Video gaming is booming. The industry will be worth more than $200 billion by 2023, up from $155 billion this year, according to recent research . But what about its payments — are they booming too?
It’s a relevant question because payments have become strategic. They’ve gone from boring to boardroom, precisely because they power so much within the business. Payments enable everything from revenue collection to customer loyalty, and fraud prevention to effective expansion for progressive players in the video game industry.
How to optimize payments in the video gaming sector
Recent research notes that the popularity of free-to-play (F2P) games, such as Fortnite and Call of Duty Mobile, is intensifying the move to in-game monetization . PC games will be the most lucrative segment for in-game purchases — estimated to total $32 billion across the industry in 2023.
The Juniper report also shows that cloud gaming and other video game subscriptions will grow at an average rate of 9% per year for the next three years, generating more than $8 billion in revenue in 2023. Gaming operators clearly need to optimize payments for in-game microtransactions and recurring subscriptions to take full advantage of this opportunity. But what does this mean in real terms?
Here are five ways you can begin to optimize your payments:
Tokenize payment details
It’s key to ensure that gamers’ payment credentials are stored safely and ready to use time and again. This involves tokenizing card data, storing this securely, and using the same payment tokens no matter whether the customer plays via PC, tablet, console or mobile. For gamers, this is a secure and convenient way to pay without revealing or typing out card details each time, thereby minimizing friction and technical churn.
Of course, gaming operators also need the most up-to-date payment credentials when it’s time to bill. Good payment providers can provide automatic updates to card details if cards are lost, stolen or updated. This avoids any breakage in subscription or friction mid-game while attempting an impulse purchase and delivers an improved customer experience in addition to the benefits to the operators’ bottom lines.
Ensure payment arrives
It sounds simple, but check that payment from customers land in your bank account. With bank-based payments, this means checking that the debit makes it through to your account. Other forms of payment like cards or e-wallets have a retry logic based on decline reasons to attempt to capture the payment if the initial attempt fails.
Maximize approval rates
You need to understand where you’re getting the best approval rates for each transaction type and ensure your routing payments through the path most likely to get approval. This may involve leverage tools that facilitate smart payment routing and cross-provider monitoring. Remember, payments are not a single component but a toolbox, so testing tools against each other and selecting the best are the steps on the path to a truly robust and optimized approach to payments.
Distinguish good from bad customers
Fraud attacks on gaming platforms are up 30% . But there’s no sense in letting a small but significant minority dictate the overall customer experience — or impact your profitability and reputation. This means distinguishing good customers from the bad ones looking to commit fraud abuse accounts or acquire in-game currency to sell for real-world money, also known as ‘gold farming’.
Friendly fraud — when a customer disputes a legitimate charge — is another common problem in the video gaming industry. This type of fraud may occur when a gamer decides to spend money on upgrade packs to beat a certain level and comes to regret it later. Or, as we’ve seen in many headlines in recent years, it can also occur when purchases are made without the cardholder’s permission.
Rich payments data and analytics can allow you to introduce the right amount of friction to your processes as needed. This way, you can tailor the experience for good customers to make microtransactions in-game, minimizing disruption on subscriptions and reducing technical churn. Simultaneously, you apply extra user verification or step-up authentication to detect and deter bad customers, in line with your risk-based approach.
Make it easy to pay
Gaming appeals to a wide demographic, including many under 18s and those without bank accounts. It doesn’t matter whether your business model relies on in-game purchases, subscriptions or both. Quite simply, you don’t want to turn customers away because they cannot pay you. This is a real prospect if you don’t accept local payment types that gamers know and trust. That’s everything from PayPal and Venmo in the US to cash-based options, such as Boleto and OXXO in South America.
Payment is local but also personal. Offering various payment options shows that you’re supportive of your customers’ needs. And understand that there are important reasons behind how they choose to pay.
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