Sports betting and igaming operators in the U.S. need to think about what bettors want in the payment and withdrawal process in order to reduce their acquisition costs and retain players.
Leighton Webb, vice president of igaming and sports betting for PayNearMe, the company designed to manage payment complexities, gave a presentation on the topic at the recent SBC Summit North America. PayNearMe powers MoneyLine, the next-gen platform that makes payments easier for players and operators.
“Payments is the single-most important aspect of the operator’s product that can reduce customer acquisition costs and increase your lifetime value,” Webb said.
There are four takeaways to understanding the process, according to Webb, who also cited data from a June 2022 research study conducted by Sapio Research and PayNearMe in making his case.
“First, research shows that payments are a lot more than moving money,” Webb said. “Payments is an ecosystem. It’s everything around that experience and the perception of that experience from players both on deposits and withdrawals. Operators put a lot of emphasis on deposits and less emphasis on withdrawals, but both are equally important.”
Second, the right mix of payment tenders is as important as the tenders themselves.
“Having the right mix of what people are used to using in their everyday lives and are comfortable and familiar with and is easy for them to use, it’s important for operators to get that right and have that available to their players,” emphasized Webb.
Third, having a positive payment experience is a driving force behind player behavior.
“There is a lot of attention in the industry around bonus codes and loyalty programs, and not a lot of talk is given that it’s actually a payments experience impacting that player behavior,” he said. “If a player has a positive experience and is able to fund their account easily, quickly and seamlessly, and get the money onto the platform and make a wager, that’s the No. 1 factor impacting their behavior. By behavior, it goes to things such as I play more often, I’m increasing the amount of wagers I’m putting on the platform, and I keep coming back. The payment experience directly contributes to lifetime value and engagement, which is an important takeaway from the research.”
Fourth, trust and privacy underpin behavior and reduce customer acquisition costs, maximizing lifetime value of the customer.
“To the extent players trust the platform and tender types they are using to fund their account, and they are comfortable with the information shared with the operator, it really impacts player behavior on the platform,” Webb said.
Some 52% of players reported declined payments when opening an online sportsbook account, he noted. Out of that, 17% left and never came back.
“That’s a big number, but where it gets more impactful for the operator is that 22% try it again and some of those are declined because they’re trying the same payment method and that will have the same result and they end up leaving,” he said. “You are quickly at 39%. It has a compounding effect of not being able to get players through to be able to make a successful deposit.”
Operators spend a lot of money on player acquisition, and funding accounts is how it’s measured, Webb said. If the operator is “dropping the ball” on a significant percentage of players who aren’t able to make it through funding the account, those players are lost forever, he added.
“Being able to improve on that goes directly to your reduction in customer acquisition costs,” he stressed.
Webb also noted that the gambling industry is coming out of the early adopter phase when people were more willing to go through hurdles to get a successful deposit. As it attracts more casual players and the mass market, patrons are less forgiving, he said.
“Casual players are looking for immediate feedback and a positive experience; they don’t have the patience of an early adopter,” he explained. “From an operator’s perspective, making sure you are getting as many players through a successful deposit goes directly to that reduction in CAC. More attention needs to be put on completing the deposit rather than the top of the funnel – bonus offerings and advertising. It’s getting players through the bottom part of that funnel that will lower acquisition costs.”
While a lot of emphasis in the industry is put on deposits, there’s not as much on the disbursement side, said Webb. Players rate withdrawals 10% less positively than deposits.
“That goes to lifetime value,” he said. “You converted the player, but if the player has a poor experience in getting their money in a timely fashion or doesn’t know when they will get it – that it takes days or weeks – that goes to the overall experience. If they have a poor experience, they are less likely to come back.”
Operators need to offer the right mix of tenders, ensure the experience is positive, and better communicate with players throughout the deposit and withdrawal process.
“If I am declined, is the operator communicating with me to explain why, and then guiding me to try an alternative tender type that they know has a higher degree of conversion?” Webb asked. “When an operator thinks about their product, they think about the look, feel and design and the games in the product and game play,” he suggested. “I would argue they need to put equal focus on both because payment is also the product. It’s one in the same. That’s the way the player thinks about it. In the igaming space, there needs to be more attention on making sure that payments piece is thought of as a product itself. Players don’t differentiate between the two.”
Operators can’t set up their payment system and be done with it. They must continue to optimize that experience for players, Webb insisted.
“For every click you add into the payment process, you’re going to lose people,” he said. “That’s not just igaming, but an industry standard. We want to find the shortest path to get the player from A to B, and do so in a seamless and elegant way. If the player runs into difficulty and a payment is declined, you need to be communicating with them clearly and re-directing them to a payment flow that has a higher degree of success. It’s all about continued optimization to improve that conversion through the payment flow.”
Most people gamble for entertainment, and winning is a key aspect of player enjoyment. When a winning bet takes too long for the customer to receive, that’s a poor experience. Operators need to do a better job of making sure players receive winnings quickly – if not immediately. This is particularly true as the market grows beyond early adopter to casual player.
“Speed is a real issue today,” Webb said. “There are a lot of operators – a majority in the marketplace today – who are taking too long to process disbursements. You’re seeing it on social media and in the press. People are confused and don’t understand why it takes so long. It’s not a great experience for the player.”
To sum it up, friction during the deposit and withdrawal process can deter players – especially new and casual players – more than one might realize. When operators start optimizing the payments experience within the overall player journey, making it a seamless and positive process, it serves as a win-win for both operators and players.
The MoneyLine platform is an end-to-end payment gateway and platform designed to remove friction, enabling operators to deliver a best-in-class player journey that overcomes the problems operators are dealing with today, Webb reported. With one integrated platform, igaming and sports betting operators can process deposits, initiate withdrawals, and gather insights from data to automate decisioning and better manage payment experiences that ultimately reduce costs and increase revenue, he said.
Last fall, PayNearMe announced a partnership with global fintech company, Pin4, that enables operators to provide players with instant access to their winnings in cash at 18,000 ATMs in the U.S. through the integration of Pin4 technology into the MoneyLine platform.