PAYMENTS 101


One of the fundamental aspects of any enterprise in the iGaming industry is that of payments, to ensure the fluidity of cash flow both into and out of your business.


Available options for affiliates in today’s sector, and those that work best in specific markets.

AFFILIATES COME IN all shapes and sizes, from serious professional to ultra casual, and inhabit all corners of the earth. What they share is that they are highly manoeuvrable, and can quickly take their services elsewhere if they are dissatisfied with the delivery of rewards.

Given the variety of verticals and the geographical dispersion of their homes, mastering the art of paying international affiliates is a challenge for affiliate managers. From the perspective of the affiliate, it’s important to understand how you’ll be paid, in what currency, and with what frequency and negotiability. Here, we explore the options and rate their effectiveness, then inevitably explain why some work better than others for some fields and countries, and why.

For the purpose of this discussion, an affiliate can be defined as a person (or company) who directs traffic to a site for a payout or other reward. And I’m going to assume that your prospective affiliate program has a reliable way to identify its affiliates, calculate their rewards, and a dashboard of some kind that presents them with options as to how to receive their compensation. What are the sensible options?

The scope of this summary excludes ‘transfer affiliates’ - that is, affiliates who collect and consolidate funds on behalf of businesses and remit large sums to them in return for a commission. The dynamics involved in the collection of high values from complex remote jurisdictions and subsequent remittance of high value commissions and/or winnings are completely different to those appropriate for more modest payments.

(1) Benefits in kind

If you are doing affiliate work for fun, or to enhance your player experience and it’s not an important source of income or a living for you, then don’t discount the effectiveness, or cost-effectiveness, of on-site affiliate rewards. There is a sizeable group of affiliates who promote sites because they like, or are genuinely interested in, the product or service. Even away from the web, there are millions of people who hold parties, visit their friends, or corral relatives into buying lingerie, kitchenware and jewellery, for example, in order to earn credits towards similar goods for their own use.

Likewise, a knowledgeable poker player may promote a favourite site in return for credits to play at tables. Benefits in kind can be particularly cost-effective where gaming affiliates are concerned because the odds are decent, in favour of the house, meaning the affiliates will eventually give their earnings back to the house. With this in mind, managers can afford to be generous. You can receive credits which are considerably more generous than the cash rewards offered for similar achievements.

(1 b) Benefits in kind - others

A handful of programs offer the ability to purchase goods from other suppliers as an affiliate incentive; Amazon gift vouchers represent one of the most common examples. My experience is that these are not particularly popular as they tie the affiliate to making purchases from one chosen supplier. If you want the chance to go shopping with your rewards, look for an affiliate program that offers prepaid gift or ‘virtual’ credit cards. With prepaid cards, affiliates legitimately feel that they have received real money to spend as and where they please.

(2) Real money

The needs of a sizeable proportion of affiliates, particularly those of corporates and professionals, are unmistakably simple. They want to receive real money - that is, affiliate commissions that are quickly convertible to cash. There are a number of ways to receive real money rewards and where you live is an important factor in considering what the practical payment options are for you.

Here are the main contenders:

(a) Cheques

People in countries like Holland or Finland which have done away with paper payments may not realise, but cheques remain very popular in much of the rest of the world. They are affordable to obtain and send; they are traceable; they cross borders seamlessly and leave the affiliate with a range of options for encashment: deposit at your own bank, cash at the cheque cashing store, or sell to a friend. The trick with issuing cheques for affiliate commissions is to make sure that the program sends you cheques that are relevant in your home country. This means, you need to be able to deposit your cheque at a reasonable cost in the country where you work and live. A US dollar cheque is useless to an affiliate in Brazil; a Sterling cheque is equally useless to an affiliate in India.

The good news is that, if you particularly like a certain program but it doesn’t offer this option at present, the manager doesn’t have to be persuaded to whizz around the planet opening bank accounts to facilitate international payouts. There are companies that specialise in issuing paper cheques for affiliate commissions: like www. countinghouseltd.com for gaming-related payments and www.chexxinc.com for non-gaming. All of the major suppliers in this marketplace are publicly visible and identifiable on the Internet, and it’s easy to make sure that the company really can issue cheques drawn on banks in the specific country where you want to draw down your earnings.

When evaluating the reliability of cheque providers used by your affiliate program, take a good look at what verticals they serve.

If your field is Adult Online Entertainment (AOE, a popular way of spelling 'porn'), make sure gaming payments aren’t included in the portfolio of services. And if you receive cheques from a gaming provider, make sure they don’t operate accounts in the USA or other complicated jurisdictions which could result in the entire structure of the company going down. There are plenty of precedents showing just how bad it can be when a large provider to one field gets nailed for operating illegally in another.

