A Guide to Merchant Accounts For Sports Betting Businesses

Man looking at sports betting results on phone

The sports betting industry is growing at an extraordinary speed, and the demand for these services is increasing. While the global revenue of sports betting is expected to reach almost 42 billion euros in 2024, a lot of businesses in this trade have found themselves struggling to keep up with the demand while also ensuring secure and efficient transaction processing.

Obtaining a reliable sports betting merchant would be the best solution here, of course, but that’s easier said than done. The high-risk nature of this industry makes it hard to attain a merchant account, as many financial institutions aren’t keen to take on such risks.

Luckily, there are payment processors out there that provide tailored solutions to establishments facing these struggles. We’ve sourced our expert insights to bring you this guide on how to set your betting business up for success by picking the right payment processor and the significance of the decision.


The Legality of Sports Betting Businesses

While the global market for sports betting is quite large today, there are countries where gambling of any kind is still illegal. Similarly, regions that have legalized sports betting require following numerous regulations. Regardless, it’s not something you can avoid—navigating these restrictions is instrumental to the success of sports betting enterprises.

To steer clear of potential roadblocks, it’s important to stay up-to-date on legal changes to ensure you’re operating in compliance with these laws. Operating in more than one country, as many betting businesses do, makes managing these ventures even more complicated because different regions may have different regulations. 

A merchant account provider with the needed experience and a proven track record can help you stay compliant, reach a wider market, ensure secure transactions, and promote the longevity of your business in a competitive industry like sports betting.


Who Needs a Sports Betting Merchant Account?

A betting merchant account is a bank account dedicated to enabling high-risk transactions within the betting industry. The high-risk categorization of these accounts stems from factors that are typically associated with online sports gambling, including:

  • Higher chargeback rates,

  • Legal complexities

  • Fraud risks

  • High-value tickets

  • Unpredictable transaction patterns

For businesses, being classified as a high-risk service provider can mean higher processing fees, more risks, and a narrow list of payment providers willing to partner.

Enterprises that typically require high-risk merchant accounts include:

  • Traditional sports betting sites
  • Sportsbooks
  • Betting shops
  • Fantasy sports platforms
  • eSports betting sites
Man sitting at desk typing on the computer

Sports Betting Platforms Payment Gateway vs. Merchant Account: What’s the Difference?

People often confuse the different purposes of a sports betting merchant account and a payment gateway for sports betting platforms.

merchant account’s sole purpose is to hold and release funds to ensure security. The dedicated merchant account is provided by the acquiring bank, and the fees for their services are usually deducted from the funds on the merchant account prior to getting sent to the primary business account. 

Whereas, a sports betting payment gateway’s aim is to facilitate the transaction process by authorizing the transactional data. The gateway serves as a cyber link between an acquiring bank and a merchant’s platform to determine whether a payment has been approved or not. 

Although these two tools may seem similar, they handle two different parts of transaction processing. Some payment service providers offer these services together as they complement each other and work hand in hand to ensure more efficient transactions. 

sports gambling platform generally requires both—a payment gateway to process the bets efficiently and a merchant account to handle the funds securely. That’s why a betting merchant’s best bet in this case would be to opt for a brokerage that can provide both of these services simultaneously.


Benefits of a High-Risk Merchant Account for Sports Betting Businesses

As mentioned above, sports betting businesses and fantasy sports platforms call for both a dedicated merchant account and a specialized gateway to guarantee efficiency and security in their operations. 

However, the benefits of these services go beyond those two, which include the following.


Access to Global Markets

As many betting merchants aim to offer their services worldwide, it’s important to be aware of and follow the dynamic regulations of different regions that might be restricting your reach.

Having a specialized high-risk merchant account as a sports betting provider may help you navigate these restrictions and reach a wider market since these accounts typically come with fewer restrictions on international transactions.


Enhanced Fraud Protection

Nowadays, the risk of fraudulent activities and cyber threats is higher than ever in almost every industry. The widespread accessibility of advanced technology poses a huge threat to the sports betting industry, specifically due to the high-value transactions and sensitive data being processed.

Hence, modern fraud prevention tools and advanced security measures have become essential for businesses in the sports betting industry.

High-risk merchant accounts tailored for sports betting businesses or fantasy sports sites can equip you with advanced tools designed to prevent such instances, like AI-driven tools, 3DS verification, and tokenization, for example.

