CellPoint Digital: What the Video Game Industry Can Learn From Payments | The Fintech Times

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With seamless transactions forming the cornerstone of modern gaming systems, the process of paying for a game remains well behind what we’d expect from the ability of modern paytech systems. 

Mark Patrick, Global Head of Payments at CellPoint Digital
Mark Patrick

The variability of paytech within gaming remains far behind the variability of the games themselves. For one, cross-border purchasing remains a particular challenge, with some payment processes being unable to align themselves with international capabilities. 

This stunted area is an area that’s widely discussed here by Mark Patrick, Global Head of Payments at CellPoint Digital. Patrick investigates stalling gaming payments, whilst putting forward a payment solution that could work for everyone. 

Patrick’s expertise is in cross-border payments. He has developed and implemented strategies and solutions for fintech start-ups and global payment powerhouses such as Mastercard, Visa/Cybersource and Ingenico. His current mission is to execute a global payment strategy for CellPoint Digital that will continue to disrupt the traditional value chain and deliver a step-change in the industry.
THE video game industry is one of the largest and most lucrative sectors around, bringing in $162.32billion in 2020 alone. Yet, payments technology within the gaming space still lags behind its contemporaries. While retailers who sell video games, both specialists like GAME and broader eCommerce stores like Amazon, offer a wide range of alternative payment methods (APMs) and can manage cross-border payments, the direct platforms for purchasing video games vary wildly in terms of the options available.

As we’ve seen in other verticals, both airlines and retail, in particular, the customer user experience (UX) is greatly improved when they are allowed to make a payment in the way that’s most comfortable for them, whether that be in the same currency or an APM of their choice. While the gaming sector may be thriving, its store checkouts need improvement, and the best way to improve is to learn what it can from other sectors.

Meeting the minimum requirements

There are several small online platforms where customers can buy video games directly, and we don’t mean retail stores (although technically they could fall under that umbrella). In the gaming industry, there are several systems that customers play games on and each of these has its own eCommerce store, sometimes multiple. Each of the three leading consoles (Nintendo Switch, PS5 and Xbox Series) have their own bespoke stores accessible through the system, as do both Android and iOS devices.

For PC gaming, there are far more options available which come in two varieties: launchers (STEAM, Epic Game Store) and browser-based stores (GOG, Humble Store). Depending on the marketplace, the number of payment options available is limited.

If we look at Nintendo’s eShop, its store for buying digital Nintendo Switch titles, the options for payments are very limited. It accepts debit and credit cards, its own pre-paid gift cards, and allows users to connect to PayPal to take payments. These options are available on every single store, regardless of platform and store type. Unfortunately, that is where it ends for Nintendo’s proprietary platform.

The PlayStation and Xbox stores are only marginally better. They both allow for mobile payments directly from providers (like EE and Vodafone) in certain regions, and Xbox takes direct debit in Germany only, but that is the extent of its offerings. All three of the major gaming platforms offer very limited payment options for its customers, and this extends to the browser versions of their stores.

The Apple Store and Google Play Store (as well as the Galaxy Store) don’t fare much better, but they do allow for use of their own Apple and Samsung wallets respectively. All three of the major gaming platforms do offer bespoke wallets of their own, but these are also limited. Going back to the eShop, when making a payment you can either pay the exact amount of a purchase, or you can upload funds to a virtual wallet. These funds can currently only be uploaded in predetermined chunks (£5, £10 and £20) which are too general to help with the very specific pricing that may arise when making multiple game purchases.

Cross-border purchasing

On the opposite end of the spectrum, browser-based eCommerce platforms are massively varied, accepting all the previously mentioned payment methods, but with the addition of things like AliPay, Amazon Payments, YooMoney and more. The Humble Store even accepts Buy Now, Pay Later with Klarna (although, this is only for US customers right now). STEAM and the Epic Games Store don’t have quite as many options, but they still have plenty. Most notably, the use of multiple currencies.

Where applicable, many of these stores will offer the price of games in local currency, with GOG covering the most regions (43 unique currencies, and if a currency is missing, it will default to dollars instead). For these stores, it is a simple press of a button to switch from one currency to another. Unfortunately, this standard isn’t found everywhere.

While the console and mobile stores do have the option for customers to purchase from different regions, this often involves making or setting your shopping account to that region and even then, payments are ‘region-locked’.

On the Nintendo Switch eShop, for example, if you wanted to purchase a game from the Japanese store then you would need to first purchase a pre-paid card, as UK debit/credit cards will not work. Even then, the pre-paid card needs to be from Japan as these are ‘region-locked’ as well. In some cases, the PayPal option is cross-border but, it isn’t available in every country.

Clearly the payments process needs updating, and some steps have been made towards this. A UK card does work in other European countries, as well as in South America and sometimes Australia. Meanwhile, a US card will work on the Mexican and Canadian stores, so some level of cross-border payments are taking place. But to reach the level that this industry should be striving towards, consumers should be allowed to buy a game from any region they want, with their own local currency and payment methods.

The multi-acquirer solution

In order to allow for multiple new payment methods, as well as purchases from different countries with local payment methods, the video game industry’s best choice would be to adopt a multi-acquirer strategy. According to a study in 2021 by ACI, over 60 per cent of merchants already have such a strategy in place but adoption has been dependent on the sector and region they operate in. What is universal though, is the benefits this solution brings to merchants.

A multi-acquirer strategy is one in which a merchant holds accounts with more than one acquirer and so can send a transaction to the best acquirer for the method of payment being used. In the case of allowing for cross-border payments and the use of local currencies, what this means is that the merchant can host acquirers from each region in one solution and give each region’s store access to all acquirers. So, if a UK account is used on the Japanese store, it is still processed by the UK acquirer. This strategy also works for alternative payment methods, ensuring the best acquirer for the job every time.

This is only one of many benefits that the video game industry can ensure from moving to a multi-acquirer strategy. For merchants who accept payments in one currency while accepting settlements in another, the cost of processing those transactions can be prohibitively high.

In many cases, processing transactions cross-border can result in incremental costs of as much as one per cent. Intelligent routing of transactions using a combination of payment types and processors can also drive the overall transaction cost down, while increasing the likelihood of obtaining an authorisation.

There is also, of course, an increase in sales as consumers are no longer restricted when purchasing games from other regions, ones that may be exclusive or released early there. With a Payment Orchestration Platform forming the bedrock of a multi-acquirer strategy, merchants can use a custom-designed solution to manage multiple payment service providers (PSP) and more easily achieve compliance with payments regulations across multiple regions.

By developing a multi-acquirer strategy, video game companies and merchants can plug into different acquirers across the globe and allow for more payment options on their digital storefronts. This is a feature that has been seen across several sectors already with proven results on improving the user experience and as the gaming industry continues to be one of the most recurring sectors for payment transactions it is important that it follows suit.

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