9 questions you should ask your gaming payment gateway

Since we started Stash, we’ve had dozens of conversations with game developers looking to shift payments from mobile to the web - some of who are new to the space, and others who already have some experience. But either way, we’ve found that because online gaming payments is such a new world, many developers miss asking questions that can really make or break their business. So here’s a list of questions you should bring up to your potential gaming payment gateway in your first meeting. 

1. How do you help minimize fraud?

Fraudsters are going to fraud - it’s their full time job! Payment and credit card fraud is a huge issue in gaming. In fact, in 2022, Apple blocked more than $2B in fraudulent transactions and banned 714K fraudulent accounts from transacting. There’s a few reasons why gaming attracts so much fraud:

• Loot boxes: Loot boxes encourage “friendly fraud” like chargebacks (when players dispute legitimate charges with their credit card company). If, for example, a player didn’t like what they received in the loot box, they might try to dispute the charge and get their money back. 
• Virtual goods: Because there’s no physical delivery of goods with in-app purchases (it’s virtual!), adding a shipping address isn’t required. Unfortunately, that opens the door for criminal fraud, since fraudsters don’t need to worry about tricking shipping address verification systems.
• Black markets: How do criminal fraudsters make their money? They sell game accounts on the black market for thousands of dollars.  

Like payments in-app, online payments also have anti-fraud models to make sure you don’t lose money to fraudulent transactions. Your job as the developer is to double check that your gaming payment gateway’s methods are best-in-class and built into the product, actively monitoring and managing every transaction. 

Here’s what you should look out for: 

• Verticalized fraud detection: First, make sure your online gaming payment gateway is leveraging multiple fraud layers - including games industry-specific fraud detection and machine learning technology. Beyond the fraud detection that the credit cards and banks already do, your payment partner should have “verticalized” experience and capabilities for gaming payments - for example, incorporating in-game engagement data (like recent playtime) into fraud detection, comparing a user’s transaction behavior from web to in-game native payments, and accounting for the higher chargeback risk associated with gacha monetizing products compared to a season pass.  
• Customized fraud detection: Second, make sure they take a nuanced, custom approach to your game and genre, adapting their general strategy to your requirements as a product and customer. Every game, developer, and ecosystem has slightly different considerations when it comes to risk - and having blanket rules could end up hurting you. Roblox, for example, has unique attributes compared to other games that need to be incorporated into its payments and fraud solutions: its young audience makes it highly sensitive to friendly fraud risk, its creator economy increases criminal fraud risk since users can more easily monetize its virtual economy, and its currency-based monetization model lessens risks associated with gacha IAPs. 

2. Do you manage the chargebacks and refunds process?

There is much more operational complexity associated with selling your goods online that developers don’t have to worry about when selling through native platform payment rails like Apple, Google, Xbox, or Sony. Not only do you have to set up customer service functions to handle refunds and complaints, but there are major risks associated with matters like chargeback and fraud rates. 

There’s generally two types of chargebacks: 

• The player disputes charges with the bank because the digital good received isn’t as expected
• The player claims their credentials were stolen and they are issued new cardholder credentials  

These all have to be managed and your gaming payment gateway needs to understand: is the chargeback really transaction fraud or just a mistake? 

If a business - either you as the game developer or even your game payments provider - has a chargeback rate per month over 1%, the credit card networks (like Visa and Mastercard) will get involved. No one wants that - so it’s important your provider cares about chargebacks. 

To keep that rate low, make sure whoever is managing your gaming payment processing: 

• has a good process in place to respond to questions about transactions and refund requests. If a consumer wants their money back, they’ll likely find some way to get it back - meaning if you don’t discuss offering them a refund when they ask, it may turn into a chargeback and hurt chargeback rates. 
• uses technology to detect if specific transactions have a high likelihood for chargebacks, and takes action to prevent those purchases. 

3. How do you manage customer support? 

If we had to bet, your game’s community team is busy handling requests from players. Not only can servicing players get expensive and time consuming, but answering payment questions probably isn’t in your team’s wheelhouse since on-platform payment services (like Apple, Google, and Steam) handle this for you. 

