This case study discusses how the Payment21 payout solutions helps licensed gaming merchants to expand market share and realize the potential of a new target group. The online gaming industry is filled with various payment options that are tailored the regulatory requirements of many jurisdictions, but smart gaming operators know they have to do something different to stand out.
A regulated Bitcoin payouts solution
“Our Bitcoin payouts solution gives our merchants a cost-effective tool to pay their users and suppliers across the globe in a safe, convenient and compliant way,” says Pablo Magro of Payment21.com. “As an AML-compliant digital cash processor, we can handle all of our clients’ specific regulatory requirements, even when our merchants are multinational enterprises dealing with multiple jurisdictions simultaneously.”
By working closely with Payment21.com, a Swiss-based FinTech firm, gaming operators evaluate how their customers could potentially use bitcoin payments in their platform. “We’ve identified the need for a solution that assists merchants in accepting bitcoin payments riskfree in exchange for their products or services,” Magro added.
“More importantly, we’ve also seen the need for solving a much bigger gap in the payments space, which is why we’ve incorporated a Bitcoin payout solution to pay players and affiliates.”
Once tried, merchants and their customers alike love bitcoin payouts. It is perceived as an additional win. Many players regard digital cash as an object of great value, such as traditional collector coins made out of gold. Tech-savvy players appreciate bitcoin as a smart investment
with added value in the future. In this context, bitcoin functions as a bonus that one stores in a piggy bank on a secure cloud allowing players to save and spend digital money at their own discretion.
Changing the game in payments
Bitcoin is a real game-changer for the gaming industry. By offering a solution that facilitates cross-border payments in real-time, operators can expand into new regions. This can help merchants reach new players in emerging markets where it can be difficult to pay over the web because of high transaction costs and lack of access to banking.
Real-time payouts: Unheard of in the industry
The Bitcoin payout solution enables merchants to offer fully automated real-time payouts to their users and affiliates directly from their own website interface. Users can request withdrawals by clicking on a customized payout button powered by Payment21’s API. The payout button appears in the player account and offers global access to the cryptocurrency.
This real-time payout platform facilitates the exchange of legal tender, speeds up clearing and settlement of payments over the blockchain, reduces overhead and eliminates the need for manual reconciliation on the accounting end. The award-winning Bitcoin cashier system was
designed to ensure merchants’ compliance with gaming regulations, industry-specific KnowYour-Customer best practices, and the particular AML-compliance needs of banking partners.
When users want to cash out they simply start a payout request. The system checks the balance to make sure the player has sufficient funds to cover the sum requested. If the funds are available, they can be sent directly to the player’s Bitcoin wallet. Players are presented with the real-time Bitcoin exchange rate, so they know how much they will receive.
Benefits for merchants
Some of the key features include the following:
● Increased volume and accelerated cash flow.
● Higher deposits from new customer segments.
● Merchant expansion across all jurisdictions and serving new regions.
● Additional business due to marketing buzz in the Bitcoin community.
● No exposure to bitcoin volatility because of real-time exchange with legal tender.
● Savings in payout fees: 1% compared to significantly higher fees of competing
● Zero consumer fraud because of no chargebacks.
● Lowering of the minimum payout threshold.
● Technology-driven solution supporting merchants to enter the cryptocurrency space
using regulatory intelligence and mitigating risk.
● Payouts done in real-time or via batch processing in delayed-mode.
Payment21 recommends that merchants perform a cost-benefit analysis prior to introducing bitcoin payments. Payment managers at gaming operators are advised to calculate volume increases and provide forecasts to facilitate management’s decision-making.
As a rule of thumb, the following formula can be applied:
● First, depending on the merchant’s licensing status, add a lump-sum of 1% volume
increase for all applicable jurisdictions in Western Europe and North America based
on your existing turnover.
● Second, analyze your potential number of new players in emerging markets and
consider a max. 5% utilizing bitcoin for deposits, and max. 15% requesting payouts in
● Third, sum up the number of new players and the additional estimated customer
lifetime value (CLV).
Eventually, merchants should arrive to an estimated figure of the new business the company
was able to generate by adding bitcoin.
Things to consider before adding Bitcoin
● Demand from a new customer segment.
● Growth opportunities in emerging markets.
● Licensing status.
● Regulatory requirements of gaming authorities.
● Regulatory requirements of financial authorities.
● Compliance needs of banking partners.
● The following emerging markets are suitable for bitcoin payments: China, Hong Kong,
Macau, Taiwan, India, Pakistan, Bangladesh, Philippines, Vietnam, Malaysia,
Thailand, Indonesia, Japan, South Korea, United Arab Emirates, Argentina, Brazil,
Colombia, Russia, Ukraine, Georgia, Kazakhstan, Egypt, Kenya, Nigeria, Ghana, and
● Studies show that Bitcoin users are mostly tech-savvy males with above-average
● They are known to be young, urban, professional, intellectual digital natives – hence
the term YUPIDs is applied to this special segment of Generation Z – the so-called
● Acquiring this target group early on makes a lot of sense because they will be the big
spenders and decision-makers of tomorrow.
A fully regulated Bitcoin PSP
Payment21 is a fully regulated Bitcoin payment service provider. As a registered financial intermediary with the Swiss Financial Market Supervisory Authority, the processor can provide the necessary regulatory framework to accept bitcoin in any permissible jurisdiction.
There are strict rules about how to verify a customer and to whom a payout can be paid, and how to maintain transparent audit trails. All of these specifications are already built into Payment21’s system.
For gaming merchants, it is vitally important to have all the com pliance items covered to the fullest extent. Regulators and risk-averse banking partners are increasingly demanding that merchants work with a regulated Bitcoin processor that is licensed as a financial intermediary and provides AML-compliant transactions including proper KYC-practices.
The increased interest in bitcoin seen in the online gaming industry and others such as the affiliate network sector highlights the business opportunities available in emerging markets.
Bitcoin payouts solve a real problem for merchants facing limited settlement capabilities in some of the most densely populated countries in the world, helping gaming operators to finally reach out to players in underbanked regions and more efficiently serving new customer
segments. This payout solution contributes to the bottom line of merchants and makes the business more competitive.
David Nunn discusses the importance of e-commerce and how the pace of payments innovations is changing the market.
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