Focus on PayNearMe: Accertify fraud prevention tech brings added security to the MoneyLine platform

December 19, 2023 8:00 AM
  • Buck Wargo, CDC Gaming Reports
December 19, 2023 8:00 AM
  • Buck Wargo, CDC Gaming Reports

PayNearMe, the payments platform that manages igaming and sports betting, has teamed up with Accertify to mitigate the rising rates of fraud that operators are facing with the growing popularity of online gambling.

During October, PayNearMe announced a partnership with the wholly-owned subsidiary of American Express. Integration of Accertify’s fraud prevention technology into PayNearMe’s MoneyLine Platform lets igaming and sports betting operators actively detect and reduce fraudulent payment activity through a unified platform.

“It’s important that operators understand the financial impact fraud will have on their business and how to minimize it. A payments partner with the right built-in technology can help do so,” said Mike Kaplan, chief revenue officer and general manager of PayNearMe.

Accertify’s integration into the MoneyLine platform enables PayNearMe clients to leverage a machine learning driven approach to identify threats, help reduce fraud and deliver a better player experience with improved acceptance rates of debit and credit cards and reduced deposit declines. It verifies player identities and automates the approval process for withdrawals, giving players quicker access to their funds.

The technology analyzes this vast body of data and alerts PayNearMe’s MoneyLine platform to authenticate transactions or, when needed, tightens security measures to help protect from account takeovers and promotional abuse.

Fraud has been a major problem for the gaming industry, which is in the top three for digital fraud attempts, according to TransUnion. The Federal Trade Commission estimates that fraud in the gaming industry is growing 30% year-over-year. Up to 15% of the igaming industry’s gross revenue is lost to fraudulent signups.

“This is a growing problem that is getting more and more expensive and in a market like sports betting that’s very competitive and has thin margins, controlling fraud can be the difference between being profitable and not profitable,” Kaplan said. “Operators need to be looking for solutions to reduce fraud and chargebacks as much as they can.”

Fraudsters continue to look for opportunities and weaknesses, Kaplan said. A lot of operators have entered into the market for the first time, and there are gaps in the solutions they have in place today. Fraudsters seek out soft targets, he added.

“Sports betting and igaming involves pulling money into and out of the system, making it very attractive to fraudsters,” Kaplan said.

Operators need to consider the hard costs of fraud. Chargeback Gurus estimates that once adding up processing costs, business operational costs, the chargeback penalty fee and the refunded transaction itself, a $100 chargeback can end up costing an operator $207. If an operator suffers $1 million in chargebacks, that operator just took a $2.07 million financial hit, even before the estimated 30% annual increase in fraud.

Some operators recruit a third-party payments provider who solely processes payments, without added security to prevent fraud and chargebacks. The problem is that the operators’ overall cost of payment processing explodes after chargebacks and fees start compounding the base cost of processing, Kaplan said.

To add to the problem, igaming and online sports betting operators are already considered high-risk by card processors and are subject to higher processing fees to begin with, Kaplan said. When a card company sees an increase in chargebacks, the operator might lose their relationship with the card processor, leading to a drop in player activity when their preferred payment method is no longer available, he added.

Accertify adds a layer of security to mitigate some of these hard costs. The technology also helps operators sift through mountains of data to reduce some of the false positive fraud alerts. “It’s sophisticated enough to let the good players play and keep the bad players out,” Kaplan said. “One of the risks of any tool that’s limiting deposits is that it’s overly aggressive, and the operator is losing out on legitimate revenue.”

The technology integration adds another layer to PayNearMe’s risk and fraud tools by utilizing Accertify’s database to match against existing payment data to help predict and prevent fraud attempts. The technology offering will go live this month with its first partner and roll out to additional gaming partners in 2024, allowing operators of all sizes to access the solution.

PayNearMe, which has been servicing the igaming market since 2013, is currently active in 24 regulated gaming markets in the U.S. The company processes cash deposits for 16 of the 17 largest online casinos in the U.S. and 9 of the 10 largest U.S. operators.

“The sports betting and igaming industries have a target on their back – one that fraudsters will continue to take aim at so it’s important that operators understand the financial impact fraud will have on their business – and how to minimize it,” Kaplan said. “It is all about putting the right technology and risk management protocols in place to protect the operator without damaging their product or bottom line.”