Fantasy Sports Payment Processing
August 11, 2020 | Merchants | Dustin
Fantasy Sports Merchant Account
With an increasing rise in sports and online gaming, many people are considering growing their own fantasy sports business. In order to have an online shop, companies will be looking for merchant accounts that are suited to their industry. As online fantasy football, basketball, hockey and other esports take the stage in online entertainment, customer transactions will flow into new websites. These new havens for ecommerce and strategic gaming share a unique factor when it comes to processing payments. Not only do they accept payments, but they also allow players the chance to get paid in return. This means fantasy sports are considered a form of gambling, and resultantly, a high risk industry.
Fantasy Football Payout Model
In many models for fantasy football and fantasy sports alike, there is an upfront fee associated with a season. Before building your team and watching your players dominate the field, you have placed your wager. Often, these antes are shared in a pool with other players. Each of them hoping to win big and take a larger portion of the overall prize. But when it comes to payouts, banks have their own set of wagers.
Payment Processing for Fantasy Sports
Certain banks have different levels of risk and restrictions when it comes to payment processing for fantasy sports. Banks that are very open to accepting those business models typically have what’s called a “Legal Opinion Letter”. This will state that the business does not require a Gambling License and is legal in all states where they grant the sale of their service. If your state approves of your business, you’ll be eligible to qualify for a fantasy sports merchant account.
Square Prohibits Fantasy Football
If you’re looking to get into esports be sure to look for the right kind payment processing. The fantasy esports arena has stricter regulations than most. For example, payment processors like Square place these companies on their prohibited items list. Square does not allow – “betting, including lottery tickets, casino gaming chips, Fantasy Football, off-track betting, and wagers at races.” Luckily, there are other places that have large appetite for businesses in the esports sector such as PayKings.
What You Need For Your Fantasy Sports Merchant Account
To start, banks want to see a transaction history. If you have three to six months of purchasing volume, and show that the transactions have low chargebacks, a bank will look favorably at your application. For example, if you were using PayPal or Square or Stripe in the past, you would be able to share your information in these accounts to help you get a more sustainable solution. Additionally, you should be a registered business in Canada or the USA. Offshore merchant accounts require international banking partners who specialize in processing payments with different countries.
Chargebacks in Ecommerce
Chargebacks are always a concern in any vertical in high risk merchant processing. This is why most banks have an approximate 2% threshold. This can be configured by either the number of transactions or the volume of sales. Fantasy sports is no exception to this rule. So with that three to six months of processing history, the bank is really looking to see that you didn’t have high chargebacks. This single factor (outside of general fraud) is their largest concern. In terms of branding, another factor they consider is reputational risk, which is more subjective based on the message your company and website are projecting.
Fantasy Sports Payment Gateway
Assuming your business can meet these criteria we have banks that are willing to work with you. Be sure to compare rates in your industry and find the payment gateway that helps you process transactions smoothly. Once you’re set up with an account and a service to transact online, you’ll be ready to take on the competition in fantasy sports.
August 11, 2020 | Merchants | Dustin