Paypal is preparing to enter the regulated U.S. iGaming market. The company may start processing payments for regulated poker and casino sites in the next few months.
Paypal would add legitimacy to a market that has struggled on the processing side of the business. Visa and Mastercard payments still carry a decline rate of at least 25 percent. Some players are also running into problems with electronic checks.
Neteller, Skrill, and site-specific debit cards have a nearly 100 percent acceptance rate. The branding of these payment processors is not familiar to many recreational players.
Adding a powerhouse like Paypal to the U.S. regulated online poker and casino industry will give access to players that may otherwise be out of reach. Paypal boasts over 150 million worldwide active users.
Many users of the Internet keep a Paypal balance due to its wide acceptance by individuals and businesses. This shields consumers from giving banking information to unknown third parties. Paypal handles all credit card processing for these transactions. It also accepts electronic checks for funding account. Withdrawals may be processed through a variety of methods, including electronic check, paper check, and the Paypal debit card.
This move was expected by the U.S. gaming industry. Paypal already processes payments for online pokers rooms, casinos and sports books in many European regulated markets.
Paypal was one of the first ewallets that processed U.S. online gambling payments. It stopped in 2002 as it was being acquired by Ebay. Paypal and its new parent company Ebay reached a settlement of $10 million with the U.S. Attorney’s Office in the Southern District of New York to put its past of processing offshore online gambling payments behind the newly merged companies.
When Paypal announced that it would leave the U.S. online gambling processing market, site operators scrambled to find a replacement, knowing it was an extremely popular choice for its American players. Sites offered players free money to open ewallet accounts at Neteller and Firepay. Both of these companies eventually left the U.S. market, each reaching separate settlements with U.S. law enforcement.
Iovation Removal from Terms and Conditions a Clue?
Paypal updated its terms and conditions earlier this year. One change saw Iovation’s name dropped as a third party Paypal may share customer information with for security purposes. USPoker reported this connection in December 2013.
Iovation briefly entered the Nevada online poker market through a third party licensed provider. That relationship ended within a few weeks and an investigation by state regulators followed.
We reached out to Paypal last week about its relationship with Iovation apparently ending and the company’s future in the regulated U.S. iGaming market. The media relations department responded but was unable to provide a statement by the time we went to press. We will update the article when we receive a comment by the company.