Open to change

Open Banking has long been touted as the avenue to unlocking a new level of seamless payment journey for gambling operators, but its full potential remains untapped, writes

JOE STREETER, Editor of Payment Expert.

This potential matters because, at a time when affordability has never been more in the spotlight, maximising Open Banking could be crucial to evolving how operators approach their business.

At the centre of the UK Government’s planned overhaul of gambling was the idea that background affordability checks on players would not be overly intrusive. This is something that would have been music to the ears of operators and bettors alike, as both feared that the incoming regulatory framework would significantly hinder the user experience.

Nonetheless, for affordability checks to take place and be sufficient, operators need to engage with the emerging tech that is changing the face of the payment ecosystem.

At the forefront of this is Open Banking tech, with its rise fuelling new levels of efficiency, speed and also safety within the payment journey. In terms of mainstream payments, the integration of Open Banking has been effective. However, there is still room for growth in the iGaming industry.

Placing Open Banking at the forefront of their strategies can give operators access to a whole new world of data with which to gain a far more extensive picture of a player’s true financial situation, while importantly not leaving the customer feeling like their privacy has been breached.

Another positive for the gambling industry is that Open Banking can play a central role in stemming the worrying tide of financial penalties that European operators are being hit with as regulatory requirements ramp up.

However, while there are high hopes for Open Banking, there are still some concerns about the suitability of the technology for gambling operators in some markets.

In a recent interview with Payment Expert, LiveScore Group’s Head of Payments, Rahul Das, warned: “Open Banking holds great promise, but it is still immature. In the UK, standard OB APIs don’t provide date of birth information, for example, which means that using OB data for KYC purposes is not possible, unlike in Scandinavia. Some providers are emerging that utilise premium APIs to get that information, but it remains niche.”

Das added: “The other hindrance is that while the Open Banking authentication process for payments is comparable to the challenge flow for card payments under PSD2/SCA, most card transactions don’t get challenged today.

“That means that using Open Banking is more of a nuisance for customers than paying by card. Again, variable recurring payments (VRPs) can simplify things, but they’re not mainstream yet.

“So, Open Banking does hold great promise, and it’s materialising, but we are still a long way from calling it ‘efficient’ from a user perspective.”

Many others are more optimistic and see significant growth potential for the technology as a mainstream payments product in the near future.

This view was supported by the publication of the UK Government’s Joint Regulatory Oversight Committee (JROC) report, which set out a roadmap for Open Banking with a view to creating opportunities for new products and services.

Amid a backdrop of increasing card payments in the UK, the Government’s report and strategy underlined that a united focus on the development of Open Banking can bring a significant boost to payment efficiency.

Off the back of the report, Ciaran O’Malley, VP of Ecommerce at Trustly, detailed his belief that “the payments market has never been more important”. He also described Open Banking tech as “a huge opportunity for companies looking to make the payment journey more efficient”.

He added: “As highlighted by the recent JROC recommendations on the next phase of Open Banking in the UK, account-to-account payments are at the heart of this drive to increase the time- and cost-effectiveness of payments across the board and companies should look to add value with this technology.

“In particular, value outlets, retailers and financial services companies will benefit from being able to achieve faster transactions, allowing for an increase in sales and a streamlining of the entire payments process.”

Words by ANDREA MCGEACHIN