Blackcatcard’s CTO, Olegs Chernisevs, Doctor of Science, recently completed a doctoral thesis developing a comprehensive approach to corporate governance that, though initially designed for fintech, holds powerful relevance for the iGaming industry. As he explains, “Governance principles—accountability, transparency, and effective risk management—are essential in both fields, making this approach extremely useful for iGaming businesses looking to meet regulatory standards, protect their licenses, and avoid fines.”
“For iGaming operators, implementing such governance frameworks goes beyond meeting regulations; it’s a crucial step for ensuring fair play, safeguarding customers, and supporting long-term stability. In a field where compliance issues can lead to heavy fines or loss of licenses, a proactive governance structure is key to protecting a company’s reputation and future. By understanding and applying these strategies, iGaming companies can confidently navigate the increasingly complex regulatory landscape, maintaining both compliance and customer trust.
The first important step in this governance approach is a thorough risk assessment. Identifying potential threats, such as cybersecurity risks or compliance gaps, allows iGaming companies to focus resources on the most critical areas, reducing the chances of issues that could turn into major problems. This proactive approach to risk enables companies to address threats in real-time, staying on top of new regulations and industry changes.
My governance model emphasizes a risk-based approach, where each risk is evaluated for its likelihood and impact. For example, focusing on high-severity risks—like software issues or dependencies on third-party providers—enables companies to tailor strategies that reduce exposure to these specific challenges. This method ensures efficient use of resources, with the most significant risks managed effectively.
Beyond risk management, I recommend that iGaming companies maintain clear and current internal policies. Regularly updating job descriptions, board decisions, and audit findings helps keep the organization aligned with compliance requirements. Consistent processes are essential for stability, minimizing operational risks, and ensuring the company can meet regulatory expectations without disruption.
I also emphasize that governance is an ongoing process. Periodic reviews allow companies to adjust to regulatory changes and new challenges as they arise. By maintaining this adaptable approach, iGaming operators can stay ahead of regulatory demands, strengthening their competitiveness and long-term sustainability.
For iGaming business leaders, my governance strategy provides a practical roadmap for building resilient, compliance-focused organizations. By fostering transparency, reinforcing internal controls, and adopting a risk-based framework, iGaming companies can mitigate regulatory risks, enhance customer trust, and support sustainable growth.
I’ll be diving deeper into these strategies at SiGMA Europe 2024 in Malta on November 14 at 13:25. Join me to explore the practical applications of this approach, discuss corporate governance trends, and gain actionable insights tailored to the iGaming industry.
What are chargebacks and how they impact the iGaming industry
The iGaming industry is experiencing significant growth, currently valued at $96 billion, with even more potential for expansion. Despite stringent regulations and robust security measures, fraud remains a pressing concern, as evidenced by the rise in chargebacks and other fraudulent activities within the sector.
In this article, we will delve into the nature of chargebacks, their impact on businesses, and explore the solutions available to combat these challenges.
The continuous growth of the iGaming industry
As highlighted earlier, the iGaming industry in 2024 is valued at over $96 billion, reflecting a significant increase from $88.65 billion at the end of 2023. This growth shows no signs of slowing down, with predictions indicating a compound annual growth rate (CAGR) of 9.3%, potentially driving the market to exceed $500 billion by 2030.
Several factors have contributed to this surge in recent years. The industry saw a notable spike in 2020 during the COVID pandemic, and this momentum has been sustained by increasing global internet access, advancements in digital technology, easing regulations, and a surge in popularity fueled by innovative industry developments and effective marketing campaigns. These factors continue to attract a growing number of interested users to iGaming platforms.
Why iGaming fraud prevention is more important than ever
It’s almost inevitable: as an industry experiences consistent growth and profitability, it inevitably attracts bad actors. iGaming fraud saw a staggering increase of 68.65% from 2019 to 2021 and surged by 80% in 2023, with expectations of continued growth in the future.
In their pursuit of expanding their client base, many platforms in the past relaxed entry regulations, sometimes overlooking KYC (Know Your Customer) processes entirely. This leniency has contributed to a rise in fraud attempts, particularly chargebacks. Now, more than ever, maintaining robust iGaming fraud prevention practices is essential. Effectively reducing chargebacks and other fraudulent activities can have a profound impact on a business’s profitability.
What are chargebacks
Chargebacks occur when customers dispute a payment with their bank or credit card provider, seeking a refund. In the context of iGaming, this often happens when players lose money gambling. While in some cases chargebacks arise from genuine confusion, with players not recognizing a transaction on their statement, fraudsters have learned to exploit this process, routinely disputing charges to their advantage.
What are the consequences of chargebacks for iGaming?
Chargebacks have severe consequences and not just in the monetary form. Let’s take a look at what are chargebacks’ biggest consequences for iGaming platforms:
Financial losses: If not managed properly, you could see your investments gathering leads and potential customers be all for nothing with bank account disputes.
Additional fees and fines: If your business exceeds a certain chargeback threshold, credit card providers could introduce fines and potentially extra fees.
Higher processing costs: Frequent chargebacks could lead to higher processing costs, especially if your bank provider doesn’t have a dedicated practice for high-risk businesses like iGaming platforms.
Loss of reputation: Frequent chargebacks take a toll on your business reputation, which might bring difficulties if you require more of their services in the future.
How to prevent chargebacks in the iGaming industry
Let’s take a look at some of the most used methods on how to prevent chargebacks as well as facilitating their detection:
Identity verification: As you saw above, some iGaming businesses dismissed KYC practices to get more clients, and if you want your practice to be fraud-proof, you shouldn’t ignore it. KYC requires players to authenticate their identity and personal information, which means they will be accountable for potential fraudulent activities.
Customer support and dispute resolution: Maintaining a clear, responsive, and effective customer support practice can help you reduce chargeback attempts, as sometimes it isn’t necessarily a chargeback but an easy-to-resolve payment dispute.
Transparent payment processing: Maintaining a clear and easily recognizable billing description and information is essential to reduce potential chargeback attempts, as users can easily verify your iGaming billing address.
Fraud detection software: Fraud detection tools like address verification services (AVS) or card verification value matching (CVV) can help you connect potential red flags to fraudulent user accounts or transactions, making it much easier to locate potential fraudsters.
Our game changing solution to reduce chargebacks
In industries like gambling and iGaming, chargebacks can be a significant issue. Gambling transactions often involve multiple parties, and it can be difficult to determine whether the transaction is legitimate or not. Players can use this loophole to have a chargeback on authorized transactions. This results in many online gambling companies experiencing high numbers of chargebacks, which can significantly impact their revenue and profitability.
At Blackcatcard, we know how crucial security is, and we want to help our customers reduce fraudulent chargeback attempts. Blackcatcard’s payment gateway is based on A2A, i.e. intra-bank account-to-account transfers. Technically, when making a purchase, the client does not use a payment card, but direct deposits from the bank account. Thanks to this, we know both sides of the transaction, and we already ran all necessary AML and KYC checks. It allows us to eliminate the risk of fraudulent chargeback when users try to recall the transactions that they previously authorized.