They'll come with something new, with better success rates or for a region that is really good, and it has to be a conversation on both sides. But they're getting much better. They always come with loads of studies on the different countries, even more information than we may have.

Vasco: Yes, because they have contact with the players, so they hear first-hand what they want to use. And payment companies offer much more than payment methods. What do you think operators are interested in getting from payments companies? Is it analytics? What kind of analytics? What are their main wishes right now?

Anschana: I would say one word: data. They want all kinds of data, from analytics, as you say, to success rates. Back to Laurent's point: why do I have this success rate? Maybe you have plenty of customers with insufficient funds, and obviously those don't go through, so it drops. So it's all data.

Vasco: Do you think they want the data itself, or the insights from the data?

Anschana: The insight as well, of course. You can't just send an Excel sheet and say "good luck". It's all about communication too.

Vasco: And do you think your companies are prioritising making sense of that data? Is it as relevant right now for payments companies to provide those analytics and insights as it is to offer new payment solutions?

Anschana: I think more and more. Until now it was kept a bit more of a secret: "We don't want to share anything." Now we're opening up, because it's a good tool for both sides, the operator and us. It was a well-kept secret for a time.

Laurent: It also depends on the quality of the data and the insight you give to the website. You can monetise that, too. If you use machine learning and send them a lot of data, they can use it to increase volume, decrease the cost of finding the best players, and pay the affiliate less per player, because you've given them good data. Good data is the most important thing. But also, as you said, they want data, they want payment methods, and they want reconciliation for the accounting team. That's important, because the more payment methods they implement on their website, the more data they receive, the more financials, the more settlements. You need someone at the payment company who can manage everything, but you also have a lot of external partners, like Aurum, for example, who can help them on the reconciliation side. I think this is very important: the more payment methods they implement, the more issues they'll have on the reconciliation and data side. Today a payment company doesn't only offer payment methods, it offers a global payment infrastructure to help facilitate everything related to payments.

Vasco: And with this AI and optimisation, making sense of the data, are you creating tools to make this work as automatic as possible, or do you think payments companies in general still rely heavily on humans to interpret the data?

Anschana: It has to be a mix of both. We are all working more and more towards automation, some companies more than others, but it comes down to what the key issues are for each operator and what information they want. You can give them as much data as you want, but they might not need the data you're giving them. So you have to sit down with them and really point out what they're covering. I think the human touch still needs to be there, at least from my point of view, because humans see certain things that a machine won't learn. AI is great, but it works from the past, so it needs to see the behaviours before it can tell you "this is happening". Someone checking might see it straight away.

Laurent: And sometimes it's intuition, a feeling. A lot of it is that as well.

Vasco: That's true. All right, I think that's all my questions for today. It was a pleasure to have you both. I think it was super insightful, and I hope you found it so too. Thank you so much for listening. Stay tuned and follow us on social media, we have more episodes of this podcast, and we'll speak soon. Thank you so much.

Laurent and Anschana: Cheers.