The global online gaming and gambling market is thriving, valuated at $63.53 billion in 2022 and set to grow – largely due to the reach of mobile technology.
The industry is continuously evolving, with new entrants incorporating cutting-edge ideas and technology. For example, online casinos are becoming increasingly sophisticated, offering players a captivating user experience with the introduction of features such as bitcoin gambling and virtual reality.
To remain competitive and attract customers, gaming and gambling merchants must embrace a forward-thinking mindset, offering convenient and specialised services, fast payouts and enticing bonuses. With this in mind, we take a look at the four key trends shaping the online gaming and gambling industry in 2023:
The trend towards a cashless world is growing rapidly. The pandemic only accelerated this shift, as businesses chose to stop accepting cash for the safety of employees and to reduce the spread of the virus. Despite the world gradually reopening, many businesses are still opting for a cashless system as part of their new normal.
The UK Finance, a trade association for the UK financial industry, predicts that within ten years, only 6% of payments will be made with physical currency. This shift is not just driven by hygiene considerations but also by consumers seeking the convenience of digital payment methods, such as fingerprint authentication on mobiles, which allow them to make purchases even if they left their card or cash at home.
The growth of digital transactions has skyrocketed with the widespread availability of online payments. With the convenience of having all your money safely stored in a digital wallet and the ability to keep track of each transaction through app-based management, there’s little reason to return to a cash-based payment system. And with an estimated 91% of the world projected to have smartphones by 2026, digital payments are becoming more accessible.
The next step in progress is to raise the prevalence of digital payments in B2B transactions, as currently half of B2B payments are still made through checks. There’s been progress, with some B2B payment processors reporting substantial growth in recent years, but this mostly involves a shift from checks to cards, facilitated by lower card network fees. The ultimate goal is to move B2B payments to digital wallets.
Given that financial transactions are at the core of the online gaming and gambling industry, it’s easy to see why security and trust have become such crucial and critical considerations for customers. It’s also a challenge for merchants as the primary reason customers abandon online purchases is due to security concerns – specifically, the perception of the payment process itself being insecure.
And unfortunately, the fear of fraud is on the rise. Research shows that most people (62%) now view fraud as an unavoidable risk of online shopping, and 59% have heightened concerns about fraud compared to the previous year. These fears are not without basis, as the incidents of fraud have skyrocketed over the past few years, with 2021’s figures showing a 30% increase from the previous year.
In the world of online gambling, the reliability of the payment processor is paramount. Players want assurance their funds are secure during storage and transfer, and it is up to the payment processor to alleviate any fears of fraud or insecurity in the absence of a physical exchange.
A study conducted by the European Commission revealed the improper use of personal payment information is the second most cited reason why people don’t purchase products online. To mitigate these concerns and build trust, payment processors should incorporate visible security measures, such as two-factor authentication, and have a credible reputation to support these efforts. This will reduce the likelihood of fraud, help build trust and boost customer confidence, ultimately leading to an increase in online gambling activity.
DifferentiationThe payments sector within the online gambling industry has experienced significant growth in recent years, driven by new technologies and changing regulations. However, as new entrants emerge and competition increases, payment providers need to stand out and separate themselves from the pack.
One way to do this is to offer reduced rates. Here, advances in cloud computing and hardware have helped payment providers lower transaction costs for both customers and merchants. However, it’s important to keep in mind that rates can only be reduced by so much before further reductions become impractical.
Another way payment providers can set themselves apart is by making their services more accessible and easier to use as part of improving the overall customer experience. A well-known example is PayPal’s acquisition of smaller companies developing innovative technology. Another avenue to convenience is through integration with existing software. With the introduction of P2D2, a European regulation aimed at enhancing the security of electronic payments and making space for open banking, payment processors now have more flexibility in how they can facilitate the use of multiple accounts for spending.
New TechnologyThe use of Artificial Intelligence (AI) can be a key strategy for payment processors to improve payment security and customer experience, and effectively manage the growing volume of digital payments the industry is experiencing.
AI can automatically detect and flag any unusual or suspicious payments, such as large or unexpected transactions. Machine learning can also help better understand customers and personalise practices. For example, by identifying gamblers with a high risk of addiction and detecting problematic patterns or ensuring players are not prevented from placing important yet uncharacteristic bets when the circumstances warrant it. The technology also allows for a faster and more efficient way to verify payments compared to manual checks, resulting in a better customer experience.
It can also enhance the overall experience for online players by improving customer service. For instance, AI-powered chatbots can answer common questions and provide 24/7 assistance. AI can also handle tasks such as creating and cancelling recurring payments, reducing the need for human input and making the process more efficient.
With an estimated 91% of the world projected to have smartphones by 2026, digital payments are becoming more accessible
Staying ahead in the evolving landscape
The growth in the payments sector, the rise of fintech, advances in technology and user demand for flexible payment methods present both challenges and opportunities for online gaming and gambling payment processors in the coming year.
As the industry adapts to new trends – and current ones like mobile payments, virtual reality and AI continue to evolve – success relies on meeting the changing needs of customers. Those that stay in tune with market shifts and use technology to craft innovative products and services for a stellar user experience, anchored with robust security to build user trust, will be well-positioned to thrive in the competitive landscape and set themselves apart as leaders in the industry.