How to connect a payment gateway for an online gambling website?

Online gambling is a multibillion-dollar industry with a total revenue of $95.05 bn. in 2023. By 2028 the market’s revenue is expected to grow up to $138.08 billion. Top-rated gambling corporations offer their services throughout the world and face exceptionally high amounts of payments. This is why businesses need to implement the most suitable payment gateways that both provide gambling websites with the highest level of security and fulfill clients’ demands.

Since a gambler has completed the sign-up process and sometimes the verification procedure, all the website opportunities are unlocked for him. Meanwhile, gamblers cannot place any bets without funds deposited previously. That is a payment gateway that helps users transfer their funds from credit/debit cards or diverse wallets to gambling accounts.

Payment gateways serve as a mediator between gambling websites and payment systems. The core goal of such a solution lies in safe and secure collecting and transferring data from one side to another.

Gateways are responsible for financial information encryption. Those solutions encode required payment data (for instance, credit card numbers, cardholder names, CVVs) so that such information could be easily delivered towards processors. Apart from the encryption function, payment gateways protect both sides from fraudsters and provide other security measures.

Among the main functions of such solutions, the following ones are pointed out:

• to securely process transactions through encryption and tokenization technologies;
• to provide merchants with an opportunity to accept diverse payment methods;
• to detect and prevent fraudulent cases while processing payments;
• to send requests to acquiring banks/payment systems and return those requests, verified or not;
• to collect important data and generate reports that can be used for business analytics;
• to inform clients about completed transactions.

Furthermore, a high-end payment gateway is a solution that can be easily integrated and maintained by merchant websites.

While talking about transaction processing through payment gateways, the procedure consists of the following stages:

1. Gamblers use a website’s interface and fill in some fields connected to funds deposit (preferred method, amount, currency, payment information, etc.).
2. Gambling websites send a request to a payment gateway to understand whether a transaction is possible.
3. Payment gateways connect with payment systems and deliver those requests.
4. Payment systems check whether a transaction is possible or not. Foremost, a system verifies the validity of payment data. Then an institution finds out whether a gambler has enough money in his account.
5. There are two possible ways. Once a payment system has detected that the requested transaction cannot be processed due to different reasons, it will reject the received request. Gamblers get a message containing an error code. When the given payment information is correct and a client has enough money, a system authenticates the request.
6. Payment gateways return either rejected or accepted requests to online casinos. In the second case, costs are successfully deposited in a player’s account.

As for the functions, all the gateways do the same things; meanwhile, solutions may provide different ways of transaction processing. Here are the main types:

• hosted (redirecting) gateways;
• self-hosted services;
• local bank integration gateways.

What are the core differences between the types given above?

Hosted gateways are frequently called redirecting ones. While completing a transaction such a gateway redirects users away from a casino’s checkout page. On the one hand, gambling businesses do not need to think about maintaining details, as a transaction is processed on a provider’s side. On the other hand, this gateway type provides the highest level of security and fraud protection. As such, hosted solutions are among the most widespread ones for online casinos.

Self-hosted gateways provide businesses with more control over their user experience. In this case, a merchant’s website collects all the payment information on its own without any redirections. The key advantage of this gateway type lies in faster transaction processing, as all the stages are completed within a gambling website. At the same time business owners don’t get access to a full technical support team (in comparison with a hosted type).

Local bank integration gateways are the basic level solution that redirects customers to a payment system’s website where all the required information will be filled in. Despite the ease of integration and maintenance, such a type is not suitable for large businesses.

Which payment methods do gambling websites support? Credit and debit cards are the most popular options when referring to the e-commerce industry. Online casinos obey some other laws. According to Statista, wire transfers and credit/debit cards cover only 74.7% of deposits gamblers make. Other funds penetrate gambling accounts through e-wallets, vouchers, cryptocurrencies, and other options.

Let’s dive deeper into the variety of payment methods that take place in the gambling industry.

Credit/debit cards

Credit and debit cards are undoubtedly the most convenient options for online payments. First and foremost, almost every person in the world has at least one credit/debit card. The Global Economy has published the percentage of people with credit cards by country. Canada leads the ranking with 82.74% of cardholders. Aside from popularity, bank cards are rather safe and secure payment options, as all the transactions are processed through payment systems like VISA, Masterсard, American Express, etc.

Wire transfers

This payment option is safe and secure, as a bank institution is entirely responsible for a transaction. Meanwhile, gamblers face some inconveniences related to wire transfers: processing time varies from 1 to 7 days and fees are quite high in comparison with other methods.

E-wallets

In 2023 the overall volume of transactions transferred through digital wallets reached $9 trillion. The option rapidly gains popularity throughout the world. The Juniper research shows that transaction values involving e-wallets are expected to grow to $16 trillion by 2028. Digital wallets are safe enough and gamblers do not need to disclose their personal financial information.

Prepaid cards and vouchers

This option cannot be understood as a convenient and popular method but a high-end gambling payment system offers it among other options. Gamblers buy prepaid cards or vouchers in special stores first and then use digit codes to deposit funds. What is the key advantage? Players provide payment gateways with no personal information. This opportunity is of much account for many users.

