18 minute read
Payments
from SBC Leaders Issue 17
by SBC Global
NUVEI: ALLEVIATING PAYMENT PAIN POINTS FOR THE US IGAMING MARKET
NEIL ERLICK, CHIEF CORPORATE DEVELOPMENT OFFICER, speaks to SBC Leaders about his experiences within iGaming, the Mazooma acquisition and how Nuvei is ‘removing the middleman’ for its partners
BY ERIN GALLAGHER
SBC: First of all, can you tell us about your experience within the iGaming industry - how did you first become involved in this space?
NE: I actually got my start in the space 21 years ago. As a young kid, hearing about a dot.com company in the sports & entertainment industries is really what piqued my interest. This was really when the online gaming market was just in its infancy stage.
I worked at Paysafe for just over 19 years where I ran their online gaming business, which going back to 2000, was something which was obviously quite innovative as online gaming was brand new. You could say that I’ve been involved in the industry pretty much since day one!
As the North American market gained momentum, I knew there would be some complexities that we would need to navigate through from a payments perspective, so I wanted to stay close to the operators and build relationships directly with the key stakeholders in the industry. Building these relationships is something I’m really very proud about. Back in 2015, I think I was the first payment professional to be voted on to the board of directors for the Fantasy Sports Trade Association and then in 2017, I was named among the Global Gaming Business 40 under 40.
I currently sit on the board of the American Gaming Association. I’ve had the chance to use my expertise and look at the industry from a different lens, not from an operator perspective, but from the payments perspective.
That then brings us up to now, where I fell in love with the story that is Nuvei. The growth, the strategy and the vision of the company is incredible. I’m running the corporate development side of things for Nuvei, but obviously lending my expertise in iGaming as we continue to expand our presence in North America.
SBC: On a general level, what would you say are the biggest challenges for operators when it comes to payments?
NE: The first challenge is that gaming has always been viewed as a high-risk industry. We definitely have a different approach; we look at gaming as a highly regulated industry.
So when you combine a highly regulated industry like gaming with a highly regulated industry like payments, we actually look at it a little bit differently in that we wouldn’t really see it as a high risk business anymore.
But certainly over the years, the biggest issues were: how does the regulation change from country to country? And what does that mean for the operators? What do they need to do? What do we need to do to provide our services across the many countries around the world?
Today, Nuvei operates in more than 200 countries across the world. You have to consider that every country either has different deposit types or different rules on regulations to be able to provide your service. You can then imagine the amount of compliance and complexities that go along with that. That’s certainly one issue.
The second issue, which has been ongoing for years, is the acceptance rates for the operators. How do they have the highest approvals for their customers who are wanting to come to their website and deposit? The challenge for us then lies in making sure that we can give them that ability.
From an acceptance standpoint, these operators are spending millions of dollars in marketing and attracting
new customers. We want to make sure that when a customer does come to their website, we can provide them with a way that that customer can pay and also get paid in a very timely fashion and in a very safe and secure environment.
SBC: Now there seems to be a lot of buzz around Nuvei in the US iGaming space. What would you say have been the key drivers of success for you in this market?
NE: Nuvei itself has been in the space for almost 17 years. We have tons of experience in processing payments for regulated gaming companies across the world. As one of the larger payment companies in the gaming industry, what we wanted to do is take
I'VE HAD THE CHANCE TO USE MY EXPERTISE AND LOOK AT THE INDUSTRY FROM A DIFFERENT LENS YOU COULD SAY THAT I’VE BEEN INVOLVED IN THE INDUSTRY PRETTY MUCH SINCE DAY ONE
a very slow and calculated approach in the US.
We spent a year and a half providing connectivity to every single relevant deposit method in the US; keep in mind, that’s all through our proprietary technology. That’s a single integration, single back office, single source of reconciliation.
Nuvei has multiple bank sponsors where we can provide the acquiring ourselves, so that operators are coming direct to the source. We cut out the middleman in a lot of ways when it comes to credit card processing, which not only improves performance for the operators, but also saves them money since they are not paying additional gateway fees.
SBC: From your experience, what have been the key differences between the US and Europe when it comes to regulation?
