Category: PAYMENT PROCESSING

Improving Your Odds – Sports Betting Payment Processing For Winners

Is your sports betting payment processing working to grow your business? It might be time to re-evaluate the play to improve your odds of success! Sports betting was made legal at the federal level in the USA just over a year ago. We’re sure you were one of the companies that enjoyed hearing that the SCOTUS declared the Professional and Amateur Sports Protection Act (PASPA) unconstitutional on May 14, 2018. Since then, at least eight states have passed full-scale legalized betting. Seven states have recently passed bills, and at least 28 states have introduced bills to legalize this billion-dollar industry. Therefore, your sports betting business should be positioned to start earning even more revenue by now. If you aren’t, it’s time to look at how payment processing could help.

Winning at the games – positioning yourself to be a contender

Not surprisingly, fantasy sports kingpins DraftKings and FanDuel currently have a majority share of the sports betting market, albeit mostly in New Jersey. But, there are still opportunities for other companies to lead this industry in different states. What you need to help position your company as a market leader are a few things. This includes an improved checkout process, industry and web compliance, and multiple payment methods.

There are players ready to seize what should be a very lucrative market. However, sports betting companies like yours must deal with the issues that come with being designated a high-risk merchant. You must navigate the tricky interstate gambling waters. You need to know how to meet various regulatory and compliance requirements in the US sports betting industry. Additionally, like other high-risk merchants, your sports betting company may be facing an uphill battle to acquire or maintain a quality merchant account.
So, what do you need to do to get a merchant account? What’s required to transition to a better sports betting payment-processing system that meets all your needs and improves your odds at increasing your player base?

Expanding the bet and getting more players involved

Growing your business means enhancing your knowledge. It means knowing how your players want to and do use your systems. It’s about assessing how you can improve your offerings and using your merchant account to expand your business bets.

Just off the bat, there are three ways to start improving your customer experience while enhancing your payment processing system.

1. Provide multiple payment channels

Your player-base will not be uniformed, so you need to meet them where they are. And this starts at providing them with their most comfortable options for making bets. So, a sports betting company with multiple payment options is already on its way to expanding how many bets will be placed. This can include a merchant account, ACH processing or crypto currencies such as Bitcoin, Litecoin or Ether.

2. Design mobile-friendly platforms

The number of smartphone users in the US in 2018 was estimated at 257.3 million (according to Statista.com) and is expected to grow to 277.8 million by 2021. That means you can’t afford not to target such a captive market. Mobile devices can and will make sports betting much more accessible. Therefore, it’s important that you provide your customer base with a mobile-friendly platform that’s engaging and easy to use. A mobile checkout is your obvious way to target users that put their money where their thumb is.

3. Simplify the checkout process

In keeping with a mobile platform is the need for a simplified checkout process. Nothing turns off a potential customer more than a difficult checkout process. That’s why services like Amazon are consistently working to improve their mobile checkout processes. You want a friction-free space to ensure your players place their bets. Consider tokenizing your customer data as it will allow for faster checkouts and make repeat orders smoother as well as ensure your data is protected. Your checkout should be secure, easy and smartphone-friendly. To learn more about how to ensure your mobile checkout doesn’t suck, click here.

Taking charge of the house – web and industry compliance

When high-risk merchant accounts are terminated, typically, it is because of uncontrolled fraud and chargebacks. Sports betting credit card fraud is a major concern. Friendly fraud in the betting and gaming industry is high, especially due to buyers’ remorse. These are the players who will chargeback legitimate bets, because they lost. When your chargebacks rates are averaging more than 1%, you know there will be hefty penalties to pay or simply account termination.

Finally, like other gambling divisions US sports betting is likely to become a highly regulated market. You must be aware of current and forthcoming industry regulatory and compliance requirements. However, sometimes compliance in the US can be a potential nightmare. There are the problems with underage gambling, gambling addiction, and the many pitfalls of interstate gambling or running afoul of the Federal Wire Act. For example, if a player is found to be placing bets for unidentified foreign parties you could be held responsible. This means you must always be on top of all these issues.

