In addition to its popularity, fantasy sports fits right into the world’s growing affinity toward a cashless society. Fantasy sports players use smartphones and other mobile devices to draft teams, change lineups, research players, and check on player injuries.
For fantasy sports operations to thrive, they must be able to accept and process credit card transactions. To do this, they need a fantasy merchant account.
Despite growing interest and its money-making potential, banks would rather pass then go in and tackle the nuances that come with approving a fantasy merchant account. The potential legalities, the nature of the business, and its reputation for excessive chargebacks turn traditional lenders off. Therefore, the optimal way for merchants to stay in the game is to work with alternative lender.
Sometimes, the Laws Worry Lenders and Processors
Fantasy sports is one of those things that, depending on who you talk to, you will get an answer as to what it is. Some call it gambling and others refer to it as gaming, so what does that matter? Well, it’s the federal and state laws. Not only are they not synonymous, oftentimes there is some intentional legal ambiguity, which is really a way for lawmakers to leave the final decisions up to the courts.
So, let’s look at the federal law, Unlawful Internet Gambling Enforcement Act of 2006, which bans games of chance, like online poker. For fantasy sports players, the impact from this law is likely minimal. Though people win and lose money betting on virtual teams, fantasy sports was excluded from the federal law because it was considered a game of skill instead of a game of chance. It was interpreted this way because fantasy sports because virtual fantasy players need the skill of knowing players’ performances to play and win games.
What the law really does is prevent a person or entity from “knowingly” accept money associated with a person participating in illegal online gambling. This has no real consequence for an actual gambler since the law focuses on a party not accepting funds. Basically, this means gaming merchants can’t legally accept wire transfers.
Though the federal lays things out fairly clearly, it is important to be aware of how your state laws few these type of entities.
Be Aware of Chargebacks and How to Prevent Them
Chargebacks, which is whenever a credit card provider forces a merchant to refund a disputed or fraudulent transaction, can lead to losing your business. Too many chargebacks is a sign that your business is inherently flawed; its either a target for friendly fraud or you are taking enough security measures to catch customers who make unauthorized transactions.
The reason really does not matter to merchant service providers. They just know that when rates get too high, it’s a bad sign that they are going to left holding the bag for fines, fees, and refunds you cannot pay.
Develop a Plan to Prevent and Fight Chargebacks
Most business conducted by fantasy sports merchants are done electronically, which make them more vulnerable to fraud. To prevent this, merchants must use secure channels and keep records of all transactions. Purchases should be recorded, archived, and easily retrievable. Information, like the exact dates and times of transactions, and the IP addresses of the computer the purchase originated, should be kept so that it can be used to fight a dispute if one arises.
What’s Needed to Get a Fantasy Merchant Account
Like any high risk merchant account, a fantasy merchant account will cost more than a lower risk accounts, and that holds true for gambling accounts. The best way to find out what you will pay is to request a personalized quote.
When discuss accounts with a merchant service provider, be prepared to provide information about your business, the ways you accept payments, your average transaction size, and your project monthly volume in card payments. Also, expect to offer supporting documents, such as financial and bank statements.
Though getting a fantasy merchant account may not be simple, it is possible if you ask questions, know what to look for, and how to proceed.
At EMB, we have made getting a fantasy merchant account quick and simple. EMB works with new and existing businesses, high risk merchants, merchants that have been rejected or terminated by other processors, as well as those with bad credit, no credit, or a history of excessive chargebacks.
Begin accepting and processing debit and credit transactions more efficiently today. Apply today by submitting our easy online application.