Regulation

Payment expert talk: iGaming trends, 2023 perspectives

By Tranchard Roxane on 07 November 2022/ Reading time : 5 minutes

While the COVID-19 crisis has sparked a new e-commerce era and an unprecedented growth of the online sector, it has had major ramifications on the iGaming industry.

The constantly changing regulatory landscape and need for operators to provide the most user-friendly experience have made payments a central aspect of their strategy.

Payplug’s Digital Business Development VP, Mathieu Richard, who is leading the company’s services deployment in the iGaming sector, is sharing his insights on 2022 major evolutions, 2023 perspectives for payments within the iGaming industry and his view on how best to address payment performance optimization in this context.

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According to you, what are the 3 major trends to remember from 2022 in the iGaming sector?

M.R. I think major evolutions of this industry in the last year are resulting from regulatory changes. 

Firstly, we can see that in the EU, most major countries have now established a clear and complete regulatory environment for iGaming. Germany and the Netherlands are now fully regulated and have required several adaptations at operators’ level to fit within this new regulatory framework. Third parties too have to adapt, as an example regarding PSPs: payment services have to be approved by the German regulator and comply with new payment rules pushed by schemes.

Another change that has affected the European market since 2021 - and I feel is still not mastered by the sector’s stakeholders - is PSD2 and very recently the decommissioning of 3DSv1. Globally I feel that despite its enforcement over a year ago, there is still room for improvement on the PSPs and operators side: they must work on TRA (Transaction Risk Analysis) to maximise the capacities of routing to frictionless vs SCA, and PSPs must provide additional services and features to support operators with the optimisation of their payment performance and UX.

At last, there have been important changes outside of the EU. I'm thinking of the American continent where online betting is legal in most states and online casino/poker have been legalised in six states in the last few years already. In 2022, we’ve seen growing traction for legalisation of these activities in other states and Ontario in Canada is opening the path for other states' regulation there. We also witness changes happening at regulatory levels in Latam and an increased interest on the part of operators for the African market.

I see in my discussions with operators that this new regulatory scope has lead them to review and redefine their market penetration strategies: which prioritisation and focus should be given to each new regulated markets, how to maintain the efforts on existing markets while opening new ones, how to dimension their technologies to each regulated market or how to optimise payments’ performance in each market.

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Can you tell us about the regulatory updates that will impact the sector in the coming months?

M.R. The major one which comes to my mind is the end of the tolerance period in Germany.

In short, since regulations have been enforced in summer 2021, operators having applied for a licence but not having it granted yet could offer their services in Germany as far as they were matching some requirements in terms of games content, players’ verifications or player’s protection. This tolerance period is due to end at the end of the year 2022, and operators who have not been granted with their official licence by then should suspend their activities in Germany. 

Unfortunately the German regulator has suffered delays in licences issuing. As a result, several operators are left with the uncertainty of having the right to pursue their activities on this strategic market.

PSPs are affected too by this regulatory change. Some specific scheme rules have been issued and PSPs not complying to these are exposing themselves and their merchants to heavy schemes sanctions.

Another coming regulatory change which will affect several operators in the EU is about Finland, where state-owned Veikkaus remains the sole operator of all forms of gambling in the country. 

In fact, the last Gambling Law voted at the end of 2021 will empower the National Police Board to begin payment blocking from the start of 2023, which means possibly offshore operators and PSPs supporting them having to redirect their activities to other markets or risking possible heavy sanctions.

Surprisingly however, I have recently heard that Finnish politicians could be open to discuss licensing of offshore operators in the years to come. The future of Finland’s iGaming regulation remains unclear. Hopefully some new guidelines will be shared in the next few years.

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In the face of these developments, iGaming operators must differentiate themselves by offering an optimal buying experience. How does this translate in terms of payment?

M.R. In my opinion, differentiation through payment has always been a combination of seamless UX and performance optimisation

But PSD2 has changed the rules, and even though it has been in place for a year, I feel this new context still widely affects the market.

Aiming at increasing the frictionless transactions’ acceptance is the essential target, but considering card issuers are final decision makers of frictionless vs SCA transactions, it is a complex challenge.

In fact, the central element determining frictionless acceptance is the merchant registered fraud rate at issuer level, but it is extremely complex to directly inflect this indicator or even obtain it from card issuers.

A strong players’ base qualification, transaction risk analysis at operators level with a scoring shared with PSPs and/or issuers and strong fraud management upstream of the payment authorization are in my opinion the levers to look into to optimise the frictionless ratios

These levers can only be achieved through a close collaboration between operators and their PSPs.

 

The 8th edition of SiGMA Europe is fast approaching. What is at stake in this event?

M.R. The iGaming sector is evolving at a fast pace, so I believe what’s at stake during SiGMA is identifying innovations, new features, initiatives and market trends which will enable operators and third parties to stand out in the future.

These are amazing times for us as a payment provider to understand operators’ future challenges, and discuss how we could possibly help resolve them through our data-driven services and our unique knowledge of issuers’ expectations as part of Groupe BPCE. 

This year, SiGMA will also be the occasion for us to celebrate the combination of Dalenys and PayPlug’s strengths, two leading payments fintechs, and our common rebranding under Payplug name. 

I’m looking forward to meeting again with operators’ teams at the show and welcoming over a hundred stakeholders of the industry at our Networking Party on the 17th of November, people interested in joining us for this event shall not hesitate to reach out of course. 

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Post category : Regulation

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