Cryptocurrencies

Digital currencies are widely criticized by skeptics; meanwhile, crypto assets step by step become more and more popular as a means of financial transactions. Over 420 million people own crypto, but this option covers only 0.2% of the overall e-commerce transaction volumes. On the other hand, the method expects to grow rapidly with the removal of some limits and barriers. Anonymity is the core advantage of using cryptocurrencies as a payment method. While transferring funds gamblers use their wallet numbers only.

There are diverse payment methods suitable for online casinos, but the popularity of each option differs significantly. Wire transfers and credit/debit cards fulfill the needs of 3 gamblers out of 4. Does it mean that a website needs a payment aggregator for gambling supporting just the mentioned options? Totally not! Users expect to get the choice. When they are limited in the variety of payment options, players will find some other opportunities. The competition level in the gambling industry is exceptionally high.

Hence, the more payment options are offered for a gambler, the better. No matter how many options a player is going to use. Never underestimate the power of choice.

Online casinos need to get a gambling merchant account, and that is a problem due to a range of reasons. Many acquirer banks and providers do not offer their services to gambling companies (high-risk industry, uncertain legal status, possibility of fraudulent cases, etc.).

As such, business owners need to start with the following stages:

1. Run a legal entity in a country or territory with legislation favorable to the gambling sector (Curacao, Costa Rica, Malta, Gibraltar, etc.).
2. Open an account in a local bank.
3. Get a license that allows your business to offer gambling services throughout the world.
4. Find a payment gateway that enables a company to open a merchant account for gambling.
5. Discuss the processing conditions and sign an agreement.
6. Let gateway representatives provide an audit and evaluate your gambling platform.
7. Qualified specialists connect the chosen solution through API and FTP protocols.
8. Once all the gateway components have been installed and connected, experts provide the final settings to ensure everything functions properly.

Note! While a gateway processes payments within a website, business owners need to get a PCI-DSS certificate. Such an option is more complicated than traditional integration.

Due to high financial risks gambling corporations face a number of obstacles. Problems with payment gateways are among the key ones. Business owners frequently contact providers that specifically work with such a sector. Those gateways provide card processing for gambling and help businesses accept other payment methods as well.

Hence, when selecting a payment gateway for gambling, limited choice occurs. Companies take into account the following criteria:

1. Preferences of your target audience. Knowing preferences and demands of their clients is exceptionally important for gambling businesses as well. You need to know which payment options are preferred by your target audience and then completely fulfill those demands.
2. Processing speed. Time is money, and your clients will undoubtedly choose competitors in case of long-lasting processing. Deal with gateways that guarantee the highest transaction processing speed.
3. Commissions and fees. Most gambling businesses connect payment gateways through API. Such a solution includes processing fees that vary from 1.5% to 6%. Sometimes, providers set minimum commissions – from $0.3 to $0.6 per transaction. As for the fixed monthly fee gateways may charge from $20 to $30.

On the other hand, gambling businesses may open up solutions related to their own API development. The cost varies from $150 000 to $1 million (or even more), but fees and commissions can be reduced to zero.

As such, gambling companies need to understand on their own which option is the best from the viewpoint of functionality, short-term and long-term expenses, and fulfillment of the target audience’s needs.

Gateways that work with gambling businesses belong to the category of the high-risk payment processor. What does it mean? Financial institutions understand the whole industry as a high-risk one. Uncertain legal status, extremely large payment volumes, high percentage of chargebacks, and other factors explain this.

Online casinos are out of law in more than 10 countries, including Japan, Singapore, UAE, Poland, Cyprus, etc. Furthermore, many countries have accepted strict gambling legislation and banned other companies that do not correspond to those norms and standards (for instance, Great Britain and the USA).

While talking about payment gateways, those providers offer services for licensed online casinos only. No matter which jurisdiction was chosen (Malta, Curacao, Isle of Man, or other territories), the fact of having a license allows payment processors to provide all the services legally.

Meanwhile, unlicensed gambling companies function as well. How is it possible? Businesses integrate their own API solutions to accept electronic payments directly. 

Despite the quality and reputation of a payment gateway technical issues can occur because of software and hardware malfunctions. This is why the API connection and required settings are not the only ways of interconnection between providers and business owners.

Furthermore, gateways require scheduled maintenance that leads to upgrades and an increase in security level.

The popularity of a gambling website among users highly depends on its working quality and speed; this is why businesses should not underestimate the significance of maintenance and technical support payment providers offer.

The gambling industry is a rapidly growing sector that attracts tons of players around the world. On the one hand, the market map is overcrowded by companies, but newcomer gambling businesses constantly appear here and there. One of the crucial tasks for newly arrived companies lies in finding a payment gateway that fulfills the target audience’s needs. Business owners need to take into account a set of important criteria, including the number of payment methods, integration possibilities, transaction fees, monthly commissions, etc.