How do Prediction Markets Get Access to Financial Ecosystem?

How do online prediction service providers and gaming platforms gain access to the financial ecosystem and a secure payment gateway?

There has been a significant rise in the prediction markets over the past few years. Online prediction markets, including casinos, sports betting, lotteries, and betting on elections or financial instruments, are increasing. The economic and financial sectors also increase interest in the online prediction markets.

From 2021-2026, the online prediction market is expected to register a CAGR of 11.94%. The recent COVID-19 pandemic has also impacted the market positively. People turned to online platforms to bridge their financial and social crises during the lockdown. Restrictions on sports events during the lockdown have led to an increased interest in online gambling or prediction markets, according to research conducted by Lund University, Sweden.

According to Gambling Global Market Report 2021, Asia Pacific is the largest global gambling market, accounting for 38%. The prediction market industry needs to adapt to constantly changing regulations and the need to keep up with the evolution of mobile and online services. There is significant growth in the online prediction markets regarding real-time online payment transactions, on-click features, built-in biometrics, etc. However, the online prediction market industry has been facing challenges in getting direct access to traditional banking institutions to enable efficient online payment systems.

Challenges Faced by the Online Prediction Markets

The issues and challenges faced by online prediction service providers include:

1) The need for speed

If the online prediction market website or mobile application has a complicated sign-up process and online payment system, the users are likely to abandon the platform. Online prediction websites need a fast and easy payment system to deposit and withdraw funds. To retain customers, online payment systems have to provide a fast and seamless experience.

2) Lack of access to traditional banking institutions

Banking institutions are wary of gaming and gambling platforms. They do not provide efficient and effective services to online gaming websites. This further results in a lack of proper financial infrastructure for online prediction service providers. Moreover, online gaming platforms also face difficulty registering for a bank account for their company.

3) Fraud

With the increase in online businesses, cybercrime reports are also increasing. The lack of access to reputable service providers is one of the main reasons for increased cyber-attacks. Account creation and processing payments are the vulnerable parts of online businesses like prediction markets. A highly efficient service provider needs to monitor the important steps such as:

• ID verification

• Login monitoring

• Withdrawal and deposit of funds

• Actual games and tables monitoring

• Anti-Money Laundering regulators (AML)

4) Regulation

Online payment systems need proper regulation and compliance. In Asia, 32% of the countries have legalized online gambling. But there are many grey areas, and some regulations are not as strictly enforced. So in as many as 80% of Asian countries, people still gamble online regardless of regulations.

Regulatory requirements have always posed a difficulty for businesses in this industry. Merchants struggle to keep up with the ever-changing rules, but many countries know that this industry brings revenue to the country. Singapore, for one, has announced the establishment of a new gambling regulator to oversee the entire landscape of the country.

5) Chargebacks

The dispute of transactions by customers will lead to a chargeback. Reasons for chargebacks include non-receipt of services, fraud, or dissatisfaction. It is difficult for online prediction markets to recognize whether a chargeback request is genuine or fraudulent. When a customer disputes a transaction and gets away with it, there are chances that the same customer is likely to do it again within 90 days.

The more chargebacks an online prediction market has to pay, the bigger the impact on its reputation. By taking the help of a reliable payment processing partner, online prediction markets can reduce the rate of chargebacks. However, every online merchant needs to be prepared for the possibility of customer chargebacks even when the purchases are legal. Some payment gateways like XanPay, focus on real-time local payments without credit cards, which eliminates the problem of chargebacks.

6) High Risk

Online prediction websites are considered to have a high risk due to various reasons like age restrictions, diverse global laws, chargebacks, money laundering and fraud, high-volume turnover, etc. An efficient payment processing provider will help online merchants to reduce the risk.

It is crucial to choose an efficient payment gateway provider who is impartial and offers a consistent service to all types of online merchants, including those in the online gambling industry. A reliable payment processing partner will help reduce the risks involved in online businesses by using the latest data protection technology and fraud prevention mechanisms.

XanPay: Get Access To Financial Ecosystem With Ease

XanPay provides effective payment processing for online businesses like the sports betting business, online casinos, and gambling websites in the prediction market industry in Asia. It has the technology and tools to ensure that customers have hassle-free, quick transactions. Being an experienced payment service provider, XanPay follows the best practices for security and reduces the risk of fraud and cyber-attacks.

Online prediction businesses can integrate the XanPay payment gateway easily to start accepting payments from their users with no chargeback liability.

By integrating with their API, your business can get paid in 100+ more ways via popular local payment methods.

Furthermore, they boast a fast KYC lead time that approves merchant accounts within 5 days. This is 52% shorter than the time taken by traditional banks or large payment providers like Stripe or PayPal.

Stop Waiting And Start Growing

The online prediction market is one of the fastest-growing online industries and is expected to increase during 2021-2026. Local payment solutions are alternative payment methods widely adopted across many regions. Developing Asian countries such as Malaysia, Indonesia, and India will gain 70~80% more market share in 2020.

Learn about the top payment trends to watch out for in 2023!