Instant Payments: A road with many pitfalls?



In this month’s Payment Collective we sat down with Oskar Strandh, who is heading up the new Payments & Operations Department at SuprNation. He discusses which challenges and opportunities of instant payments can bring from a merchant perspective.


PCM: What are you looking for when selecting a payment vendor?

Oskar: As an online gambling operator, we have to consider money out (withdrawals) as well as taking payments (deposits). A key determining factor is whether there is a demand for the specific payment method and what type of customers use these payment methods. Anonymous payment methods or unregulated payment methods may be disproportionately popular with undesired customers such as promotion abusers. This may sound obvious but especially in the igaming industry, there is a belief that the more payment methods you offer, the more customers you reach. While there is an element of truth to that, if you also consider the financial and operational costs of setting up and maintaining dozens upon dozens of PSPs, e-wallets, and payment methods, the net benefit isn’t as clear anymore. Other important factors are reputability of the vendor, coverage (countries covered, banks covered in each country), complexity of technical integration, quality of back office, speed of settlement, experience and understanding of my industry, and of course also pricing. 


PCM: What do you think the future of Payments will look like? 

Oskar: Payments are a significant reputation-builder in igaming. Given that, I’m hoping that we will start seeing 24/7 real-time bank transfers rolled out across more countries and being adopted by more banks. Thanks to some of the PSPs we work with and banks they have integrated (mostly in Scandinavia), many of our players receive their withdrawals into their bank accounts within seconds after we approve, which is usually within 10 minutes. That’s a fantastic customer experience. With the EU eIDAS Regulations, I’m also hoping to see PSPs get more and more involved in customer identity verification. Many payment methods require players to verify themselves against a bank. Why not leverage that more? For now, only a handful of PSPs have reached this level of maturity and it’s definitely a value-added service of the future for PSPs. It helps regulated merchants fulfill their AML/KYC obligations.


PCM: What is the most undervalued part of Payments by payment providers that you see and should be covered more or would be great to outsource?

Oskar: Sharing data. PSPs sit on a tremendous amounts of valuable data. It can be useful for everything from KYC/AML checks to enhancing customers’ shopping experience to helping merchants assess the potential value of a paying customer. Acquirers, e-wallets and bank transfer payment providers could do a lot more to share data about account owners and card holders with their merchants, without necessarily disclosing any sensitive financial information; Of course provided that the merchants are capable of handling the data in a secure, responsible manner and in line with regulations such as the GDPR.


PCM: How important are Instant Payments to your organisation and how do you utilise this to ensure a seamless customer experience?

Oskar: Taking deposits and paying out withdrawals is absolutely critical to igaming. It doesn’t matter if you have the coolest front-end, latest and greatest games, and eye-catching marketing material. If your players are unable to deposit funds through their preferred method and receive their winnings quickly, they will go somewhere they can. If you are able to offer your players fast payouts, where their payout requests not only are approved quickly manually or entirely automatically but also reach their bank accounts within seconds or minutes, players are able to trust your brand much more.


PCM: What effect does Instant Payments have on your business in terms of payments and customer experience?

Oskar: I think this question is best answered in two parts. First, we decided to not offer several payment methods that tend to clutter a lot of igaming operators’ lists of payment options. Many igaming operators are keen to offer every payment method under the sun.

We only offer payment methods for countries where they make up a significant and valuable part of the market instead. Players that come to us see a cleaner, simpler cashier with only the payment methods that are relevant to them. It has enabled us as a company to have a much more streamlined payments setup internally, which reduces workload for customer service, payments team, finance, tech, and pretty much everyone. A definite net benefit for us. Secondly, VoodooDreams has earned a reputation for fast payouts. This is possible in part because of our more streamlined setup and also because the payment methods we do offer are absolute top-tier. Data sharing is also a hugely impactful element. A typical Swedish player can deposit money straight from their bank account, play, win, withdraw, and have the money on their bank account within 10 minutes in most cases. Service levels like that have certainly helped us build trust with our players and enabled us to grow.


PCM: From your experience, what can be better when it comes to Instant Payments in terms of technology and processing rates?

Oskar: Merchants, customers, and even PSPs have a lot to gain from instant payments where authorisation, clearing, and settlement are all instant. Steps hve already been taken for this, especially within the SEPA region. Improving error messaging would also benefit merchants and customers. If we know exactly why a payment failed, we can better guide the customer on how to complete their deposit or their purchase.


PCM: In your opinion, what are some of the biggest challenges working with Instant Payments?

Oskar: In the case of an igaming operator, it’s usually down to balancing players’ expectations of quick payouts with regulatory requirements. We want to ensure our players get their funds as quickly as possible but we also have compliance requirements to meet and risks to mitigate. For e-commerce and travel, where customers are less accustomed to alternative payment methods, customers might not see any advantage of an instant payment method as opposed to just typing in their card digits. Instant bank payment methods introduce a number of additional steps such as authentication to log in to your bank, which, short of 3D Secure, card payments are not subject to.


PCM: Finally, what are a few words of advice you would like to tell merchants looking into implementing such system or technology?

Oskar: Instant is great, but beware that there can be risks.  These payment methods may come with practically zero chargeback risk, but be careful not to confuse this with guaranteed funds. If you are looking to offer instant payments, for example via bank transfer, make sure you understand whether the payment is 100% guaranteed at the moment of payment or if there is a settlement delay. This risk may vary between payment methods and between countries and banks. It essentially boils down to whether the bank account holder, that payment was initiated, can cancel or cause the transaction to be cancelled.

Suppose a customer is buying a 500 EUR computer monitor online on Friday evening. With some instant bank payment methods on the market today, the customer can set up a transfer of 500 EUR and you would get an OK from your PSP. The payment may not execute until Monday and many banks don’t reserve funds for pending transfers, so the customer might spend those 500 EUR at the bar on Saturday. When Monday comes, there are no funds available and the actual bank payment is cancelled. As a merchant, you wouldn’t know until probably a few days later at which point you have probably shipped the item already.


About Oskar Strandh

Head of Payments and Operations at SuprNation

Oskar is Head of Payments and Operations at SuprNation and has an extensive background in online gambling (igaming), financial services (money remittance), travel, and commerce. With over six years of online payments and fraud prevention experience, Oskar joined SuprNation in April 2016.


About Suprnation

SuprNation is an online gambling operator and technology company founded in 2015. The company is based in Malta and holds several licenses. In August 2016, the company launched its first online casino, VoodooDreams. VoodooDreams has quickly earned a reputation for fast payouts.