NE: I think the key difference in Europe is that regulated gaming has been around for decades. But the US is really still very new. It’s only in the last few years that there has been an uptick in gaming activity.
In Europe, every country has its own set of regulations, but sometimes a licence in one country can be
passported to others. But for the US, it’s really a state-by-state approach. If you want to operate in any of the states that have introduced a regulatory framework, you have to apply for a licence with the individual legislature.
Each state may then have different rules and regulations for their customers, especially when it comes to deposit types. Some states will allow you to use a credit card, other states will not. What we’ve done is taken our experience of working in regulated markets and brought that to the largest operators in the world who are now choosing Nuvei as their payments partner for the US.
We always go back to being low risk, but it is also super complex. You can’t just wake up one day and say you want to process payments for the gaming industry. There’s regulations, there’s vendor registrations understanding the nuances, and understanding the issue with credit card declines.
The issuing banks in the US still have about a 40% decline rate for credit cards. Debit cards, meanwhile, have a higher acceptance rate. We’re certainly trending in the right direction, and I do believe that this will only get better.
But to speed things up, we have tools built into our platform where we are able to ensure the highest level of acceptance rate. If we know that you’re going to a website, and we know that you’re using a Bank of America credit card, we’re not going to encourage the customer to keep trying that credit card which we know is going to fail.
We therefore give the operators the tools to say “hey, if that’s going to fail, why don’t you try using your bank account, something like Mazooma, where we know you’re going to get approved?”
It’s also not just the money in but it’s the money out. We’re making sure that we can get the customers their money very quickly by partnering with Visa for things like OCTs. We were also the first group to launch Real Time Payments (RTP) in the US so now we’re able to send money directly back to your bank account instantly.
When you think about that, giving the consumer the ability to fund their account and then getting paid back in that same fashion instantly is game changing. We certainly like where we are positioned and we certainly believe that the experience that we’ve had is what’s going to help us be successful in the US.
SBC: Now you mentioned that Nuvei recently acquired Mazooma - can you tell us a little bit more about that? What was the thought process behind this acquisition? What will this acquisition mean for both operators and players?
NE: There’s a number of factors from Mazooma that we liked. The first is we’re big believers in the product. What they have is the leading account to account payment product in the US market today, with an exclusive relationship with Plaid, which has connectivity to over 11,000 banks today. With one in four Americans who are used to using the Plaid Interface, because they do it in a number of different applications, they’re very familiar with the product.
How the product works is that you actually log in with your username and password from your bank account. So traditionally, from an ACH perspective, you have to find your routing number and your checking number.
I personally couldn’t tell you what my routing number and checking number are, but I can certainly tell you how I log into my bank account, right? And so that’s as easy as it would be to enter your credit card number. You enter in your username and password for your bank, you see the bank logo in which you work with, you click on it, and the funds are then sent instantly to the merchant. So we love the actual functionality of the product.
The second thing is that Mazooma has relationships with all of the largest operators already in the US. So instantly, we have access to all the largest clients. They also have money transmitting licenses across the US. If you were to try to get these licenses on your own, that takes years. They are also the first provider in US iGaming to provide RTP, which is real time payments, we absolutely love the potential of the product.
SBC: Player experience is very important to operators, but also for players when considering which operator to bet with. What does Nuvei provide to make payments frictionless and fast?
NE: I go back to that single integration. Everything that we have is available à la carte, and customisable. So while we can use our experience to help guide the operators in what we think works, we also don’t want to dictate to them.
So from customisation, flexibility and our experience in ensuring the highest possible approval rates, and then being able to transfer money in and money out through that same platform, we believe this is helping make payments frictionless and fast.
SBC: What’s Nuvei’s vision when it comes to crypto adoption in the iGaming space?
We believe in the crypto space, and what we’re trying to do is two things. It always comes down to the regulatory aspects from a crypto perspective. We believe we’re a very innovative company so we always want to make sure that Nuvei is ready to support all of our clients globally, if and when they are ready to accept cryptocurrencies.
The ability for our merchants to accept payments in 40 different cryptocurrencies exists today. We also recently bought another business called Simplex, which provides the on-ramp, off-ramp capability for different crypto companies and for people that want to pay, buy and sell crypto with their credit and debit cards. We actually go one step further as we use our proprietary AI powered risk engine to indemnify our partners from any chargebacks, making all transactions guaranteed. In fact, we see tremendous opportunity with these capabilities across other verticals
SBC: And finally, can you give us a sneak peak into your plans for G2E?