One way to cope is upgrading to more robust internet tools like shopping carts and/or CRMs. These platforms and software should offer flexible checkout processes and be PCI compliant. Additionally, using a tool like 3D-secure to authenticate your orders will significantly reduce incidents of chargeback fraud and add another layer of security to transactions.

Improving your odds – a sports betting payment processing solution

Sports betting payment processing is a lot more comprehensive than it appears. And if you want to seriously expand your business significantly beyond that $20,000-in-monthly-revenue mark, you’ll need to start doing things differently. That means putting a solid payment solution in place like the big guys do. Take charge of high chargeback rates. Reduce the incidents of fraudulent transactions and operating within the frameworks of each respective state law. Also, streamline your business to keep compliant with regulatory standards. You’re going to need software and systems to prevent underage gambling, fraud, and interstate betting. Therefore, improving your odds starts with the systems you have in place.

Are you irritated about losing revenue to fraud, high chargebacks, and breaking compliance rules? Well, work with a solutions-oriented partner who understands the high stakes of high-risk merchant accounts.

We know how important it is to find the right payment processor for your company. That’s why we work with our clients to determine which prospective providers would be the best for their business. Contact DirectPayNet and learn about how we can help you.

June 12, 2019
Brexit Shakes Up Payment Processing For High-Risk Merchants

As Brexit looms in the air, an increasing number of Europe-based companies are worried about the financial effects of the United Kingdom’s “divorce” from the European Union. As of now, the UK is due to leave the European Union (EU) on 31 October 2019. The EU is an economic and political partnership of 28 European countries. The UK has struggled to reach a withdrawal agreement by the deadline (29th March). Consequently, the EU offered an extension in the hopes of reaching a final agreement with the lawmakers within the next couple of months.

What does this impending separation mean for merchant acquiring in the region? Well, there is a lot of uncertainty about what policies and regulations will be established. And, this will undoubtedly have an impact on high-risk merchants. Particularly, those that rely on UK-based payment processing services to accept cross-border transactions in Europe.

EEA, Brexit and what this means for high-risk merchants

Until now, businesses registered in the European Economic Area (EEA) could procure the services of acquiring banks and other payment providers in the same region without hassle. This trade privilege included the UK. That will ultimately change, as the UK will automatically cease to be a part this region (unless they negotiate a separate agreement).

The EEA is an agreement between all EU Member States and three of the EFTA States (Norway, Liechtenstein, and Iceland) that essentially extends the EU single market to the three EFTA countries. Consequently, member states have tariff-free access to this single market. They also comply with the EU’s regulations on competition, intellectual property, state aid and public procurement. One big advantage of the EEA is that, under current EU rules, British banks and financial intuitions can operate with a domestic banking license.

How would a “divorce” from Europe affect online merchants, banking and payments?

Online merchants with businesses registered in the UK and EU are increasingly concerned about the effects of the impending “divorce” from Europe. The Brexit effect on the sterling, the currency fluctuations, and spending behaviors have all been cited as issues. Also, shipping, overseas returns, cross-border tax compliance and more are of concern to sellers.

Following the Brexit referendum, the British pound witnessed a staggering drop. Currently, it’s one of the worst performing currencies in the world,. It plunged to a 31-year low against the US dollar in October last year. What this means for online sellers is that British goods are now cheaper for European shoppers. This has led to a change in spending habits, and experts suggest that for some EU-based businesses this could actually produce an increase in e-commerce sales.

Brexit may be insignificant to EU-based retailers that don’t export or import goods from the UK. One exception could be a projected increase in customers that could avoid shopping at UK stores online. The absence of British competitor brands could potentially also lead to an indirect uptick in sales even for merchants who don’t have direct relations with the UK. It can have the reverse effect on British merchants by shrinking their market if tariffs and increased processing fees are incurred for sales to EU customers.

Does your payment provider have a license?

British financial institutions have begun reviewing their solutions across payment processing, cash management services (particularly virtual accounts), liquidity and Euro-denominated products. Until recently, British banks could operate throughout the EEA area with a domestic banking licence. Now they may require separate licenses in EU countries to maintain their operation post Brexit. Some financial institutions – like the London-based TransferWise – have already applied for a money transfer license in Brussels, citing Brexit as the primary reason. Prominent names and pillars of the British financial system, like RBS and Lloyd’s have already obtained their licenses in a number of EU countries.

