How Rapyd’s Innovative Platform Overcomes the Unique Payment Challenges in Online Gaming
The online gaming industry is a $180.3 billion-per-year titan of online commerce. As the industry expands, it’s becoming increasingly evident that traditional payment processors fall short of addressing the unique needs of this market.
The demand for efficient and reliable online gaming payments has surged, highlighting the need for purpose-built payment gateways and payout solutions. Rapyd has created the platform to meet these demands and address common pain points like false declines, chargebacks, fraud, lack of visibility into customers, slow payouts to recipients and high take rates.
Payments Haven’t Kept Pace with Gaming’s Growth
The online gaming landscape is expanding quickly and encompasses:
- Multiplayer games
- Live streaming platforms like Twitch
- eSports and competitive gaming
- Persistent online worlds and MMORPGs
By 2027, the number of video game users worldwide is projected to exceed 3 billion people, about 37% of the global population. That’s roughly double the number of people who drive an automobile.
Number of Video Game Users Worldwide 2017 to 2027
The digital gaming world offers a playground for billions of people. These platforms aren’t just games. Many are thriving economies unto themselves with hundreds of thousands of concurrent players. But traditional payment solutions, designed for more straightforward transactional environments, struggle to keep pace with the online gaming industry’s needs. It is increasingly clear that gaming companies need payment solutions that are as innovative as the games themselves.
Most Played Games on Steam by Average Number of Concurrent Players
The Challenges in Online Gaming Payments: False Declines, Global Acceptance, Fraud, Fees
A Global, Young and Often Anonymous User Base Creates Challenges for Payment Acceptance
False declines cause gaming companies to lose sales and customers. It also degrades the experience of making in-game purchases, which leads to poor player experiences. Millennials and Gen Z make up the majority of online gamers, and this group is up to four times more likely to experience false declines compared to Gen X and baby boomers.
Gaming Companies Must Balance Acceptance Rates and Fraud Prevention
Online gaming’s fraud risk is exacerbated by the prevalence of younger users, who may inadvertently engage in ‘friendly’ fraud, such as making in-game purchases without parental consent. This leads to high chargeback rates that put a financial strain on gaming companies. Chargebacks eat into profits and consume valuable time and resources in resolution. Gaming also faces increased money laundering risk from fraudsters who launder money by transferring and selling in-game currencies on the gray market.
Game Developers Face Higher Costs than Other Digital Goods Providers
The risk of fraud and chargebacks means that many game developers rely on third-party marketplaces like Steam, the Epic Store, and the Apple App Store to sell their games and process transactions.
These platforms often mandate the use of their payment systems, which come with high fees, sometimes exceeding 20%, and significantly diminish the developers’ revenue.
Gaming Companies are Challenged with Finding Solutions for Both Accepting and Sending Payments
Many direct payment providers either won’t work with a gaming company because they deem them “high-risk” or offer a solution that lacks the features and capabilities gaming companies need. Payment processing for online gaming demands more than just the ability to handle transactions — it requires a deep understanding of the gaming ecosystem, and the ability to offer solutions such as:
- Fast, secure and frictionless in-game purchases
- Subscription management
- The ability to handle multiple currencies, credit cards and alternative payment methods for a global audience
- Robust anti-money laundering (AML), fraud prevention and built-in identity management
- The ability to Pay workers, game developers and eSport prize money globally
- The ability to create digital accounts for customers to hold funds for seamless in-game purchases
Rapyd Addresses Payment Needs and Pain Points for Online Gaming
Rapyd offers a tailored solution that addresses the primary pain points of online gaming businesses.
Pain: False Declines: Rapyd offers gaming companies some of the industry’s highest card authorization and payment approval rates. The ability to reliably accept cards and alternative payment methods worldwide gives game developers and marketplaces more opportunities to increase their global reach.
Pain: Anonymity / Aliases. Gaming thrives on the use of avatars and aliases, creating a layer of anonymity that can complicate payment processes. Rapyd’s solution incorporates advanced transaction monitoring to safeguard against fraud. Our approach provides compliance and security without disrupting the immersive gaming experience.
Pain: Slow and Limited Payout Options. Rapyd Disburse provides robust choices for sending payouts, including bank transfers, real-time payment networks and card payouts. Card payouts let gaming companies send funds instantly to credit or debit cards via Visa Direct and Mastercard Send 24 hours a day, 7 days a week.
Pain: The Digital Goods Nature of Online Gaming. The intangible nature of digital goods in online gaming complicates the payment landscape. Rapyd tackles this by integrating robust compliance measures, including automated Know Your Business (KYB) and Know Your Customer (KYC) protocols. These measures reduce gaming company’s risk and combat fraudulent activities, fines and regulatory action.
Pain: Chargeback Resolution. Chargebacks cost gaming companies revenue on lost purchases and through the time that is required to manage disputes. Rapyd’s integrated chargeback management system efficiently handles disputes and chargebacks, reducing resolution times.
By addressing these pain points, Rapyd provides a payment gateway for online gaming and a comprehensive ecosystem that supports all gaming transactions. This approach means that gaming companies can focus on what they do best — creating engaging and immersive gaming experiences, while Rapyd takes care of the complexities of online gaming payments.
