On June 7, 2021, eSports organization Team SoloMid announced that they had made a $210 million dollar naming rights deal with crypto exchange FTM. This illustrates an increasing harmonization between gaming and cryptocurrency. In fact, crypto is becoming so intertwined with gaming that developers are integrating crypto as a payout system within games. The reasons for this increasingly close relationship are straightforward. On the one hand, there’s the sheer size of the gaming market. It’s estimated that the gaming industry will reach a valuation of $256 billion by 2025, with more than 2 billion gamers worldwide. On the other hand, the gaming community is increasingly interested in using digital assets. According to one survey, 62% of gamers and 82% of developers are interested in using digital assets when gaming.
Gamers’ growing desire to use crypto payments solves another problem gaming companies face in terms of payment processing. As a high-risk industry, traditional bank and credit card solutions present a number of problems, including unbanked users, chargebacks, declines, security issues, and high fees. By using crypto, gaming companies can leverage blockchain technology to further bridge the gap between gamers and sites.
Lower Fees and a Wider Customer Base
Despite its popularity, gaming is considered a high-risk industry. This is because of legal gray areas, age restrictions, the number of chargebacks, and the potential for fraud. Because of this status, gaming companies pay higher fees, including being over 10% on the high end. Because crypto is a currency and cuts out mediators that eat into profits, gaming companies can lower their fees to between 0 and 3%.
At the same time as it lowers fees, crypto can also widen access to unbanked customers. While gaming is not limited to teens or pre-teens, these demographics still make up a significant portion of the gaming market. Odds are these users don’t have a credit card and may not have a bank account. This means that gaming companies can’t take payment from them. Certainly, parents might allow their children to use their credit cards or bank accounts. But this runs the risk of overspending or payment information being used for purposes other than gaming. Crypto provides an easy solution. First, parents can allow adolescents to use their crypto wallets, which can be done on a single-use basis. This is the equivalent of giving digital cash to be used, which places a specific limitation on the amount spent. Second, crypto gift cards can be given for gaming use. Using crypto gift cards comes with a potential added benefit: while other gift cards often sit in a draw, where they are forgotten and may even expire, crypto tends to go up in value year-over-year.
No Chargebacks and No Declines
Chargebacks and declines are a problem for most online industries and gaming is no exception – it may even be more susceptible. With chargebacks, gaming companies are beholden to credit card companies: any time a customer contests a charge, the credit card company automatically refunds the charge. This puts the liability on the company to prove that the charge was not fraudulent, which comes at a high expense in terms of time and money. Because cryptocurrency cuts out the mediator and creates a direct relation between your gaming site and customers, there’s no automatic chargeback. Gaming companies get to determine whether a chargeback is warranted, which puts the onus on the customer to prove fraudulent use.
A similar problem created by credit card companies and bank policies is card declines. If a gamer in a different country than the gaming company’s base of operations attempts to pay with a credit card from their home country, their credit card company may decline the payment as a matter of policy intended to prevent fraud. The problem here is that gaming has exploded as a global phenomenon and the majority of gaming customers are likely not residing in the same country as the gaming site they are trying to use. Cryptocurrency offers an easy solution because it was intended to directly connect one party to another without going through a centralized financial institution. By accepting crypto, gaming companies give their customers a decentralized, borderless payment option that is not beholden to bank or credit card policies that impose geographic limitations.
Secure, Embedded, and Instant Payments
One of the burdens of being a growth industry is that you become a target for hacking and malicious users. As the industry expands and its value grows, gaming has become a major target. Moreover, because of the number of people gaming, hacks can be massive, exposing the personal information of as many as 25 million users’ in a single hack. Hacks can do irreparable brand damage. Crypto was created to provide a secure and anonymous medium of exchange. Accepting crypto payments in gaming can give customers piece of mind when purchasing online because of the simple fact that they don’t need to provide banking, credit card, or other personal information: it operates like a currency that is directly exchanged, with the added protection that it is encrypted and the private key isn’t exposed during the transaction.
Because gaming has become a target of hackers, gamers have become suspicious of gaming websites. This raises a problem because of the way some standard payment options operate website redirects. Because gamers are suspicious, a payment redirect can set off red lights – they think they are being redirected to a fraudulent website. This can lead to cart abandonment, a situation in which a customer places products in their cart and abandons them because of concerns over fraud. Because crypto is a form of currency that can be exchanged directly between you and your gaming customer without a third-party website or payment page, crypto payments can be paid on your website with an easy dropdown menu that avoids the suspicions that arise with redirects.
Adopting crypto has the additional benefit of removing potentially lengthy wait times. Gamers login to play, not to wait around. Payment processing can be slow, particularly when gamers are paying through bank transfers. Because crypto is a currency, it’s like handing cash to a vendor. It eliminates the need for their credit or bank transfer to be verified through a series of payment processors and other intermediaries that are getting in-between customers and their gaming experience.
RocketFuel Blockchain for Gaming Companies
Crypto and gaming are growing at the same time and among a largely overlapping demographic. It’s time to fully leverage new blockchain technologies to bridge the gap between gamers and gaming websites.
RocketFuel offers a blockchain solution that accepts more than 120 cryptocurrencies, while offering low payment processing fees. In addition to offering a secure payment option with no chargeback and no declines solution, RocketFuel offers a user-friendly one-click payment experience with a handy drop-down menu that avoids suspicious redirects.