NE: We have a large booth this year, it’ll be the first time since closing the Mazooma acquisition where we can showcase the Mazooma product as part of the Nuvei family. I think it’s a great opportunity to network and to see our partners for the first time in a long time. We’re very excited to be there! •
LEVELLING THE PLAYING FIELD - AFFORDABILITY CHECKS IN THE POST-LOCKDOWN ERA
THE PROSPECT OF ENHANCED affordability checks has become a key talking point in the UK government’s review of the 2005 Gambling Act, with some advocates of reform citing a perceived upsurge in betting activity during the pandemic
BY TED ORME-CLAYE
The implementation of stringent affordability checks has subsequently become a key point of debate in the gambling industry itself, with some criticising the measures for infringing on customer privacy, whilst there is also a view that the need for the continuation of this policy will decrease with the large-scale reopening of retail venues after COVID-19 lockdowns.
Speaking to SBC Leaders, four industry leading experts shared their views on the future of affordability checks, changing consumer behaviour during the pandemic and the importance of effectively leveraging technology.
Observing that ‘gambling behaviour has changed throughout the pandemic’, with regards to both players and operators, Dan Spencer, Head of Safer Gambling at EPIC Risk Management, argued that the former are increasing their stakes and moving towards ‘volatile methods such as online slot machines and instant win games’.
Meanwhile, he added that operators have experienced ‘extremely high turnover’ throughout national lockdowns and so may be staffed by employees “who are yet to build up a working relationship with regular customers and it won’t be so easy to spot behaviour which is abnormal for these customers”.
For Dan Trolaro, EPIC’s Vice President of Prevention US, the best way to address any post-COVID difficulties will be to maintain beneficial relationships between operators and their customers, whilst keeping the perspective that gambling is a “form of entertainment that can be enjoyed without harms for over 90% of the population in general”.
He remarked: “Operators want ‘sticky’ customer relationships… ones where the customer returns and refers so nobody wins when the view is short sighted and transactional in nature. Long-term, healthy and safe relationships help to reduce (not eliminate) gambling related harms.”
Sharing his own opinions on the maintenance of strict affordability measures post-lockdowns, Sonny Cott, Operations Manager at beBettor, outlined his belief that a ‘layered approach’ to affordability is needed, with strict affordability measures less important than some may believe.
Noting that it is ‘difficult to predict’ customer behaviour patterns as bettors return to retail venues and acknowledging that the COVID-19 pandemic ‘may have been a catalyst’ in accelerating the ‘digital shift’, Cott concluded that as lockdowns ease ‘there will be a rebalancing of where customers choose to gamble’.
“As a result, affordability frameworks for remote operators will continue to be very important,” he explained. “In order to achieve a fit for purpose affordability framework that accommodates a diverse customer base, it is important for operators to build automated frameworks.”
Regarding his support for a ‘layered approach’ to affordability, he remarked: “Those operators who adopt a layered approach to affordability, e.g. a frictionless check that requires no sensitive financial information from the customer early in the journey should ensure suitable protections are in place for the vast majority of customers.
“Operators can then conduct more invasive checks for the small percentage of customers that require them, later in the customer journey.”
Spencer also maintained that ‘a rise in online gambling was inevitable’ during the pandemic due to the lack of availability of retail venues, with EPIC having experienced a 5% increase in both slot play and esports betting, whilst sports wagering declined by 11%.
“We need to be mindful that we continue on the journey to improve safer gambling practices so that the player base is protected and this sort of increased risk does not continue to rise now that we transition out of pandemic restrictions,” he asserted.
Agreeing with his colleague, Trolaro commented: “Betting companies need to work together and with industry stakeholders to take data and metrics from the past 15 months to study and analyse player behaviour, compare to pre-Covid, and work toward developing tools that are more predictive in nature.
“Whether through speed and velocity of play, cancelled withdrawals, failed deposits, or number of cards on file to name a handful, the operator has the data, now they need to use it for the betterment and in furtherance of player protection and to reduce gambling related harms.”
