As published in EGR Magazine, Sept 2012 100th additional issue.

Ian Kay of Realex Payments discusses the importance of acceptance/ decline analysis for egaming merchants and how the regulation of EU markets has accelerated the need for payment providers to support customer acquisition in these regions

The introduction of e-wallets and pre-paid cards, among other alternative payment methods, has created a sector that is rapidly developing, with online gaming leading the way. But the importance of credit and debit card payments within online gaming cannot be overlooked – they remain the most popular and used method of payment. According to Ecommerce Europe’s Online Payments Report 2012, credit cards are the most frequently used payment method for online purchases in the UK, representing 40% of online transactions, with debit cards standing at 35%. Credit and debit cards, both online and offline, are a more mature and recognised form of payment than alternative payments, particularly in the UK. As a result, card payments offer a greater level of familiarity and perceived security to consumers, who trust brands such as Visa and Mastercard to handle their payments.

Experts in the field

Realex Payments’ focus and expertise lies in card processing, and we see ourselves as specialists. This has enabled us to grow and develop as a business, adopting an international approach demonstrated by our expansion into global markets. The company was founded in 2000 and has grown to a staff of 120 across three offices in Dublin, Paris and London. As an organisation, we process in excess of £1bn of online gaming transactions annually. Although we support corporate organisations that span multiple sectors including retail, travel and financial services, we have developed a product specifically for online gaming merchants. Our RealResult service provides a comprehensive and granular level of decline data in real time during the authorisation phase of transactions. By implementing this service, merchants can increase their acceptance levels and improve their customers’ user journey by dynamically responding to a declined authorisation attempt. While standard PSP/Acquirer solutions return only a generic failed or successful response for online transactions, RealResult provides the specific issuer response code. Ongoing analysis of decline patterns can also be conducted to improve the payment lifecycle and overall customer user journey. Benchmarking and analysis across our gaming portfolio at all levels including acquirer used, originating country of the transaction and many other factors has seen us achieve an uplift of between 5-10% in acceptance rates.

Clearly, acceptance rates are a constant challenge for any merchant; however, they can be particularly problematic for those processing online gaming (7995) transactions. There are a number of reasons for this, including high cost per acquisition, issuer resistance to 7995 transactions and the competitive nature of the sector.

Evidence suggests that gaming merchants can achieve higher acceptance rates by processing transactions through a domestic acquirer. The costs attributed to processing transactions in different markets can vary enormously. Merchants armed with both the acceptance and cost data described above are able to make measured, logical and cost-based decisions when choosing where to direct customers at the point of payment. With rising market costs due to increased competition and taxation within regulated markets, even minimal increases in card acceptance rates can have a significant impact upon the bottom line. We have continued to develop our international presence following the new regulation of online gaming markets in the EU. France and Italy are both examples of where we can offer domestic acquiring services and we are focused on developing this further to support our ongoing commitment to the gaming sector.

Ian Kay
Ian Kay is head of gaming at online payments provider Realex Payments. He is responsible for both real-money and social gaming sectors. He has been working in the online gaming sector since 2006 with both Pentasia and NCC Group PLC.