iGaming operators: a world without cards is coming

For iGaming operators, debit and credit cards are a fact of life. 

Created decades before the introduction of online commerce, they remain a dominant payment method both within the industry and beyond. Today, container wallets like Apple Pay and Google Pay are harnessing the infrastructure of networks like Visa and Mastercard, while providing a faster and smoother flow for players, whether they’re funding a bet or paying into an online game.

But is that all about to change? While they remain a convenient choice for users, cards do present their fair share of problems for operators. They’re costly, they’re prone to fraud and chargebacks and they settle slowly. Ultimately, they require a host of operational expenses — which get often overlooked in the context of comparing one method to another.  

And while cards are playing with a winning hand today, retaining that competitive advantage isn’t guaranteed. A host of alternative payment methods have gained ground on cards in recent years, due in part to regulatory pressures, high processing costs and other factors.

So with that in mind, imagine a world without cards. A world where players embrace a different payment method that converts just as often as debit or credit without all the drawbacks, intermediaries and old technology.

It’s not all that far-fetched. In fact, it might be here sooner than you think.

The challenge with cards

First, let’s look at why iGaming operators would benefit from a world without cards. 

The simple answer is that while cards are popular, they weren’t designed for the digital experiences that dominate the industry today. As a result, they can leave your players frustrated and vulnerable, degrading your player experience and ultimately leading to attrition, reputational damage and even regulatory action. Here are a few reasons why…

Slow payouts

Cards don't provide an instant experience for iGaming players. Waiting three days to cash out winnings can be irritating for players. In fact, the UK Gambling Commission received more than 2,000 complaints related to withdrawal delays in 2023.

Slow payouts also affect player behaviour. In fact, 1 in 4 European users would consider increasing their deposits if they knew they could withdraw instantly.

Security concerns

Despite taking longer to process than other payment methods, cards don’t offer any additional security measures. In fact, they’re uniquely vulnerable to card-not-present (CNP) fraud, also known as remote purchase fraud.

While the introduction of strong customer authentication (SCA) has helped mitigate these risks, CNP fraud remains prevalent. Finance UK reports that it accounted for £360.5 million in fraud losses in 2023 alone. Do you know what percentage of your volume was affected by CNP?

That makes cards a risky proposition at a time when operators are under increased pressure to prevent malicious activity. Fraud in the iGaming sector has increased 64% year-over-year since 2022. What are you doing about it today?

CNP fraud can also lead to other forms of malicious activity such as bonus abuse, the practice of creating multiple accounts to claim offers meant for new users. Sometimes this takes the form of deposit match bonuses, where operators match the funds that a user pays into a new account. Fraudsters often use stolen credit card details to make these deposits, defrauding the operator while also exposing them to greater chargeback risks.

Compliance issues

Unfortunately, cybercriminals and other malicious actors often target iGaming platforms to commit fraud, launder money, fund terrorist activity and perform other illegal activities. 

As a result, operators must maintain stringent KYC/AML practices. If they don’t, they can face steep penalties, including fines, reputational damage and so much more.

Card payments can make it difficult for iGaming companies to meet these requirements. Payments must undergo reconciliation, where the operator matches a customer’s personal information against their payment details.

While card reconciliation is often automated, maintaining it can be both costly and time-consuming. And as criminals increase their use of stolen card details and adapt to new technology like virtual cards, operators will need to devote more resources to ensuring their platforms remain free of illegal activity.

Poor risk management

Risks associated with cards extend beyond security and compliance concerns. Despite pressure on European operators to promote responsible gambling and account for problem players, cards have been part of the problem rather than part of the solution.

Countries throughout Europe have started to restrict or ban credit card payments in gambling. The UK and Germany have already prohibited operators from accepting credit cards, while Sweden has proposed a ban that could go into effect in 2025.

With debit cards, players can limit and block iGaming transactions through their banks. But the process can be cumbersome and inflexible without additional data or verification features. 

What could replace cards?

While cards have their fair share of problems, what kind of payment method would you need to improve upon it?

In order to provide the fast, frictionless experience players want, a payment method must offer:

• Instant capabilities: players need to be able to fund their activity and withdraw their winnings in seconds, while operators should receive funds immediately.

• Robust security: payments should come with SCA baked in, protecting players without slowing down their experience.

• Fewer intermediaries: between processors, acquirers and other intermediaries, cards put a lot between players and their money. Removing these barriers will make for a smoother playing experience and reduced complexity for operators.

• Lower cost: payments shouldn’t come with a host of processing fees and extra costs. Eliminating these will allow operators greater flexibility to improve their player experience in other areas. 

• Easier compliance: by including additional bank-sourced data as part of the payment journey, iGaming operators will be able to verify users quickly and easily.

Luckily, there’s already a payment method that offers all of these benefits and more…

The solution: Pay by bank

Pay by bank (also known as instant bank payments) offers you a glimpse of a world without cards. By using open banking APIs, it initiates payments directly from a customer’s bank account.

What is open banking?

Open banking gives regulated companies limited access to consumer and business bank accounts in order to provide services and make payments. The account holder controls how much access they’ll allow and must approve any payments.

For iGaming operators, Pay by bank can facilitate both pay-ins and payouts. With pay-ins, users simply select their bank, authenticate with biometrics like a fingerprint or face scan, and voila: they can play the lottery with their deposit, fund a bet or enjoy a casino game in seconds.

The process is just as simple for payouts. Players choose Pay by bank, select their bank account, input the amount they want to withdraw, and their earnings go right into their bank account.

While cards remain dominant in several areas, Pay by bank is starting to make up ground. Already, some operators are seeing it gain a significant share of checkout of 30% within the first month and 9 in 10 new players choosing it as preferred payment, proving that users are keen to adopt it. Companies working with TrueLayer have also reported conversion rates as high as 90%, so Pay by bank is becoming increasingly reliable as well.

And those aren’t the only benefits. Overall, Pay by bank offers each element of an ideal player experience. Compared to cards, it represents a smoother, faster and safer option for both consumers and operators. 

Why is Pay by bank valuable for operators?

Whether they’re paying in or paying out, players get everything they want from Pay by bank: fast, secure and smooth access to both the iGaming experience and their winnings. Instant bank payments gives you each of those benefits, all as conversion and adoption rates continue to rise.

With higher rates of conversion and adoptions comes cost savings. Payment fees are reduced. Operational cost for activities like reconciliation disappear. And in some cases the average deposit value increases.

The title of this piece is bold. A world without cards? 

Maybe not yet. A more reasonable conclusion is that we will all have more choice. iGaming operators won’t need to default to cards. And we’re seeing greater uptake across industries beyond iGaming for Pay by bank including travel with Lastminute.com. Because people don’t only pay for their next bet. They pay for travel, groceries and more.

Cards aren’t going to vanish in an instant, but gone are the days when cards were a necessary part of online payments. Pay by bank is becoming a sure bet for the future, today. More choice and a better experience are out there. And it's happening now.

Find out more about TrueLayer's open banking solutions that iGaming operators use including Payments, Payouts and Signup+.