Trustly’s open banking revolutionises the payment landscape
There are plenty of operator pain points when it comes to payments, from sign up drop offs, to slow transactions, compliance checks, to high costs. It’s a tough ask for operators to find a solution to all of these themselves, and that’s why the spotlight right now is on open banking.
Payment specialist Trustly has identified how to help operators streamline their payment processes. Welcoming the new modern way of making payments with seamless and instant transactions which work alongside important data verification products that facilitate compliance, Trustly is solving the industry’s biggest challenges.
What is open banking and how does it work?
If you’re based in Europe, you’ll be familiar with PSD2, or open banking as it’s more commonly known in the UK. If you haven’t heard of it, you’re about to be introduced to the regulatory revolution of safer online payment processes.
PSD2 grants secure and fast payments for users and businesses. With PSD2 payment methods like Trustly connect via multiple channels and power the real-time movement of money. Key factors of PSD2 are speed of the payments, secure but seamless verification, trust – customers feel more secure when they can select a familiar, trusted route to make a payment.
“Since the introduction of PSD2, almost all online payments are required to perform at least one strong customer authentication (SCA), including debit card payments. As cards were developed for in-person transactions, they are not optimised for SCA and many verification methods add unnecessary friction to the depositing process.
“Open banking payment solutions like those from Trustly have had SCA integrated from inception so that users can authenticate with a face or fingerprint scan, resulting in a seamless payment experience.”
Trustly was founded in 2008, before open banking was even on the industry’s horizon, and the supplier has become one of the first providers of direct bank account payments for the gambling industry. Over the past few years, and with key learnings from what the biggest payment challenges are in the industry under its belt, Trustly has helped shape and evolve the payments landscape.
“Due to our experience and our efforts spent trailblazing in this space, we have been involved and even consulted on landmark legislation designed to strengthen and expand open banking,” Haragezova-Bilota explains.
“Members of the Trustly team including our former CEO advised on the drafting of PSD2 for example, which has revolutionised the payments landscape across Europe and empowered millions of people to take control of their financial data.”
What does this mean for the gambling space?
For the gambling industry, this means there’s a focus on putting the user first, doubling-down on compliance and streamlining processes that were once arduous at best. For operators that are now using open banking, players have an onboarding process that is unlike any they’ve seen before.
If you’re wondering what problem open banking solves in the world of gambling, we could draw up a list.
For instance, instead of a user having to manually send through the required documentation like bank details for verification checks, open banking can do this in a matter of seconds by linking directly with the user’s bank account.
By sharing banking information from app to app, authentication is quick and easy, and better still, eliminates any potential for fraud.
“The potential to move money instantly via open banking is of special importance to the gaming industry and for gaming operators,” Haragezova-Bilota says. “Real-time money transfers are naturally beneficial in other verticals such as ecommerce and financial services but those merchants can accept a longer processing time as they cannot fulfil and complete an order instantly.
“Gaming operators have a much clearer need to receive payment quickly in order to not incur losses after crediting a player’s account.”
Haragezova-Bilota has noticed the change in the payment sector for herself as Trustly puts open banking at the forefront of its offering.
“Our product offering includes the revolutionary Pay N Play product that combines deposit and user verification into one seamless onboarding flow so that players can start gaming quickly, skipping lengthy registration forms all while keeping operators compliant,” she says. “Compliance-wise, we have a suite of data products that provide important KYC insights through open banking connectivity like NameVerify and AgeVerify.
“We also have a heavy focus on our affordability feature in the UK that gathers key financial information on consenting users so that operators can ensure that their players can gamble responsibly.”
The benefits of pairing open banking and gambling operators
One of the benefits to this is the extra data verification that includes affordability checks that open banking can carry out for players. In layman’s terms, these affordability checks will ensure that a player is gambling with money they can actually afford to gamble with, like a bank does when considering someone for a mortgage. It’s already caused ripples of debate across the industry.
The BGC has warned that intrusive affordability checks could “undermine the customer experience” and have the unwanted effect of sending high-spending players to unlicensed sites. Haragezova-Bilota, however, argues that it is solving a big industry challenge with a “technologically modern user experience” which, in a world of instant gratification, will help, not hinder, the industry.