In that case, it’s best to let your online gaming payment gateway handle customer support on your behalf. First step - ask your provider whether or not that’s a service they include, and if it’s an additional cost. If they don’t, consider moving on. If they do, your second step is to make sure the customer support they offer is quality. Your players are precious, after all. They should have: 

• 24/7 support
• clear refund standards so you don’t have to think when and how refunds will be handled
• an understanding of the products you sell so if a player has an issue with a bundle your gaming payment provider can speak directly to it

4. Is the user experience easy and frictionless?

Everything we’ve discussed until now is mostly behind the scenes. But what about the frontend? Your gaming payment gateway’s checkout flow - ie, the process of linking your in-game account, browsing and choosing items, entering your card details, and finalizing a purchase - is also a huge factor to consider. After all, the user experience is the most important part for maximizing and repeating conversions. Though online payment processing won’t ever be more convenient than double tapping with Apple Pay or Google Pay, a great user experience can help bridge the gap. 

Be sure to demo the checkout process yourself and see if it’s something you think your users would understand and enjoy. Here are some things to watch out for: 

• How many steps does the entire process take? Can players complete checkout in <30 seconds?
• How easy is it to link the game account to the web shop and checkout features? Is it a manual process or automated?
• Can players save their credit card information for future purchases? 
• Are players forced to make payment accounts or is guest checkout allowed?
• Is there a click to accept payment, so the player knows they’re about to make a purchase? 
• Does the checkout experience have a progress indicator to help reduce cart abandonment? 

5. How do you charge developers? 

What’s in the fine print? Hidden fees are the worst, and you never want to feel like you’ve been tricked after you’ve already paid. Sadly, there’s no chargeback for misleading business terms! 

Compared to the app stores’ 30% commission, online gaming payment processing typically takes around 10%. That said, it’s crucial your game payment partner is actually charging you 10% and not more. Be sure to ask for:

• a thorough breakdown of what their transactions fee is made up of (see below)
• their foreign transaction rates 
• how they manage channel costs
• additional fees for managing chargebacks and refunds or providing other services.

In most cases, online gaming payment processing providers will charge you a flat fee (like 5%) plus sales tax and the cost of the channel for each transaction. The channel cost is usually made up of two components: a flat cent transaction fee plus a percentage fee. So, for example, if the channel is credit card, you may need to pay an extra 2-3%, because that’s what a card network typically charges. Or, if the channel is carrier billing in an emerging market, that channel fee could be upwards of 25%, since most carriers charge 25%-40% commission and monthly minimums. On top of that, you may have to pay an additional 2-3% sales tax for transactions in some countries.

If your payment provider charges include anything for costs apart from transaction fees, sales tax, channel costs or any other costs for services you agree to, raise a red flag. To get ahead of any issues, request transaction reports that break down the costs each month. Foreign exchange rates, for example, can hide a significant cost if your provider is charging you an above-market rate. 

Beyond simply informing you what their costs are, your gaming payment gateway should also be proactive about reducing foreign transaction rates and channel costs. Get an understanding of their payments operations strategy and how they do that for you. For example, they may choose to limit their payment methods (like we said, carrier billing can add an extra 20-30% to your bill).

6. How do you meet regulatory and tax compliance standards? 

Moving money is complex - local and international regulators, card networks, and industry players, each have their own compliance requirements for gaming payment processing, and any violations or inquiries about them may mean getting fined or your account terminated. For example, some common compliance standards to be aware of are: 

Data protection: There are loads of payments-specific and more general consumer protections standards that it’s impossible to list them all - some include:

• Card data: PCI DSS (Payment Card Industry Data Security Standard) makes sure you’re correctly securing your players’ credit card information. 
• Information security: You need to protect your players and payers against cyber threats. To do that, you and your payments partner need to balance cyber risk against the operational cost to protect against them - and different payment vendors offer different degrees of protection. Your payment partner should have cyber insurance in place, for example. 

Paying taxes: This requires you to accurately report and remit taxes to all the necessary government authorities, based on where you and your users may operate.

‍Payment network policies: Each payment network has their own rules and regulations. For example, card companies assign Merchant Category Codes to each merchant based on their core business category and impose specific policy requirements, rules, and restrictions according to the nature of that good or service. The MCC for many games, 5816, has certain high risk designations from one card network, Visa. 

Financial crimes: There are also regulations in place to prevent your game’s transactions from being used in financial crimes (like anti-money laundering or doing business banned under sanctions laws). Your gaming payment gateway partner should include robust fraud detection and monitoring tools to prevent suspicious behavior and other activities that could violate financial crimes laws. Based on analysis, your game payment partner can, for example, block purchases that might show a pattern of account farming with simultaneous purchases by devices in different locations or prevent checkout access from a sanctioned country.   

Make sure your online gaming payment gateway has expertise and tools to help you navigate all these complexities on your behalf. Ask them how they help you protect and secure consumer data and manage sales tax requirements. It should mostly be baked into their payment product, so you can leave all the hard work to them.  

