Regulatory differences between different countries, and in North America, different states, is the main cause of payment challenges in igaming, according to Nuvei’s Chief Corporate Development Officer, Neil Erlick.
Speaking to SBC Leaders, Erlick discussed payments hurdles in the igaming space and how these can be overcome, as well as Nuvei’s corporate goal of ‘removing the middleman’ for its partners and greater acceptance of cryptocurrency in the igaming space.
SBC: On a general level, what would you say are the biggest challenges for
operators when it comes to payments?
Neil Erlick: The first challenge is that gaming has always been viewed as a high-risk industry. We definitely have a different approach; we look at gaming as a highly regulated industry. So when you combine a highly regulated industry like gaming with a highly regulated industry like payments, we actually look at it a little bit differently in that we wouldn’t really see it as a high risk business anymore.
But certainly over the years, the biggest issues were: how does the regulation change from country to country? And what does that mean for the operators? What do they need to do? What do we need to do to provide our services across the many countries around the world?
Today, Nuvei operates in more than 200 countries across the world. You have to consider that every country either has different deposit types or different rules on regulations to be able to provide your service. You can then imagine the amount of compliance and
complexities that go along with that. That’s certainly one issue. The second issue, which has been ongoing for years, is the acceptance rates for the operators. How do they have the highest approvals for their customers who are wanting to come to their website and deposit? The challenge for us then lies in making sure that we can give them that ability.
From an acceptance standpoint, these operators are spending millions of dollars in marketing and attracting new customers. We want to make sure that when a customer does come to their website, we can provide them with a way that that customer can pay and also get paid in a very timely fashion and in a very safe and secure environment.
SBC: Now there seems to be a lot of buzz around Nuvei in the US iGaming space. What would you say have been the key drivers of success for you in
NE: Nuvei itself has been in the space for almost 17 years. We have tons of experience in processing payments for regulated gaming companies across the world. As one of the larger payment companies in the gaming industry, what we wanted to do is take a very slow and calculated approach in the US.
We spent a year and a half providing connectivity to every single relevant deposit method in the US; keep in mind, that’s all through our proprietary technology. That’s a single integration, single back office, single source of reconciliation.
Nuvei has multiple bank sponsors where we can provide the acquiring ourselves, so that operators are coming directly to the source. We cut out the middleman in a lot of ways when it comes to credit card processing, which not only improves performance for the operators, but also saves them money since they are not paying additional gateway fees.
SBC: From your experience, what have been the key differences between the US and Europe when it comes to regulation?
NE: I think the key difference in Europe is that regulated gaming has been around for decades. But the US is really still very new. It’s only in the last few years that there has been an uptick in gaming activity.
In Europe, every country has its own set of regulations, but sometimes a licence in one country can be passported to others. But for the US, it’s really a state-by-state approach. If you want to operate in any of the states that have introduced a regulatory framework, you have to apply for a licence with the individual legislature.
Each state may then have different rules and regulations for their customers, especially when it comes to deposit types. Some states will allow you to use a credit card, other states will not. What we’ve done is taken our experience of working in regulated markets and brought that to the largest operators in the world who are now choosing Nuvei as their payments partner for the US.
We always go back to being low risk but it is also super complex. You can’t just wake up one day and say you want to process payments for the gaming industry. There’s regulations, there’s vendor registrations understanding the nuances, and understanding the issue with credit card declines.
The issue banks in the US still have about a 40% decline rate for credit cards. Debit cards, meanwhile, have a higher acceptance rate. We’re certainly trending in the right direction, and I do believe that this will only get better. But to speed things up, we have tools built into our platform where we are able to ensure the highest level of acceptance rate.
If we know that you’re going to a website, and we know that you’re using a Bank of America credit card, we’re not going to encourage the customer to keep trying that credit card which we know is going to fail. We therefore give the operators the tools to say “hey, if that’s going to fail, why don’t you try using your bank account, something like Mazooma, where we know you’re going to get approved?”
It’s also not just the money in but it’s the money out. We’re making sure that we can get the customers their money very quickly by partnering with Visa for things like OCTs. We were also the first group to launch Real Time Payments (RTP) in the US so now we’re able to send money directly back to your bank account instantly. When you think about that, giving the consumer the ability to fund their account and then getting paid back in that same fashion instantly is game changing.
We certainly like where we are positioned and we certainly believe that the experience that we’ve had is what’s going to help us be successful in the US.
SBC: Player experience is very important to operators, but also for players when considering which operator to bet with. What does Nuvei provide to make payments frictionless and fast?
NE: I go back to that single integration. Everything that we have is available à la carte, and customisable. So while we can use our experience to help guide the operators in what we think works, we also don’t want to dictate to them.
So from customisation, flexibility and our experience in ensuring the highest possible approval rates, and then being able to transfer money in and money out through that same platform, we believe this is helping make payments frictionless and fast.
SBC: What’s Nuvei’s vision when it comes to crypto adoption in the iGaming space?
We believe in the crypto space, and what we’re trying to do is two things. It always comes down to the regulatory aspects from a crypto perspective. We believe we’re a very innovative company so we always want to make sure that Nuvei is ready to support all of our clients globally, if and when they are ready to accept cryptocurrencies.
The ability for our merchants to accept payments in 40 different cryptocurrencies exists today. We also recently bought another business called Simplex, which provides the on-ramp, off-ramp capability for different crypto companies and for people that want to
pay, buy and sell crypto with their credit and debit cards.
We actually go one step further as we use our proprietary AI powered risk engine to indemnify our partners from any chargebacks, making all transactions guaranteed. In fact, we see tremendous opportunity with these capabilities across other verticals.