Chargebacks are a mechanism originally designed to protect consumers. But they have become a growing concern for e-commerce companies around the world.
Especially affected by this issue is the iGaming or online gambling industry. The nature of these transactions and the impossibility of physically verifying buyers make the sector particularly susceptible to chargebacks.
Chargebacks and chargeback fraud are increasing every year.
In 2023, chargebacks and chargeback fraud increased considerably. It was estimated that 238 million chargebacks occurred in the global ecosystem. A figure projected to increase to around 337 million by 2026, representing a 42% increase since 2023.
With a projected total cost exceeding $117 billion in 2023, chargebacks not only imply a direct loss of revenue. They also represent an operational and reputational challenge for businesses in the most affected industries.
This situation highlights the urgent need for effective solutions that can mitigate the impact of chargebacks.
How chargebacks affect iGaming
Chargebacks in iGaming pose significant challenges to companies in this sector. These challenges, which are not only monetary, can have a profound impact on various aspects of their operation:
Loss Of Revenue
Each chargeback represents not only the loss of the amount of the original transaction but also of the products or services already delivered. In iGaming, where bets and winnings are processed almost instantly, recovering these losses can be especially challenging.
DISPUTE MANAGEMENT
Resolving chargeback disputes consumes time and resources. Companies must allocate staff to investigate the claim, compile evidence, and communicate with banks and payment processors. This process is not only laborious but also diverts resources from productive activities.
FINANCIAL STRAIN DUE TO HIGH CHARGEBACK RATES
A high chargeback rate can lead to penalties from payment processors and banks. This includes increased processing fees or even service termination. For iGaming companies, which rely heavily on the ability to process payments efficiently, these consequences can be devastating.
BRAND REPUTATION
Beyond direct financial losses, chargebacks can damage a company’s reputation. Dissatisfied customers who resort to chargebacks instead of resolving their disputes directly with the company can spread negative opinions, affecting the perception of new potential customers.
REGULATORY AND COMPLIANCE CHALLENGES
High chargeback rates can attract the attention of regulators and industry standards bodies. This could result in additional inspections and stricter compliance requirements, increasing the operational burden on the company.
Common reasons for chargebacks in iGaming
Let’s look at some of the most common causes that lead customers to initiate chargebacks after using iGaming platforms:
Friendly fraud: Occurs when a customer places a bet, loses, and then disputes the charge claiming not to recognize it or authorize it.
Unrecognized transactions: Customers may not recognize a transaction on their statement.
Fraudulent activity: Scammers using stolen payment credentials on iGaming sites can cause the true account holder to receive unauthorized charges.
Customer dissatisfaction: Although less common, some players may dispute transactions as a result of a negative gaming experience.
The solution to chargebacks lies in Bitcoin
Currently, 25% of all online betting payments are made with cryptocurrencies. And around 50% of all online Bitcoin transactions are related to gambling.
Moreover, 2024 is the ideal year to accept Bitcoin in businesses. That’s why Bitcoin payment platforms emerge as standout solutions.
Bitcoin offers irreversible transactions that eliminate chargebacks, while providing additional benefits such as reduced transaction costs, improved security, access to a borderless global market, and faster processes thanks to Lightning technology.
An effective strategy combines:
- Integration of Bitcoin payment solutions.
- Rigorous identity verification.
- Utilization of fraud detection tools.
- Accessible and efficient customer service.
These strategies not only effectively address the issue of chargebacks in iGaming but also enhance business operations. They improve the user experience and expand market reach.
Avoid chargebacks in iGaming with ElenPAY
ElenPAY is the optimal solution to end chargebacks in iGaming. Using Lightning Network technology, it facilitates instant, low-cost, and irreversible transactions.
Our mission is to level the playing field, allowing licensed operators to compete on equal footing with unregulated ones. This is possible because our Bitcoin payment platform aligns with legislation.
ElenPAY provides a payment solution that respects regulations. But not only that! It also offers a powerful analytics platform. Therefore, it’s the winning bet for all parties involved in the iGaming industry:
- Regulated operators can expand their business overnight and gain market insights, anti-fraud capabilities, and AML capabilities.
- Players get more options to bet with Bitcoin on platforms they trust.
- Tax authorities get taxable revenues that would otherwise go unnoticed.
Discover how ElenPAY can make a difference in your chargeback strategy, elevating your iGaming business to new horizons of security and financial efficiency.
Request a personalized demo today and start your journey towards a chargeback-free future.
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