Banks that once accepted high-risk business models (like forex, cryptocurrency exchanges, nutraceutical and business opportunities) may alter their policies and refuse to honour merchant agreements. Merchant account approvals from acquiring banks could also be delayed.

The additional licenses are likely to incur more charges on financial institutions. Following Brexit, payment providers in the UK may present their clients with new agreements. Banks in the EU may make it mandatory for merchants to sign new contracts and abide by new rules. Changes will likely not happen overnight but as the UK exits the EU – and EEA by extension – they are inevitable.

Merchants and digital payments may also fall victims to extra charges. Up until now, payments with debit or credit card within the EU did not incur an extra fee or surcharge. This applies only to card payments made in one’s home country or another EU country. The impact on consumer behaviour cannot be predicted. However, some EU-merchants may actually enjoy a surge of customers, unwilling to purchase from online UK stores.

What to do in the wake of Brexit?

If you are a high-risk merchant at the mercy of Brexit, it is impossible to correctly predict the exact effects the decision may have on your business. Operating an online store and selling in the EU could require applying for both merchant and bank accounts in the region well ahead of the deadline (end of October with the EU’s extension). Opening accounts in both the UK and Europe with a provider that supports multi-currency trading is an inconvenience. As the UK leaves the EEA, issues such as tariffs on trade will also occur. Therefore, it’s wise to prepare for a hit in sales and change your product pricing accordingly.

Planning is of the essence and risk analysis can be key for the survival of your business in the aftermath of Brexit. Naturally, planning for uncertainty is easier said than done. Brexit’s affect on banking (in addition to the UK being nowhere near closing an agreement with the EU) makes it difficult to fathom how the divorce will influence consumer behaviour and trade in general.

Brexit is around the corner: what are the next steps?

As you can see a lot of potential changes lie ahead for high-risk merchants when the UK leaves the EU. The extent and how they change will depend mostly on the form of departure. DirectPayNet always stays abreast of these changes. No one can predict the aftermath of Brexit, but we can help you be ready to navigate the upcoming changes. What are your payment processing concerns surrounding Brexit?

Our team provides support to high-risk merchants, particularly when it comes to regulatory changes and policies.

If you want an informed advocate to help alleviate your payment processing challenges, contact us today.

May 23, 2019
Fantasy Sports Merchant Accounts – How Diversified Is Your Payment Processing?
Fantasy sports have come a long way from office betting pools. Now, it’s a US $7 billion industry with a huge fanbase. It has consistently expanded its offerings catering to fans in football, basketball, soccer, golf, and other sports like MMA and NASCAR.

But, as a billion-dollar industry, is it now too saturated? And what do the various legislations mean for your business? Plus, as a high-risk business unlike others, what concerns should you have for payment processing?

These are a few of the issues we’ll be looking at in the business of fantasy sports and the impact of online sports betting.

Fantasy Sports – the billion-dollar industry

According to the Fantasy Sports & Gaming Association (FSGA), there are close to “60 million fantasy sports players” in the USA and Canada. (The FSGA was formerly the Fantasy Sports Trade Association (FSTA)). This growth in players has undoubtedly helped to increase the revenues of fantasy sports companies. But it has also fuelled the rise in fantasy sports companies to the point of saturation. Now, there are also the opportunities for pairing online gambling with fantasy sports locally in the US where before it was relegated to offshore sites.

Are online sports betting legal?

The legitimization of sports betting has certainly helped to spur the growth of online betting and even fantasy sports sites. In May 2018, the US Supreme Court overturned a 25-year old federal law (Professional and Amateur Sports Protection Act). The Supreme Court Ruling basically allow all states to authorize sports betting as they see fit. With this ruling, American betting companies are now able to compete legally in various types of sports betting.

Fantasy sports sites are also poised to take advantage of this newly legal online gambling market. They have either indicated interest or have started offering online betting as part of their service to users. However, while fantasy sports may be legal in other international jurisdictions, online betting is either illegal or heavily regulated.

How global is the fantasy sports market?

