Digital channels are increasingly being adopted in the gaming industry. Juniper Research estimates that online gambling will draw over USD 1 trillion in revenues by 2021, while gaming using emerging technologies such as virtual reality is expected to rise by over 800 percent in the same time frame. As gaming continues to expand and explore digital channels, new ways to pay will continue to emerge to cater to this market and facilitate a more seamless customer experience.
A new era of payments has emerged in gaming. For gamers, this new era heralds unparalleled freedom and flexibility to pay in the manner most convenient and relevant to them. While for operators, huge opportunities for differentiation and competitive edge will present themselves to those who can adapt to the change of pace. “Implementing a seamless payment offering that integrates elements of both traditional and digital methods will not only offer a heightened experience, but ultimately increase customer loyalty”, said Neil Erlick, Executive Vice-President of Business Development at Paysafe Group.
“Customers prefer to use cash because it is easier to control. Most players arrive at casino floors with a pre-established budget in their pocket, however, we have to ask the question: cash is still a way to increase player loyalty?”, said Rudi Borgato, Sales Manager for Latin America of Crane Payment Innovations (CPI), during a debate at SAGSE 2019 in Buenos Aires.
The executive explained that operators continue to prefer cash because it guarantees cash flow, does not require special technology to process it and is easy to reconcile. In addition, he said that debit and credit cards have a payment processing charge, while cash does not.
However, Borgato proposed different scenarios that are leading to rethinking payment operations in casino floors: “The problem is that players seek convenience when they want to buy a service at the same time they are playing. That is why each slot machine must allow to acquire those services on the same screen and with the payment method that the client requires. This would increase consumer satisfaction.”
As was explained by the Sales Manager, another inconvenience that current players are having is that they are looking for personalized experiences and to have less waiting time at the cash-box to buy chips because the game tables do not accept TITO or electronic ways of payment.
“It is necessary that each game table has new payment mechanisms to allow greater speed in bets. For gaming, cash will remain the leader in payment method, however, we will have to start advancing in other means of payment,” concluded Borgato.
Cashless?
Traditional cash, coins and notes, continue to have a clear place in the gaming industry. They’re quick, private, and easily authenticated in the majority of cases. These benefits combined mean cash is still a relevant and convenient way to pay in gaming, but this doesn’t necessarily pose an obstacle to the rise of new forms of digital cash in the industry.
“Indeed, our research shows that rather than cash and digital competing with each other, the sweet spot is often how cash is merging with digital formats. This is demonstrated by the rise of alternative payment methods, including voucher based systems and digital wallets which are convenient, enable instant transfers to gamers’ accounts and access to a much larger consumer base,” said Erlick.
However, these new payment solutions are not without their challenges. The gaming sector is highly regulated which means that the introduction and integration of these payment methods can be a fairly lengthy process, especially as regulations vary significantly across geographical borders. So, while cashless, or new forms of digital cash, may be on the rise in the gaming industry, there is still work to be done before it can be consider that this growth is sustainable.
Regulation and consumer adoption obscures the timeline on the evolution of a cashless society, but it is certain that going cashless will become more prevalent over time, which is evident in the gaming industry’s digital transformation to date, explained the executive. Consider the industry’s evolution over the last eighty years, particularly in gaming hotspots like Las Vegas, in which gambling was traditionally the undisputed focal point of casinos.
“Today, gambling forms just one pillar of the entire casino experience, alongside entertainment, cuisine, sightseeing and social appeals. The entire gaming experience has completely transformed over time, and will continue to change in the future. The way people pay is just one element of gaming and we can expect to see both alternative payments and cash evolve in the years to come alongside the wider consumer experience,” added Erlick.
Digital wallets
Consumer spend via digital wallets across Europe and North America will increase by 40% this year to nearly $790 billion, according to a new study from Juniper Research. The largest growth in 2019 would come from instore payments, with mobile contactless payments more than doubling across these regions.
The study “Digital Wallets: Service Provider Analysis, Market Opportunities & Forecasts 2019-2024”, found that while eRetail spend through wallets would remain the largest contributor to consumer spend, continued migration from cash would see a surge in wallet use at Points of Sale (POS). The document explained that this was particularly the case amongst younger demographics and in the US, where a third of iPhones are now used for contactless payments.
The report highlighted the importance of digital wallet providers establishing partnerships with leading banks to maximise reach amongst consumers. Juniper Research’s analysis found that Apple far outstripped its rivals; achieving the largest addressable share of banking consumers in 7 of the 10 national markets assessed.
In the online space, the study found that wallets, including Apple Pay, Amazon Pay and Visa Checkout, had also significantly expanded their availability at merchant sites, although all lagged well behind PayPal in this regard.
Meanwhile, social payments through wallets will grow strongly both this year and beyond; a trend expected to be accelerated in the middle of 2020 by the emergence of Facebook’s Calibra wallet and its attendant Libra cryptocurrency.
However, the study was less optimistic about prospects for Wearable-Pay wallets; arguing that their limited addressable bases and functional constraints meant they would struggle against converged wallets – providing an extensive portfolio of online and offline payment offerings.
Juniper Research Analyst, Nick Maynard, said: “Wearable-Pay solutions are still completely dependent on the smartphone and are ultimately limited to a single use case. They are thus likely to remain, at best, a niche offering.”
Also, Juniper Research has shown that revenue from payment platforms that enables merchants to process payments will grow from USD 106 billion in 2019 to 158 billion by 2024. The study forecasts over half of global revenue will be generated in China by 2024; primarily owing to its increasing affluence and vast usage of social payments such as WeChat Pay.