7. How do you comply with the mobile app stores?

Beyond complying with payment standards, your game also needs to comply with the mobile app store standards set by Apple and Google. If you’ve been keeping up with the news, you know that they change often and differ per country. The Digital Markets Act in the European Union as well as the Apple vs Epic Games and Google vs Epic Games trials in the US forced Apple and Google to make some critical updates in how they allow developers to do online gaming payment processing. Though Apple and Google released their new developer requirements in early 2024, regulators are still actively reviewing them, and how forcefully they are implemented can change over time.  

Naturally, there’s a fear that Apple and Google can choose to ban any mobile game developer who fails to comply with their new rules. To help make sure that doesn’t happen, your gaming payment gateway should make sure app store compliance is built into the product, while giving you best practices on navigating them. That said, Apple and Google uphold their rules through the app store review process - so any violations would be more about what’s in the app than outside it. 

The biggest potential violation would be for breaching Apple’s anti-steering policies. Until 2021, developers weren’t allowed to communicate with players outside the app using information obtained from the app - meaning developers couldn’t tell users about any alternative payment channels. 

Today, it is possible to communicate this to players - just with some caveats. In the US, following the Apple vs Epic Games trial, you’re allowed to link to alternative payment channels from the app, but only if you get explicit permission from Apple. Meanwhile, in Europe, thanks to the Digital Market Act, you’re also allowed to link out but only if you opt into Apple’s alternative App Store terms - which also includes a Core Technology Fee of €0.50 on App Store installs above 1M. 

Should you or shouldn’t you adopt the new terms to get the most out of your alternative gaming payment processing? Your partner can help you make that decision. While it’s technically legal, your payment provider will work with you to deeply understand your use case and either advise for or against it. (You don’t need to link out to get the best results!).   

8. How extensive is your gaming expertise? 

There are a lot of payment processors out there - some are more generalist that cater to any and all ecommerce verticals and some are focused just on gaming. Both will provide somewhat similar products, but only a gaming payment gateway will be able to deeply understand your business’ needs and interests. 

The game industry has its own set of unique challenges when it comes to payments, which your partner should actively solve for. For example: 

• Microtransactions: Gaming microtransactions differ from how payments in other verticals work, since it’s based on a flat fee plus a percentage commission. That means low transactions like $1.00 get surcharged at least $0.35. Apple, for example, solves this by bundling microtransactions together throughout the day - paying out the developer in larger sums. 
• Fraud: Fraud is much more prevalent in gaming than nearly any other industry. Because shipping address isn’t a required field for digital goods, there’s a somewhat sketchy secondary market for in-game items that is attractive to fraudsters and card thieves. Plus, the nature of gacha and lootbox mechanics also encourage friendly fraud. 
• Virtual items: It’s hard to validate purchase delivery, since the item is virtual - which is where robust customer service, fraud detection and secure delivery systems come in. 
• Real time delivery: Unless you want to build it yourself, it’s important that your payment partner has a system that integrates easily with your game’s backend to make sure your users receive their items in real time. 
• Compliance: The regulatory and compliance landscape in gaming is constantly changing - including policies from Apple, Google, Visa, Mastercard, and each country you sell in. 
• Gambling: The payment networks, like Visa and Mastercard, are often skeptical of gaming because of potential gambling and perceived predatory behavior. Often, gaming companies have to go through more stringent risk assessments than other businesses. 

9. How closely do you work with game developers? 

Finally, you don’t just want a payment processor - you want a partner. Navigating payments while meeting regulatory and compliance responsibilities is tricky business, and it’s important you’re set up for success. In addition to handling the online gaming payment processing and taking the logistical work off your plate, your gaming payment gateway should be working closely with you and tailoring their solution to your specific game. For example, they can help you: 

• create a custom refund policy
• build a taxonomy of your offline SKUs
• provide best practices to support and manage your players 
• establish relationships with all the parties involved in payments, like card networks
• build your direct-to-consumer channel and strategy, like a custom web shop

Start asking your gaming payment gateway some questions

Time to put this article into practice. Stash is a platform that supports direct-to-consumer engagement and payments for virtual digital goods, all while helping game developers meet a number of regulatory, compliance and legal obligations. Our payment platform onboards and manages your payment account, monitors sales taxes, protects consumer data through PCI compliance, processes chargebacks and refunds, and offers extended customer support. 

‍Get in touch with us and ask us all your hard questions about online gaming payment processing. Talk soon!