How do online prediction service providers and gaming platforms gain access to the financial ecosystem and a secure payment gateway?
There is a significant rise in the prediction markets from the past few years. Online prediction markets including casinos, sports betting, lotteries, and betting on elections or financial instruments are increasing every day. The economic and financial sectors also hold an increased interest in the online prediction markets.
During the forecast period 2021-2026, the online prediction market is expected to register a CAGR (Compound Annual Growth Rate) of 11.94%. The recent COVID-19 pandemic has also impacted the market positively. More people turned towards online platforms to bridge their financial and social crises during the lockdown. According to research conducted by Lund University, Sweden, restrictions in sports events during the lockdown have led to an increased interest in online gambling or prediction markets.
According to Gambling Global Market Report 2021, Asia Pacific is the largest global gambling market, accounting to 38% of the market. The prediction market industry needs to adapt to constantly changing regulations as well as need to keep up with the evolution of mobile and online services. There is a significant growth in the online prediction markets in terms of having faster online payment transactions, on-click features, and built-in biometrics, etc. However, the online prediction market industry has been facing challenges to get direct access to traditional banking institutions to enable efficient online payment systems.
Challenges faced by the online prediction markets
The issues and challenges faced by online prediction service providers include:
1) The need for speed
If the online prediction market website or mobile application has a complicated sign-up process and online payment system, the users are likely to abandon the platform. Online prediction websites need to have a fast and easy payment system to deposit and withdraw funds. In order to retain customers, online payment systems have to provide a seamless experience. Depending on the traditional banking system for transactions with slow processing is good ideas in this fast digital world.
2) Lack of access to traditional banking institutions
Banking institutions are wary of gaming and gambling platforms. They do not provide efficient and effective services to online gaming websites. This further results into a lack of a proper financial infrastructure for online prediction service providers. Moreover, online gaming platforms also face difficulty in registering for a bank account for their company.
With the increase in online businesses, cybercrime reports are also increasing. The lack of access to reputable service providers is one of the main reasons for the increase in cyber attacks. Account creation and processing payments are the vulnerable parts of online businesses like prediction markets. A highly efficient service provider needs to monitor the important steps such as:
Sign up monitoring
Withdrawal and deposit of funds
Actual games and tables monitoring
Anti-Money Laundering regulators (AML)
Online payment systems need proper regulation and compliance. In Asia, 32% of the countries have legalized online gambling. But there are many grey areas, and some regulations are not as strictly enforced. So in as many as 80% Asian countries, people still gamble online regardless of regulations.
Regulatory requirements has always posed a difficulty for businesses in this industry. Merchants struggle to keep up with the ever-changing rules, but many countries know that this industry brings revenue to the country. Singapore for one, has announced to establish a new gambling regulator to oversee the entire landscape in the country.
The dispute of transactions by customers will lead to a chargeback. Reasons for chargebacks include non-receipt of services, fraud, or dissatisfaction. It is difficult for online prediction markets to recognize whether a chargeback request is genuine or fraud. When a customer disputes a transaction and gets away with it, there are chances that the same customer is likely to do it again within 90 days.
The more chargebacks an online prediction market has to pay, the bigger will be the impact on its reputation. By taking the help of a reliable payment processing partner, online prediction markets can reduce the rate of chargebacks. However, every online merchant needs to be prepared for the possibility of customer chargebacks even when the purchases were legal.
6) High Risk
Online prediction websites are considered to have a high risk due to various reasons like age restrictions, diverse global laws, chargebacks, money laundering and fraud, high-volume turnover, etc. An efficient payment processing provider will help online merchants to reduce the risk.
It is crucial to choose an efficient payment gateway provider who is impartial and offers a consistent service to all types of online merchants, including those in the online gambling industry. A reliable payment processing partner will help in reducing the risks involved in online businesses by using the latest data protection technology and fraud prevention mechanisms.
XanPay: Get Access To Financial Ecosystem With Ease
XanPay provides effective payment processing for online businesses like the sports betting business, online casino, and gambling websites in the prediction market industry in Asia. It has the technology and tools to make sure the customers have hassle-free, quick transactions. Being an experienced payment service provider, XanPay follows the best practices for security and reduces the risk of fraud and cyber-attacks.
Online prediction businesses can integrate the XanPay payment gateway easily to start accepting payments from their users with no chargeback liability. By integrating with their API, your business can get paid in more ways via users' local payment methods. Furthermore, they boast a fast KYC lead time that approves merchant account within 5 days. This is 52% shorter than the time taken by traditional banks or large payment providers like Stripe or PayPal.
The online prediction market is one of the fastest-growing online industries and is expected to increase during the forecast period 2021-2026. Local payment solutions are alternative payment methods that widely adopted across many regions. Developing Asian countries such as Malaysia, Indonesia and India gain 70~80% more market share in 2020.