How to accept crypto payments for iGaming
iGaming platforms have a prime opportunity to capitalise on the growing trend of cryptocurrencies. Learn how to accept crypto payments for iGaming...
August 19, 2024
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As cryptocurrency adoption surges, iGaming platforms have a prime opportunity to capitalise on this trend. By integrating crypto payment solutions, these platforms can not only attract a broader, tech-savvy audience but also enhance the experience for existing users. This integration ensures that iGaming firms remain at the forefront of the industry, offering seamless, secure transactions in a rapidly evolving digital landscape, helping them stay competitive and relevant in today’s market.
There are several reasons why iGaming businesses may want to start accepting payments in crypto. Cryptocurrency adoption has exploded in recent years, with around 420 million crypto users worldwide. This means iGaming operators embracing crypto payments may benefit from much greater market reach and may even be able to tap into new customer demographics that have been previously difficult to reach. Crypto payment facilitation may entice previously unattainable players into the iGaming market.
While negative headlines often dominate the crypto space, dismissing it as a legitimate currency would be a mistake, especially for iGaming. Cryptocurrencies offer enhanced privacy and robust security through pseudonymous transactions and strong encryption, making them particularly appealing to players who value discretion. Moreover, the decentralized nature of crypto empowers users with greater financial autonomy, aligning perfectly with the needs of modern, privacy-conscious gamers. By leveraging these benefits, iGaming platforms can offer a more secure and attractive payment option, keeping pace with evolving player expectations.
Cost-effective transactions are a key benefit of cryptocurrency, as crypto transactions generally come with lower fees compared to traditional payment methods. Cryptocurrencies don’t use intermediaries (like banks), so crypto payment gateways often enable transaction costs to be up to 80% cheaper. Crypto transactions are also processed within seconds, facilitating seamless deposits and withdrawals that feel almost instantaneous to players. Low-cost speedy transactions benefit both iGaming firms and players.
As cryptocurrency transactions are irreversible, they can eliminate a big pain for many iGaming companies: chargebacks. By accepting crypto payments, iGaming operators can embrace crypto’s built-in chargeback protection and should see a substantial reduction in the number of disputes and costs associated with chargebacks. In tradfi, settlement and reconciliation can take several days to process, whereas, with cryptocurrencies, the confirmation of the transfer and the transfer itself happen simultaneously.
Another inherent feature of crypto is that it is borderless; crypto payment gateways can therefore facilitate fuss-free cross-border transactions. These payments don’t require costly currency conversions and other hurdles that can come with the use of traditional finance services. They also encourage a truly international cohort of players, whether playing individually or collectively, who can enjoy iGaming without regulatory restrictions that may otherwise apply.
When it comes to integration, iGaming companies need to think about two key things: technical integration and regulatory compliance.
Typically, iGaming operators integrate crypto payment gateways through APIs that are provided by the gateway provider. This process is quite similar to the process of implementing traditional payment systems. The result of the seamless incorporation of crypto payments into iGaming operators’ existing platforms is a frictionless experience for users who can choose between paying and withdrawing in either fiat currencies or cryptocurrencies.
Another element to consider is the wallet integration. Platforms will need to integrate cryptocurrency wallets, which may require setting up a mixture of hot and cold wallets for various cryptocurrencies. Hot wallets are software-based cryptocurrency wallets that are always connected to the internet and facilitate more frequent, lower-value transactions. Cold wallets are hardware devices or offline storage solutions that provide enhanced security as they are not connected to the internet.
iGaming operators use hot wallets for holding a portion of funds that are easily accessible. This enables the quick process of withdrawals and deposits, which supports day-to-day transactions on their operating platform. In comparison, cold wallets can store the majority of iGaming operators’ cryptocurrency holdings in a secure offline location. This provides necessary safeguarding for much larger volumes of player funds that aren’t typically required for immediate transactions.
The last aspect of technical integration is in the user interface, which should be optimised to comfortably display crypto payment options and flows. For the best user experience, integration should always facilitate real-time currency conversion capabilities. That way, players can then easily view the digital currencies available to them on the platform, view live exchange rates, complete payments, and make withdrawals quickly.
Although cryptocurrencies are pseudonymous, this doesn’t absolve iGaming platforms from KYC and AML compliance requirements. These procedures help reduce money laundering, fraud and other illicit activities that can stem from the use of cryptocurrencies in iGaming activities. iGaming firms may also be expected to take reasonable measures to proactively detect and prevent fraudulent activities. Monitoring transactions for signs of illicit behaviour can help operators stay compliant and also ensure their integrity as a secure iGaming provider.
Integrating cryptocurrency payment methods into online casinos offers numerous advantages that both enhance players' experiences and support operators’ growth.
XDA aims to simplify financial transactions for gaming companies by offering a unified service that combines both cryptocurrency and traditional fiat payment options. XDA offers a broader range of financial services, including business accounts with IBANs and OTC trading, plus crypto settlement services, allowing iGaming operators to handle cryptocurrency transactions efficiently.
