Fintech Insights

Ask the expert – Can online video games balance customer experience with security?

Sean Wylie | senior sales executive EMEA, Worldpay

February 23, 2021

With a market value of over $150 billion in 2019 and no sign of growth slowing, playing games online – either with friends, strangers or alone – has become an enormously popular way for people of all ages to spend their free time.

In the EU, 51% of the population aged 6 to 64 play at least some form of video game, while the overall European video games market has seen 55% growth since 2013.

But there are several challenges that online games and digital purchasing face. It’s crucial that businesses protect their users and ensure that any stored payment information is secure while preserving the overall gaming experience.

How do you ensure secure payments, without negatively affecting customer experience?

Monetization in video games has changed dramatically over the last decade, and digital expansions, micropayments and season passes have all become popular. But with new regulation coming soon – for example, the Payment Services Directive (PSD2) Strong Customer Authentication (SCA) – it’s important for merchants to ensure all such payments are taken in a way that’s safe, secure and efficient while also meeting the new guidelines and minimizing payment declines.

Finding a way to safeguard payments without interrupting gameplay is a high priority, especially for games that use micropayments. Avoiding the impacts of jarring payments procedures keeps players immersed in the game. If the payments experience is poor, players may lose interest and move on to something new.

Two-factor authentication (2FA) has become a popular way to ensure payment security without being too disruptive, with 87% of European video gamers happy to use 2FA when paying online and 65% happy to use their fingerprint as authentication. These methods will also help businesses comply with the new SCA regulation that will become more prominent in 2021. With new gaming consoles and devices now often featuring some form of fingerprint or voice recognition, incorporating simple authentication methods should become easier./p>

A simple way of tackling SCA compliance is with 3DS Flex from Worldpay. It combines effective authentication methods that prevent users from paying without certain permissions. Plus, it’s simple, unintrusive and PSD2- and SCA-compliant, helping to lower fraud, protect revenue and boost reputations.

How big is the fraud risk?

Like businesses in many other industries, video game companies face serious problems from customers who, often unwittingly, commit “friendly fraud.” This is the act of using chargebacks to claim money back without having a legal basis for doing so. What’s more, these customers are often without the knowledge that what they’re doing may technically be a crime.

Many players who do this might not be fully aware of what is involved in the chargeback process and the cost it can incur. With gaming being considered a high-risk marketplace for chargebacks, it’s important for companies to stay on top of friendly fraud or risk hitting high fraud-to-chargeback ratio thresholds from card schemes.

The reasons for chargebacks in video games vary dramatically. Some may occur when credit card information is illegally obtained online and the account holder spots the transaction. Others use chargebacks when they purchase a consumable item for a game, then regret their purchase. Regardless of the reason, it’s a scenario that needs addressing.

How can businesses mitigate the risks?

Clearer and more user-friendly customer service, particularly in regard to refunds, can help to reduce friendly fraud. Such systems can be frictionless, with self-service setups, too, which simplifies the customer experience. For example, some online gaming platforms have even started offering refunds for games or add-ons purchased within 14 days if the customer has played less than two hours.

Alongside this, Worldpay solutions can help to reduce the risks posed by friendly fraud, while also helping to ensure that legitimate chargeback claims can proceed. FraudSight, is a multilayered fraud solution that takes advantage of powerful data insight and fraud expertise to predict if a transaction is potentially fraudulent. Machine learning within FraudSight uses vast amounts of anonymized transaction data to assign transactions a fraud risk score, adding a layer of protection for any online business. This helps to keep fraudulent purchases and chargebacks down and protects a business from fines from card companies.

Another effective solution to help meet SCA requirements is the Exemption Engine service. Not only does it use transactional data to predict issuer behavior, it also performs a real-time risk analysis of transactions with an aim to exempt as many as possible from SCA.

But these options are just the start. Speak to Worldpay to learn more about how to we can help you to protect your online gaming business from fraud and build a better experience and reputation for your players.