Technological solutions, it has been argued, could present an opportunity for operators to better safeguard their customers, in addition to enhanced customer feedback.
An example of this could be Entain’s ARC system, developed in cooperation with EPIC Risk Management and academics, with the aim of establishing the ‘right behavioural markers’ to identify customers at risk of harm.
People gamble for many reasons and people develop a gambling problem for the same many reasons,” Trolaro remarked. “A person can start out socially and over time, what initiated the gambling may not be what maintains the gambling so a combination of technology, customer feedback, research, and player behaviour should help to shape a safer, more affordable experience.”
Mark Potter, EPIC’s Head of Delivery
US, placed a heavy emphasis on the role technology can play in an operator’s safer gambling arsenal, particularly with regards to riggers, algorithms and ‘fit for purpose responsible gambling tools’ to enable customers to better protect themselves.
“If they are educated and made aware of potential harms, then interacted with at regular intervals across a customer journey, then the chances of a customer suffering from gambling harm is greatly reduced,” he explained.
“Understanding what the customer
Dan Spencer, Head of Safer Gambling at EPIC Risk Management
Dan Trolaro, EPIC’s Vice President of Prevention US
Sonny Cott, Operations Manager at beBettor
wants, needs or requires as an individual would always help inform operators as to how best to protect. Interactions with customers must be effective however and not a tick box exercise.”
Sharing similar views to EPIC, Cott further emphasised the importance of successful technological leveraging by operators to ensure robust protection for their customers as the betting industry eases into post-lockdown operations.
“Leaning into technology has enormous benefits for creating a great customer experience, ensuring protected play and streamlining compliance processes.”
“In the case of affordability, beBettor checks are conducted at less than 0.5 seconds, meaning operators can check thousands of customers per day and tailor customer interactions to the individual. Automating these checks saves operators huge amounts of time and money compared to conducting these manually.”
In addition to technology, Cott highlighted the virtues of customer engagement, which he argued ‘should always be a priority’, with effective operator-user communication leading to ‘continued improvement’ with regards to affordability and responsibility.
He added: “However I do not feel it should be one or the other, affordability is, for many operators already, a large part of their safer gambling frameworks and core business.
“Many operators are already proving that they are able to create a strong business whilst complying with evolving regulatory requirements and we at beBettor aim to continue to enable our operator clients to achieve this.”
A concern that has been repeatedly raised by betting industry incumbents regarding the continuation and enhancement of affordability checks in the aftermath of COVID-19 lockdowns, however, is that these measures could actually negatively impact the operator-customer relationship.
Fears have been expressed that customers who do not struggle with problem gambling or gambling related harm could be subject to affordability checks, with trade associations such as the Betting and Gaming Council (BGC) claiming that this could drive customers towards illicit, regulated operators that do not employ any affordability checks.
“I believe that customising limits and affordability based on several factors helps to best individualise and tailor the experience,” said Trolaro. “It should be noted that gambling, for some, can be progressive in nature, so what is affordable and manageable is a moving and sliding scale over the lifecycle of the gambler.
“Based on a series of checks and data points, limit setting and availability should be a moving scale, both up and down. Similar to how creditworthiness is determined, several factors should be in play and periodic review checks should be done in an attempt to minimise the potential for harm.”
Spencer, meanwhile, maintained that affordability checks ‘level the playing field,’ adding that bettors who do not face gambling related harm are still at risk, meaning operators must have a strong understanding of their customer base.
“Many operators are ahead of the game with thresholds in place and conducting checks on new customers as a matter of course. The key to success here is in the education of players, if they understand why we have to do these checks and how to go about it then they are more willing to cooperate, but this must happen across the entire industry, not just the big names.”
Cott too agreed that operators must know their customer base and its needs in order to effectively conduct affordability checks without marginalising ‘the vast majority of bettors’ who gamble within their means, with the scope of a check ‘determined upon the level of friction experienced by the customer’.
“For the small percentage that may be seen to be vulnerable to experiencing gambling related harm, operators can then tailor customer interactions to only those that require them.
“If operators were to use invasive checks that require sensitive financial information early on in the customer journey, it could be seen as an invasion of privacy for the majority of bettors who are not faced with issues with financial management.” •