Having such precautions in place not only provides peace of mind for you as a business owner but for your customers as well, knowing that their transactions and data are being handled securely. 

a scammer guy in front of a laptop smiling as he just took money from an account. Show some credit cards in the air around him

Flexible Transaction Limits

Standard merchant accounts are often limited by the transaction limits set by the acquiring banks, whereas dedicated merchant accounts come with more flexible capacities for payments being processed.

This flexibility plays a big role in adapting to on and off periods which stem from the seasonality in sports, special events, and promotional phases in the betting industry. Ultimately, having flexible transaction limits can ensure operational success as well as help you manage the cash flow of your business and aid in its growth even during peak betting times.


Diverse Payment Options

High-risk merchant accounts can also facilitate various payment methods, which can be a game-changer for businesses in the betting industry, as the diverse target market requires you to offer diverse payment options to cater to those needs, currencies, and (oftentimes) the hush-hush nature of those bets.

These payment methods may include e-wallets, credit cards, and even cryptocurrencies. Being able to cater to your clientele can help you reach a wider market and enhance the user experience, potentially increasing customer satisfaction and loyalty.

"As a sports betting or gambling business, the more payment solutions you use, the better. Customers in this niche are always looking for alternative methods and you should be able to cater to that. People want to be able to get their money out quickly if they win, and they should have those options."

Long-Term Stability

Ultimately, we can’t stress enough how beneficial it is for you and your business to get a high-risk merchant account tailored to the sports betting industry’s needs, at least when it comes to long-term business stability.

The specialized support, services, and unique tools these accounts come with (or at least what a PayFasto sports betting merchant account comes with) can enhance not only the transaction processing side of a high-risk business but also the operational aspects that can aid your business’s growth.

Although these accounts can come at a cost, since the added risks are reflected in the fees, it’s an investment that pays off in the long run with the protection it provides.


Key Features to Look for in a Sports Betting Merchant Account Provider

It’s important to research different payment providers before settling on the right one, as there are a lot of different ones on the market today.

Many promise instant approvals, obscure terms, and low prices. And while they might “seem” to offer those perks, most of the businesses we see rush to sign up for a low-quality account only to encounter issues later on (claims of instant approvals, for instance, are myths in high-risk industries unless the service provider is cutting corners elsewhere).

Regardless of the provider you end up choosing, there are a few essential elements any great merchant account for sports betting businesses should have. We’ve taken a look into the key points to consider when making your decision. 


Industry Experience and Expertise

Choosing a provider with a proven track record of successful merchants and the much-needed competence in the sports betting industry can be a game changer.

A provider that’s experienced and understands the unique struggles, dynamic changes, and needs of this industry can help you build a solid foundation for your business. Their invaluable knowledge of the sports betting industry and common challenges can help you troubleshoot and solve problems on the spot without excessive downtime. 


Fraud Protection

The level of fraud and chargebacks is higher than ever, and in the high-risk sports betting sector, advanced fraud prevention and risk management can make or break a business. That’s why any quality provider should take extreme caution to detect and prevent fraud.

Tools used for this might include encryption, 2-factor authenticators, 3DS verification, tokenization, PCI DSS compliance, machine learning tools, and fraud prevention tool filters, all of which are designed to protect customer data and make your betting platform safer overall. 

"PayFasto's fraud and security measures are industry-leading and constantly evolving. For the first 30 to 60 days, a real human dedicated to your account is building a fraud monitoring setup. After that, smart AI algorithms take over to build variables based on data and traffic. This helps control the fraud ratios, which is what they look at now—not chargebacks."

Competitive Fees & Transparent Pricing

High-risk merchant services are costly compared to those of standard merchant accounts. This is, unfortunately, something you can’t afford in the sports betting business. However, you can find a payment processor who’s able to break down the fees for you to ensure you know exactly what you’re paying for.

Remember, though, that it’s not always about finding the best price on the market. Instead, it’s about finding a provider whose prices match the quality of service and live up to the promises made prior to signing a contract.


Great Customer Support

Issues with a sports betting merchant account obviously aren’t life or death, but you are dealing with someone’s money (and usually payouts), which might as well be life or death for them. That’s why timely support in the betting industry is so important.

Unnecessary hold-ups and downtime can quickly (yet drastically) disrupt the operations of a sports betting business and lead to disputes. This can lead to financial forfeitures, loss of clientele, and damage to the reputation of your company.