Outside of the USA and Europe, India has a large market for online fantasy sports – in cricket. Not a sport familiar to most Americans, but it does well in that part of the Asian continent. And like America, the fantasy sports industry gained legitimization from a local court ruling. In India, it was ruled that playing fantasy games online was not betting, and therefore not subject to gambling regulations.

Similar to India, there are many more markets internationally for fantasy sports to tap. And this means learning the intricacies of the sports that do well in those markets – like cricket in India. The larger players in the American market are aware of this and are looking to or have already expanded internationally.

In Japan, baseball and basketball are the big draws for fantasy sports with American football and hockey coming in close behind. In Europe it’s soccer or better known as football locally. Plus, there are also large fantasy sports markets in Central and South America, China, and Southeast Asia.

Expanding to new markets mean understanding them and getting the correct licensing in order to be able to compete in them legally. So, in addition to the types of sports that do well, you also have to look at the payment options preferred by your users and market.

How diversified are your payment platforms?

The more established fantasy sports companies offer a variety of payment methods for their users from credit cards to ACH, PayPal transfers, etc. The variety of payment options increases confidence in consumers and thereby market share.

As a smaller or start-up fantasy sports company, it’s important to show your customers that you’re a safe bet for their funds too. However, given the financial and reputational risks associated with this industry from payment providers, it can be difficult not just to get a merchant account, but also to diversify payment processes. But, diversification is necessary to capture the ever-increasing – and strongly competitive – market in which your business is operating.

Now, there is also the added requirement for mobile processing. With high internet access via mobile devices, it’s a no-brainer to accommodate your mobile users with a friendly checkout process made for smaller screens. This attracts and engages more clients, and expands your market.

Where do Bitcoin and other cryptocurrencies fit in?

Cryptocurrencies seem like a natural fit to fantasy sports and online sports betting. The ability to access and transfer money around the globe via blockchain technology has increased the use of this method of payment. This has fuelled the rise in combining blockchain technology and fantasy sports leagues.

So, in addition to options to pay using Bitcoin and other cryptocurrencies, crypto buffs are also launching digital fantasy games linked to various cryptocurrencies.
With cryptocurrencies, players have the option of a liquid form of tender. They also offer faster withdrawals to their wallets and processing that can take place quickly. So, your traditional payment methods have to complement this area.

An industry unlike any other

Like sports betting and gaming merchant accounts, processing for fantasy sports are considered high-risk. That’s because the nature of the fantasy sports industry ensures it’s always placed in the high-risk category no matter the payment processor.

As such, it can be difficult to get approved for a merchant account for a high-risk business. Now while you can get by with a service like PayPal in the early stages, as you grow and start doing more business, you need a more robust solution that will allow your business to scale.

With the increasing use of mobile devices, you also need to simplify your checkout process to allow for faster checkouts. This is in addition to having highly secure onboarding processes as well as follow Know-Your-Client (KYC) rules that will protect your customers and your business. It’s about balancing security with a seamless onboarding process. You need one that is highly secure and limits fraud while not turning away potential customers.

Therefore, compliance and risk management are crucial aspects of managing your online fantasy sports site. The risk of chargebacks is high in the industry. So too is fraud. Because of the high-risk nature of fantasy sports and online betting, and the difficulty in securing merchant accounts, some companies specialize in merchant accounts for high-risk businesses. Unfortunately, too many of them are out to gouge businesses with high fees and untenable contract terms.

Reducing global payment friction to increase revenues

The aim of the fantasy sports business is to make it easy for players to pay and get paid quickly. As companies expand into global markets, the method of payment becomes an issue. Like players, you’ll have to determine which payment method would work best in the markets you want to enter. This is truly a situation where one size cannot fit all.

When you can offer the preferred payment method of the local fans, then that increases your legitimacy and consumer base. Your business must know how and when to provide alternative payment options and localized payment tools. As such, a payment solutions provider can help you to:
- Diversify your customers’ payment channels; and
- Identify suitable payment options based on market
For example, DirectPayNet helps fantasy sports and online betting companies identify the right payment options per market and assist with acquiring merchant accounts and /or ACH solutions in these markets.

What are you doing to diversify your market and payment options?