BitPay specialises in Bitcoin and cryptocurrency payment processing, allowing businesses to accept crypto payments easily. BitPay focuses on providing a straightforward payment processing service for cryptocurrencies, helping businesses avoid the complexities of handling crypto directly.
CoinPayments offers a platform for accepting a wide range of cryptocurrencies. CoinPayments is known for enabling businesses to accept multiple cryptocurrencies, providing a versatile solution for merchants looking to expand their payment options.
MuchBetter is a payment app designed for the gaming industry, offering secure and efficient payment solutions. MuchBetter provides a mobile app-based payment solution specifically targeted at the gaming sector, emphasising security and ease of use.
AstroPay provides prepaid cards and other payment methods for online gaming. AstroPay focuses on offering prepaid solutions, allowing users to make payments easily without needing a bank account or credit card.
Revolut offers integrated banking and cryptocurrency services. Revolut provides a wide range of financial services, including both fiat and crypto transactions, catering to a broad audience beyond just the gaming industry.
Wirex combines traditional banking with cryptocurrency services, offering crypto-friendly banking accounts. Wirex supports both fiat and crypto transactions, providing a consumer-focused platform that integrates traditional banking with cryptocurrency services.
Integrating cryptocurrency payments in iGaming presents a series of challenges and other considerations that operators must overcome to reap the full benefits that digital currencies promise.
Cryptocurrencies are not exactly the most docile or stable of currencies. The inherent volatility of cryptocurrency prices may significantly impact the value of both players' winnings and operators' revenues. This unpredictability should not be overlooked, as it could complicate financial planning and open opportunities for disputes over payout values.
Although we highlighted the benefits of non-reversible transactions earlier (no chargebacks!), it has to be acknowledged that non-reversible transactions can generate issues too. Unlike traditional payment methods, cryptocurrency transactions are irreversible, which can be problematic if players make mistakes during transactions. Fund recovery can become extremely difficult and can cause players to have bad experiences on your platform, especially if the error was somehow caused by a poor user interface.
Yes, cryptocurrencies are decentralised, and yes, many aspects of cryptocurrencies aren’t fully regulated. However, iGaming platforms that choose to accept cryptocurrencies will still have to navigate a complex, inconsistent, and ever-changing regulatory landscape. Additionally, compliance requirements (and consequences for perceived and actual non-compliance) vary significantly from jurisdiction to jurisdiction, making it very challenging for operators to maintain a consistent strategy to achieve compliance.
Cryptocurrency winnings or earnings may be subject to different levels of taxation in different regions. Regulations on tax vary greatly between jurisdictions and are constantly being rolled out and adapted in lots of different countries. Both iGaming operators and players need to be aware of potential tax obligations, which can be complex, subject to change, and carry heavy penalties for non-compliance.
Whilst many people may be able to identify Bitcoin as a type of digital currency, there are plenty of other popular assets and networks that are in use every day. With thousands of cryptocurrencies in existence, supporting player preferences for specific coins can present new challenges for gambling platforms. A careful balance must be found between catering to customers’ diverse crypto preferences and securely integrating payment facilities for all the different cryptocurrencies on offer.
Whilst millions use cryptocurrencies daily, digital currencies are still a relatively new technology with many people and businesses still lacking a concrete understanding of the technology. Additionally, trust in digital currencies is not steadfast, and this presents extra hurdles for iGaming platforms embracing cryptocurrencies. They must constantly work to build trust in their crypto payment options and educate their players on everything from crypto processes (non-reversible transactions!) and crypto-specific fraud risks.
As mentioned above, implementing robust Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures is an essential part of integrating cryptocurrency transactions. These are especially important processes to get right, as players using depositing and withdrawing cryptocurrency enjoy a degree of anonymity in their transactions that could be exploited for illicit activities.
Effectively integrating cryptocurrency payment systems requires significant technical expertise, planning, and resources. Operators must ensure a seamless integration that satisfies regulatory requirements and maintains high-security standards that protect both the operator and the customers.
Responsible gambling practices have been a hot topic for regulators in recent years. Ensuring responsible gambling practices is even more challenging when facilitating cryptocurrency payments, as the pseudonymous nature of transactions can make it more difficult to monitor and enforce betting limits and self-exclusion programs.
By addressing these challenges and staying informed about regulatory developments, iGaming operators can successfully integrate cryptocurrency payments while maintaining compliance and protecting their players.
iGaming operators considering the integration of cryptocurrency payments into their platforms should not shy away from the idea. Embracing crypto presents a transformative opportunity for iGaming firms, with faster transactions, reduced costs, enhanced security, greater appeal to players, and greater global accessibility. Some iGaming companies can use a wide range of cryptocurrencies to attract a tech-savvy, pro-crypto audience, and position their platform as innovative leaders in the iGaming market. For other iGaming operators, embracing some of the more popular digital currencies alongside a wide variety of fiat currencies may be a small yet powerful step that keeps them abreast with their competition. As the market continues to expand, those who successfully integrate cryptocurrencies will be well-positioned to capitalise on the opportunities presented by this digital revolution.