Therefore, trust us when we say that having access to a truly knowledgeable team of industry experts to help resolve any issue as quickly as possible is going to help you succeed long-term in your business.


Integration Capabilities

Finally, don’t overlook the importance of integration capabilities, as it’ll make your life way harder if you can’t seamlessly integrate a provider’s tools into your existing systems. The smoother the setup process is, the faster you’ll be able to start processing payments.

In addition, a seamless integration can also enhance the customer experience. Betting clients need reassurance that their funds are being handled with care and that you’re processing their data securely. It’s easier to provide those kinds of safeguards with a reliable brokerage offering reliable and up-to-date tools. 


How to Apply for a Sports Betting Merchant Account

Preparation is key when applying for a sports betting merchant account (or any high-risk merchant account, for that matter).

Map out your needs and your expectations, and ask a lot of questions. It’s important to make sure you’re on the same page with your provider and understand what will be needed from your side. Therefore, it’s smart to start by gathering all the documents required before applying for a merchant account.

Collect the following:

  • Certificate of incorporation

  • Articles of association

  • Passport copies 

  • Proof of domain

  • Processing history of the last 3 months

  • Licenses (depending on the region you’re operating from and those of your target markets)

  • Website policies

  • SSL secure payment page

  • Company name and address

  • Customer service email address

These documents will help you kick off your onboarding process, which typically takes the longest due to the back-and-forth emailing to ensure your business is in compliance with all the security measures.

You should also be ready to provide further documentation, as gambling of any kind is more regulated than most other trades. Remember that being responsive and understanding during this stage of the process is best and can increase your chances of quicker approval. 

card with a face, a merchant with money and a terminal with accepted connected

Staying Compliant as a Sports Betting Business

As an online sports gambling platform, one of your most important tasks should be implementing measures that minimize chargeback rates and help handle disputes. Taking a driven approach and initiating a proactive relationship with your account provider is a great way to have an overview of your operations in that regard.

Regular reviews and account monitoring are some of the best practices to implement to reduce major issues and ensure security and compliance with regulations.

Having a more personal (re: professional yet close) connection with your payment processor can also help you get a step ahead of your competitors by foreseeing any bigger setbacks or changes in the industry. These may include changes in regulations, predictable trends, or possible security threats.


Comparing Providers: What Sets PayFasto Apart From the Rest

When comparing payment service providers, it’s often hard for newbies to differentiate the quality providers from lower-quality ones, as they’re not sure what to look for. That’s why we’ve identified some of the biggest red flags to keep in mind while you’re on the lookout for a new provider.

  • Unresponsiveness: Since most betting merchants operate beyond regular working hours, a responsive team should be one of the first things to look for.

  • Poor customer service: The betting industry requires quick thinking and a hands-on approach once a problem arises.

  • Over-exaggerated claims: Instant approvals are almost impossible!

  • Very low fees: If it sounds too good to be true, it probably is. The risks associated with this industry are typically reflected in the fees.

  • No track record: Success in the high-risk industry often requires experience.

  • Lack of transparency: If the processor can’t break down all the fees for you, there will likely be some hidden fees and added costs down the line.

At PayFasto, we’ve made it our mission to ensure both parties are on the same page and that our merchants, first and foremost, understand what they’re getting with our betting merchant accounts.

With years of experience, we’ve found that every business still has its unique needs despite being in the same industry as other merchants we’ve worked with. Hence, we aim to personalize every company’s experience with us.

Another top priority of ours is being available to our merchants around the clock, and that’s exactly what our team of high-risk payment experts offers. We understand that there is no such thing as clocking out after 5 pm for betting platforms, and issues might even need addressing at 11 pm on a Tuesday. 


Get a Quote From One of the Best Online Sports Gambling Payment Processors

Ultimately, to ensure a long-lasting and successful betting platform, it’s crucial to find the right account provider. This provider should offer advanced fraud prevention, have an established reputation, provide seamless integration, offer the much-needed support, and know the industry inside and out.

At PayFasto, we tick all those boxes and more for you to be able to offer the best solutions for every high-risk business, no matter the industry. 

For merchant account and payment gateway solutions from a provider who understands the needs of sports betting and online gambling businesses, get a free, no-obligation quote for a sports betting merchant account here. We’ll review your business information and get back to you ASAP.

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