The fantasy sports markets continue to expand, and online sports betting is becoming more mainstream. Earning potential is increasing, but only for participants who are equipped to take advantage.

Compared to other high-risk merchant categories fantasy sports is a vastly different business model. So too is finding merchant accounts and/or ACH processing at attractive rates. The more ways that players can pay you, the more your business will grow in revenue. Plus, as a high-risk business, having multiple payment channels allow you to protect your cash flow and mitigate risk should one of your providers change the industries they support.

Contact DirectPayNet and to help diversify your payment channels (be it credit card or ACH processing), reduce fraud and get chargebacks under control.
May 16, 2019
Is Your CRM & Shopping Cart Limiting Your Payment Processing Options? Pt. 1
Are your CRM and online shopping cart compatible with your payment processor? Too often e-commerce business owners launch their online stores without checking their customer relationship management (CRM) and shopping cart capabilities. By the time merchants have integrated these on their website, they discover their setup isn’t the right fit for their payment processor. Alternatively, a seller may be in business for a while, but hasn’t upgraded to a system to help grow their company. Plus, the implications these solutions have for their merchant account remain unknown. So, have you been in business for over a year and work in a high-risk industry? If so, then continue reading this two-part blog to make sure you don’t compromise your business’ sales or merchant account.

Just how important are your CRM and online shopping cart?

They may be used interchangeably, but a CRM and a shopping cart are not the same. A CRM is typically used to manage your customer data, your affiliates and all your business interaction with your buyers. A shopping cart allows potential consumers to select items they want to purchase then takes them through the checkout process. You may find a single software that attempts to offer both solutions. But more often than not, you may have to find separate software to meet your CRM and shopping cart needs based on specific requirements for your business type.

Selecting the right solutions will allow you to grow without limiting payment processor partnerships or payment type options. At least 26% of US shoppers will abandon their orders, because the checkout process was too long or complicated. Plus, without a CRM in place, e-commerce businesses can fail to convert up to 79% of their leads given data isn’t tracked correctly? And there are so many other factors that can negatively affect your conversions when it comes to your order process and page.

A poor mobile experience will cost you valuable business. Customers are moving more toward mobile methods of payment. Not having a CRM and shopping cart combo that facilitates this type of shopping channel could cut into your potential sales.

The Baymard Institute reported that 34% of online buyers chose to cancel transactions because the site required that they create an account. Yes, we agree that it’s important to get buyers onto your email list so you can manage them through your CRM. But, forcing them through an additional step to make a purchase may ultimately affect you negatively in the long run. Your shopping cart should have a checkout page designed to increase conversions.

With so much potential for lost revenues through your CRM and shopping cart applications, it’s no wonder that both these solutions are critical elements of a successful e-commerce business.

What can a properly integrated CRM and online shopping cart do for your business?

A CRM aids in managing the customer relationship lifecycle from lead generation to sales and support. A good customer management system should ensure the following:
- Marketing: It allows the ability to run campaigns and generate leads through your database. Additionally, if you have affiliates, it should allow you to manage them efficiently and track their activity.
- Sales management:Well-designed CRMs and shopping carts help customers navigate your sales through your order page.
- Order management: If you have inventory, the CRM should be integrated for visibility of your products in mind.
- Responsive customer support: It will allow you to improve relations with your clients and include a rapid response rate.
Building out a CRM and shopping cart for your e-commerce business

When looking at CRMs and shopping cart software for your business, there are a few key questions you need to ask. This is in addition to the four general areas your CRM should address that we noted above.

You’ll want to look at some business-related questions that the design of your CRM should facilitate based on your business model.
- Which gateway/payment processor/payment options are important to you or may be at a later date?
- Do you need to manage affiliates?
- Can you calculate shipping rates and taxes automatically?
- Can it manage inventory stock, for physical items?
- How well can it handle sales reporting? And, does it offer the information you need to make critical business decisions?
- Can you maintain an effective customer database that can be segmented and targeted based on interests?
- Is your customer data in a secure environment that is PCI compliant.
- Does this company(s) have a history of data breaches?
Make your next move

As you can see, selecting and integrating a CRM and shopping cart is much more involved than it appears. The most successful merchants examine their options based on a number of factors and not simply a brand’s popularity. Tools like this should be examined for security and flexibility, especially for recurring billing models and alternatives to credit cards like ACH.

