What are the Risks of Credit Card Payments for Gaming Companies?

Americans are in record credit card debt and they’re becoming increasingly less “credit healthy.”

While consumer credit card debt sits around $1.079 trillion, legislators like Senator Wayne Fontana are voicing concern that emerging industries such as online gaming “should not be another scenario to accumulate more debt.”

Fontana is another opposing voice in the choir against credit card usage for iGaming sites. Senate Bill 1159 (introduced by Fontana) would add Pennsylvania to a list of three other states that have already prohibited the use of credit cards to fund online gaming activities—with the others being Iowa, Tennessee and Massachusetts.
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Credit cards are trending out of online gaming 
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Not only do credit cards come with risks, they’re trending out of gaming altogether. Here’s why: 

Most of Europe has already banned credit cards for iGaming
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In 2020, the British government announced a ban on credit cards for gambling. The ban was applied to all forms of gambling, including iGaming and DFS, the only exception was National Lottery ticket purchases.

“Research shows that 22% of online gamblers using credit cards are problem gamblers, with even more suffering some form of gambling harm,” Neil McArthur, CEO of the Gambling Commission, said in a statement.

Additionally, Sweden already has a ban in place on licensed operators offering or providing credit under the Gambling Act. However, the government is seeking to strengthen these measures with a more in-depth ban.

The proposed measures state operators and gambling agents would not be able to process deposits or bets financed by credit. This would be regardless of how and when the credit is provided, including credit cards.

Government intervention and regulation appears to be inevitable when it comes to credit payments and gaming—Europe is just leading the way. 
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Some major players in online gaming don’t accept credit cards
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Recent legislation is only the tip of the iceberg for credit cards in gaming. The funding method is being avoided by some cautious operators in the space already. 

Massive online gaming companies like betr already do not accept credit cards. In a statement on Twitter, Joey Levy, Founder and CEO of betr said: “Today I announced at G2E that @betr will be the first sports betting operator in the U.S. to ban credit card depositing to fund user accounts.” 

The move to keep credit cards out of gaming is strategic. For betr, it means aligning with a mission to enhance the sports watching experience while avoiding high-pressure or financially damaging wagers.  
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US legislation is building momentum against cards
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In a number of states, buying a lottery ticket with a credit card is illegal. The same is now true for iGaming deposits in 3 states, with Pennsylvania potentially joining the list soon. 

The legislative boulder is already rolling—and it’s unlikely to be stopped.
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Risks associated with credit cards and iGaming
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While iGaming, DFS, and online gaming are considered games of skill vs. gambling which is a game of chance, there’s still risk involved. 

Some players are even going into debt when they fund their picks with a credit card. A survey by Odds Assist revealed that over half of sports bettors who have used a credit card to wager have fallen into debt as a result.

For an industry that’s still in its infancy, excessive player debt won’t be sustainable. For iGaming to reach longstanding success and adoption, there has to be balance. 

But credit cards aren’t just riskier funding methods, they’re generally bad for businesses and consumers in a number of other ways: 
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They’re expensive for merchants
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The total estimated merchant cost of credit card payments is around 2% to 5% of each transaction amount. This range includes transaction fees, potential monthly fees, chargeback fees, PCI compliance fees, and cross-border transaction fees where applicable.

Consider how large/often your transactions are and that money adds up to the tens or hundreds of thousands per year. 
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They have high decline rates in iGaming
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Online gaming transactions may decline because some credit card issuers simply won't process them. 

For example, Chase and Wells Fargo allow gaming transactions where online gambling is legal, but Citi and Bank of America do not.

There’s a cloud looming over what’s allowed and what isn’t when it comes to credit cards and iGaming. This makes the process of accepting them confusing and annoying for players. 

There’s risk of fraud
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Something called “friendly fraud” happens when cardholders and opportunistic customers use the chargeback process incorrectly. 

For example, a player might regret the amount gambled and falsely claim fraud to get the money back. Or a significant other might not know the family member is gambling and disputes the charge as suspected fraud.

This is particularly common with credit cards as a player may spend money they do not have, and then attempt fraud as a last resort to recoup losses. 
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Account to account payments are the best option in iGaming
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Account-to-account (A2A) payments digitally transfer funds between bank accounts.

To pay via A2A, a user logs into their bank account to authenticate the online payment. That payment is either pushed or pulled (depending on who initiates the transaction) from the consumer bank to the merchant account provider.

A2A transactions are a perfect fit for the online gaming industry because they enable instant funding and withdrawals—a necessity for motivated players looking to get in the game and cash out quickly. 

Not only are account to account payments more convenient and compliant than credit cards, they’re already widely adopted across the online gaming industry by the largest operators, like PrizePicks. 

See the best gaming payments options.

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Aeropay is the leading A2A provider in online gaming
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Aeropay has secure online pay-by-bank solutions for the gaming industry. Our solution is easy for gaming companies to implement and it helps businesses stand out from the competition by offering instant pay-in and payout options for players—creating the ultimate gaming experience.

Other notable Aeropay benefits for gaming include:

• Convenience: Players link their bank account in just a few moments without entering card numbers or sharing personal data. For all future payments, gamers immediately add or withdraw funds in a single click. 
• Compliance: Aeropay has total regulatory approval, fully compliant financial partners, verified license holders, and exclusively vetted clients—guaranteeing gaming compliance at every level. 
• Easier player acquisition: Overcome any last-minute objections at checkout and streamline the deposit process so more players can join the game, faster. 
• Security: Customers log into their bank directly, guaranteeing bank-level encryption. There are also the highest levels of fraud detection, prevention, and real-time risk assessment to protect gamers and fantasy sports merchant accounts. 
• Customizable payment experiences: Aeropay’s flexible and customizable solution gives merchants the freedom to meet and exceed their audience’s expectations – ensuring a positive user experience every time. 
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‍Schedule a demo with our fantasy sports payments specialists to see what all the hype is about.