What prepaid cards mean for the gambling industry

It’s often the game development and whacky promotions that grab headlines when it comes to the gambling industry and its developments. But, the use of prepaid cards has radically changed online gambling activities and is on the rise. 

Ten years ago, the average popular online casino accepted debit cards and, at a push, PayPal. Today, most e-wallets are accepted, prepaid cards, and sometimes even crypto. The result has been a growth in deposits and activity that coincided with tech innovations more generally. But how does this change in payment impact the industry?

The impact on bettors

Prepaid cards give online gamblers three main perks: privacy, easy access and a boost in security. The privacy they offer is a big draw because many users dislike having their gambling activity appear on their bank statement. Not only for domestic reasons, this could be an issue when applying for a mortgage and lenders are scrolling your recent bank activity. Letting users deposit money without sharing banking info is a big plus for many.

These cards are also widely accepted across many gambling sites now, making them a handy choice for players using multiple platforms. When it comes to security, prepaid cards allow users to only spend what’s loaded onto them. This spending limit encourages responsible gambling, but it also means protection from security breaches. For those who deposit using public WiFi, this is a serious consideration.

Impact on operators

While prepaid cards help avoid Visa and Mastercard fees, operators may still incur costs associated with processing prepaid transactions. These range from 1.5% to 3.5% per transaction. However, these costs are often offset by increased customer acquisition and retention, which is why it’s become a race to offer them. If you don’t, you may lose out on a portion of the demographic.

From a regulatory standpoint, the UK Gambling Commission requires operators to implement robust Know Your Customer (KYC) procedures, even for prepaid card users. This necessitates storing certain customer information, albeit less than traditional payment methods. So, while credit card details may not be stored (which is great for operators too, concerning potential security breaches), everything else remains the same.

Prepaid cards vs. Cryptocurrencies in iGaming

Both prepaid cards and cryptocurrencies offer anonymity and security in online gambling, but they differ in key ways. Cryptocurrencies such as Bitcoin may have low transaction fees but they come with a lot of their own risks, from losing wallet keys, hacking, and asset volatility. Plus, they’re far less regulated. Prepaid cards, however, aren’t outcasted in the same way by regulators, and users are using regular old fiat currency still. This is why most licensed UK operators still do not offer cryptocurrency, due to KYC and other regulations.

Data analytics and personalised marketing

The use of prepaid cards goes far beyond gambing, as seen with its charitable uses. These can have a downside of more anonymous usage, but this may actually help casino operators who want anonymised data as it makes it safer to analyse.

Storing less sensitive data on customers, yet still having the same level of insight, is a big plus for operators. It will also be useful for valuing customers that use prepaid cards vs those who do not, which can then help inform whether marketing campaigns are better spent targeting them vs regular card payers.

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