“In terms of feedback so far, around 80% of modern consumers in Europe prefer to pay with debit and authenticate through a digital and biometric solution like the one offered by Trustly,” she says. “According to our case studies, after using Trustly for the first time, most new users continue paying with Trustly and continue using the merchant’s services. We see an increase in first time depositors too, attributed to a higher conversion rate.”
Other advantages include driving merchant costs down, offering seamless UX, instant deposits and automated withdrawals, high conversion rates alongside the additional data verification.
With an ever-growing focus on safer gambling, the use of open banking can automatically streamline the user checking process, making the once fragmented or basic checks a thing of the past and ensuring that no one user manages to slip under the radar.
What does this mean for operators and suppliers?
As with all new processes, the adoption of open banking needs to be quick, easy, and most essentially, understandable to all. Users will not wait around to make sense of how it works; attention spans online are notoriously lower than ever, and that’s why it’s important that the onboarding process is as smooth as can be.
But it’s not just players that have to get their head around the new processes. Companies introducing payment solutions that use open banking have found themselves looking at other companies in Europe and wondering, have we got it right?
The pitfalls of failing to do so can be costly, especially if users don’t stick around to make use of an operator’s site. With competition rife, the last thing an operator needs is a large number of their users heading elsewhere.
And the stats show they are right to be concerned. Research from HooYu shows that, on average, 86% of UK online gambling customers pass KYC at sign up, meaning that 14% of customers are lost.
Pair this with the fact that just 83% of small and medium operators have a sign up and onboarding success rate, and you can almost see the yield tumbling out of the virtual slot machines themselves. So how do you solve the big retention challenge? Trustly believes it’s down to personalistion.
“Personalisation and the best user experience for returning users in merchant cashier is a key priority for Trustly,” says Haragezova-Bilota. “We are continuously focused on elevating our products to create an unrivalled user experience and personalisation is at the heart of that effort.
“In May 2022, we launched a new product feature called Trustly Express, which is revolutionising the returning user experience. Trustly Express allows users to store their bank account on file with merchants for seamless and fast repeat spending. First-time deposits have the same Trustly benefits of instant payins and enriched data. For all following deposits, operators that have activated Trustly Express will display the user’s bank logo, masked bank account number and bank account name in the cashier.
“Storing the user’s bank account on file reduces the number of payment steps by up to 50%, significantly reducing the time to deposit. Trustly Express also skips one of the SCA steps for increased conversion and customer loyalty.”
On the flipside, it’s not only the loss of potential users to consider if regulators decide to crack down on those not implementing more enhanced authentication and verification processes or deeming them non-compliant, there will be plenty of pockets empty across the industry. After all, regulatory settlements are stretching into eight-figures recently.
“Compliance is undoubtedly a critical part of our open banking product as it provides so much value to our gaming merchants,” Haragezova-Bilota explains. “Open banking allows users to consent to share KYC data they have provided to their bank with other merchants and services when they pay.
“This data is also what igaming operators are required to have in order to let users play on their sites. There is therefore a clear demand-and-supply equation that open banking solves in a seamless and unobtrusive way.”
The future of open banking and gambling working together
Much like with all changes to more traditional working methods, adoption from operators can be slow and sometimes not even forthcoming. Where does that then leave them in the gambling space? If, as Haragezova-Bilota predicts, open banking solutions will become the norm, operators that decide against using them will be left playing catch up in a race they’ve already lost.
She’s clear about the benefits, “While data products are important, open banking offers way more than just that. Seamless UX and close to 100% payment conversion rates are very important for the operators and that’s what Trustly can offer.”
So this now poses the question: are you ready for the payment sector revolution?
Payments and fintech enthusiast with expertise in Open Banking & account-to-account payments across different verticals – online gambling, financial services and e-commerce.
For the past 4 years Julija has been a frontrunner of the Account Management team at Trustly, leading business development initiatives for Gaming merchants. Prior to commercial roles, Julija managed B2B support team at Trustly. Julija has gained experience doing various management, operations and commercial roles in industries like payments, media and gaming.