Alex Volk, BDM at Betatransfer Kassa, talked about the brand-new payment solutions based on P2P payments presented on their products for Japan, Brazil, Mexico, Argentina and Colombia.
Press release.- Until recently, there were only acquiring solutions in the high-risk payments market. We at Betatransfer Kassa have been developing payment solutions based on P2P payments for many years. We recently presented our new products for the markets of Japan, Brazil, Mexico, Argentina and Colombia. I will tell you how the solutions work, whether they can completely replace acquiring, and what the peculiarities of the technology are.
The end of the era of total acquiring
How to connect acquiring, if it is absolutely impossible. The answer is simple – you can’t. Earlier acquiring was an alternative means of accepting payments. It did not suit everyone. Why? It is difficult to start cooperation with a bank. In every new market, a legal entity must be established. Besides, the companies that work in the iGaming market are at high risk because banks do not want to take such merchants for servicing. Negotiations can take months or years. This stops the company from scaling.
I am not talking about the fact that the bank you have entrusted everything to may simply go bankrupt and close down. This is exactly what happened to two banks at once, with which all the major players in the Ukrainian market worked. Instantly, the company was left without the ability to accept payments, and their customers could not play.
However, the most difficult thing in this chain is the countries where it is impossible in principle to connect acquiring for high-risk merchants. India, for example. Or practically impossible, as in Japan. Latin American countries are also still unsaturated iGaming-brands market, just because of difficulties in accepting payments. Until recently there were no alternatives to acquiring. Market players simply put up with the fact that some geos simply couldn’t be reached. Now that has changed.
P2P payment solutions
According to statistics, the number of cards from different banks increases every year for an average user. If 5 years ago the average number was 1, now it is 2-3. Accordingly, the number of P2P payments is also growing exponentially. Due to MCC, the bank knows when the client pays for services in iGaming companies and tries in every possible way to protect the client by blocking transactions. This is how the conversion rate decreases. If one user sends money to another, it is absolutely legal.
Holds kills profits
According to statistics, 95% of gambling and betting projects are closed in the first 5 years of operation, and most of them – in the first and second year. The reasons are many. One of them is the bondage conditions of banks. From all incoming funds, the bank freezes the interest on hold. The interest is small, it would seem, about 10%. Moreover, the money will be returned soon. But here is the truth that this frozen for the time seemingly money, the bank will try hard not to return. And the contract you signed has a lot of loopholes for this. So there is more and more money left in the distribution account. And while large companies operating in several markets at the same time can withstand this, young businesses at some point will not have enough working capital.
There are no holds in solutions based on P2P payments. Payments are made according to the T+0 scheme, and withdrawal is possible on the same day. While traditional acquiring offers T+5 or even T+8. That is, you will get the money at best in 5 days and not in full.
Successful user experience and trust in P2P on the market
If we talk about conversion, it is often higher in P2P solutions. I wrote earlier why – the bank does not know about the real purpose of the payment and does not block it. However, it should be noted that the conversion rate is higher only for those countries where trust in P2P payments has been formed. For example, in countries where cryptocurrency use is more active, trust in P2P payments is higher, and user experience already exists. In addition, trust in the product is higher in those countries where there is an alternative to bank accounts – various e-wallets. That is, if the user knows how to copy the card digits into the mobile app, the probability that the payment will go through is high. Often, in order not to scare the client with digits, QR codes are used, when scanned, the payment can be made faster.
For example, in the markets where our products have been operating for a long time, which are the countries of the former CIS, the conversion rate reaches 90%. While in traditional acquiring the conversion rates are from 50 to 90%.
People think that P2P solutions do not allow them to make a large number of payments. In fact, this is not true. If we talk about our solution, we have tens of thousands of details for each geo, and the cascading technology allows us to make millions of payments. That is why the throughput indicators are not inferior to traditional acquiring.
Of course, you can use both solutions in parallel and many of our clients do so. For example, acquiring is used to accept payments from new players, and P2P solutions are used for regular players who already trust the platform.
Often, connecting and acquiring is like beating your head against the wall. But in some markets, you can’t do without it. Betatransfer Kassa has both solutions in its portfolio and we will advise you on which geo product is more effective.
(The content of this article is under the responsibility of Betatransfer.)