In part two of this blog we will highlight the essentials for a robust checkout process, PCI compliance and troubleshooting. In the meantime, contact DirectPayNet for advice on this subject, or if you have been processing for a while and need a new payment solution. Email our team today!
April 17, 2019
PayPal or Stripe have Suspended your Payment Processing? Switch to your own Merchant Account
A merchant account can help relaunch your online store when payment processing is unexpectedly suspended. A stoppage from PayPal or Stripe is detrimental to e-commerce businesses. As popular payment solutions, there’s an innate sense of trust built into alternative payment providers. However, the ease of setting up an account is often too good to be true.

Companies around the world with high-risk business models are facing difficulties in routine e-commerce activities. When it’s time to upgrade from PayPal, DirectPayNet can help you resolve payment-processing challenges by securing approval for a merchant account.

Why do PayPal and Stripe suspend accounts?

Did you read through your payment processor’s list of prohibited and restricted merchant categories when setting up your online store? If not, you’re not alone. A survey from Deloitte found that 91% of consumers agree to terms and conditions without reading them. Though it should go without saying, we need a reminder of the importance of reading through online contracts before clicking “I Agree.”

There are grave consequences when a payment provider discovers that your business model is on their prohibited or restricted list. Your provider can suspend your account at any time. This move makes your business incapable of accepting payments and can even freeze the funds in your account.

Business categories considered high risk

Stripe’s definition of a high-risk business is lengthy. Financial coaching, travel reservation services, bongs and other smoking accessories, health supplements, subscriptions and several more are taboo categories. PayPal’s list is comparable. Here are some prohibited and restricted categories.

Digital Products and Business Opportunities
- Intangible goods are more vulnerable to customer disputes than physical products thereby making ebooks, elearning, marketing service packages, and motivational speakers a high risk.
Forex
- The Forex market is often more volatile than other investments, because of high chargeback rates. Processors prefer to work with licensed providers and if your business is based out of Europe, all the better as it’s a friendlier market to forex trading.
Nutraceuticals
- Supplements, vitamins, and loose herbs are at high risk for legal action due to the lack of government health regulations. It’s a grey area where acquiring banks and other payment providers don’t want to get entangled.
Online Gaming
- Gambling, video games and fantasy sports fall under this category. PayPal is hesitant to work with these businesses due to US state regulations on gambling. Also, though not prohibited, merchants in this category still require pre-approval.
Travel
- Fulfillment of services like rentals, bookings and accommodations in this category are volatile. Not only are average ticket prices high, but also the possibility of a chargeback for a high amount is a worry for any payment processor.
Jewelry and Precious Metals (e.g., gold and silver)
- Due to the prices, sellers of high-ticket purchases like precious stones or metals require pre-approval. Payment processors don’t want to worry about the consumer requesting a chargeback and causing seller overdrafts
Though not a comprehensive list, you can see how processors are cautious when it comes to expensive items, regulated and non-regulated industries, and products that are open to disputes.

Why You Need a Merchant Account

If your e-commerce store offers any of the above unpopular products or services, you should consider a merchant account. Sales edging towards $25,000 a month or processing a high volume of transactions can capture negative attention from your payment provider. Don’t lose access to your money! If there is any confusion or review conducted on your PayPal or Stripe account, funds are typically frozen and can cripple your business.

The flexibility to accommodate recurring orders, high-ticket transactions and high volume is a significant benefit of a merchant account. If you haven’t done so already, download and save your monthly processing statements. You may lose access to this valuable tool that can help you obtain another payment solution if you get terminated. To get a merchant account approval, processing history may be required to show your business can generate revenue. Also, pay attention to your risk by ensuring refunds and chargebacks rates are low.

DirectPayNet has more than 10 years of experience resolving payment challenges for those in high-risk industries. We help companies grow their e-commerce stores thanks to our specialized expertise and knowledge.

Don’t spend another second worrying about how to process payments on your website! Get approved for your next merchant account today with DirectPayNet.
March 28, 2019