(b) OFT (Original Funds Transfer) to Visa and MasterCard payment cards

This is an inexpensive, traceable and easily tracked way of receiving affiliate payments if you have a Visa or MasterCard (including debit cards). There is a lot of mythology surrounding these payments, and I have written extensively on this in the past. Here are the straightforward facts:

• They are not expensive for the issuing company. They should not cost you more than €1.50, or about ?1.25, if your program manager buys OFTs through a knowledgeable and fair supplier.
• They work well in Europe, less well
in Asia and South America, and poorly in North America.
• Some banks block OFTs on the assumption that all are gaming payments. This is an error but is prevalent, for example, in Spain where they are not accepted on about 60 percent of cards issued.
• They can be sent in any currency, to any card.
• The payment limits are very high.

Indeed, there is little reason to anticipate that any normal affiliate transaction would ever breach them.

• It is not a requirement that the merchant (affiliate program) has taken an original deposit from you on the card. The whole point of OFTs is that they are the first transaction with the card. The exception is if you pay gaming winnings by OFT onto a payment card, which is not included in the scope of our conversation here.
• They can be sent in any currency, to any Visa or MasterCard; however, countries with protected currencies don’t perform well with them (Russia, China, India, Brazil, and Argentina are the largest culprits).

(c) Prepaid cards

In both their real and virtual forms, prepaid debit cards have garnered huge press and attention in recent years.
Under this heading we should not disregard mobile payments. The prepaid debit card grew out of prepaid phone card technology; in a curious return to roots, payments to consumers, especially in difficult countries like China, are increasingly taking advantage of mobile technology when more consumers have mobile phones than plastic cards.

The notion of 'prepaid’ as a payment method is simple; a plastic payment card (or an Internet representation of same) can be mailed or emailed to a payee, pre- loaded with funds or subsequently used as a place to send funds. There are thousands of providers of physical cards, from well known to barely known, most with Visa, MasterCard or American Express brands.
In the USA, you could probably buy 50 different cards without trying very hard. Some work only in the USA; some work internationally. If your program manager can meet the minimum order quantity, it is possible to you may even receive a card branded to the site, and the program manager may be able to choose the design. Some US banks even let merchants design their own individual cards online and order them through Internet banking.

The prominent provider of virtual cards, Entropay, is heavily engaged with the gaming industry despite ongoing attempts to widen its image and portfolio. This is both a blessing and a curse, but there is no doubt that the firm’s delivery is efficient and easy to manage. The cards, which appear to be hosted and sponsored in Malta, are internationally usable and have effectively avoided many national restrictions on gaming use, making them acceptable for gaming affiliate payouts to many jurisdictions.

Prepaid cards have many attractions for paying lower values, not least the speed of reloading after the initial card is issued, and, if the project is large scale, the ability to manage a program with some side benefits for the merchant. Physical cards are more costly than virtual; sometimes this cost is passed to the affiliate, so be sure to check before ordering a physical plastic card based on a virtual issue message. The downsides involve the risks of postal loss, cost of initial issue, and their poor record as a way to deliver actual cash - issuers typically have high charges for ATM cash withdrawals on the cards and sometimes for the initial delivery of a plastic card.

A final restriction on the use of prepaid is the compliance angle. While low values can typically be loaded with no more than an email address, more successful affiliates who earn four-figure sums will quickly be required to provide additional compliance documentation and you may not be willing to do so. Many prepaid cards come with annual limits for loads, so it’s definitely not a solution for high value affiliates.

(d) EFT, bank transfers and wires

There is no reason why affiliates who are willing to provide their bank details should not be paid directly into their own accounts. Particularly in the developed world, critically Europe, North America and the more advanced countries in Asia, there are well developed local transfer systems that can be accessed at a cost of cents, rather than dollars or pounds, per transaction. These are, therefore, very popular with affiliate managers in the current cost- driven environment. A multi-currency processor will facilitate low-cost transfers into 50 countries or more, so again, affiliate managers don’t need a massive suite of bank accounts to direct low-cost payments.

Direct transfers are particularly attractive for affiliate commissions in the USA and Canada, where they are extremely cheap, and the UK, where they are extremely fast. The facility today exists to have payments to UK customers made 24/7 with typical delivery of funds within 15 to 20 seconds of execution of the payment order and very low costs.

If you are in the UK and aren’t receiving your money with lightning speed, ask your program manager to implement ‘UK Faster
Payments’ which are truly state-of-the-art in terms of local payment processing.

Wire transfers are more expensive, but valid options for higher value transfers, payments to many less developed countries, and situations where speed is required. Pricing tends to be in dollars and pounds rather than cents or pence, usually double digits, so you may be required to pay a small fee towards the cost of delivering funds to you.

(e) Payment wallets

No one who shops on the Internet can have failed to notice the plethora of payment wallets available to consumers who wish to deposit their funds in a convenient spot, then shop securely with web merchants. PayPal, Moneybookers (Skrill), NHTELLER, there is a long list and many have integrated solutions with many facets. What is slightly less well known is that merchants (in this case affiliate managers) can utilise the wallet system to distribute funds to affiliates, who then can spend the funds from the wallet or, in many cases, cash them out via the wallet using one of the aforementioned methods. Costs are quite cross border aspects: an affiliate manager in one country wants to pay affiliates in another, and struggles to get cost-efficient payments to them in a timely manner.
 
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