David Grant, one of our Growth Managers here at Monoova, recently attended Backing the Punt in Melbourne. He came back armed not only with new dad jokes (IYKYK) but also some additional insights into the industry. Particularly interested in sports betting, David shared his knowledge and views on the history of payments in the industry and where he thinks it’s heading.
The wagering industry is a dynamic and ever-evolving space, particularly in Australia, where sports betting is deeply ingrained in the culture. Expected to reach $155 billion globally by 2024*, the industry is on an upward trajectory fuelled by technological advancements.
From the days of trackside cash betting to the era of sophisticated digital wagering, the sports betting landscape in Australia has rapidly adapted to the digital world. Alongside mobile phone and app capabilities, payment technology has been a key driver in shaping the wagering industry.
The Evolution of Payment Technology in Australia's Wagering Industry
The Cash Era: A Nostalgic Start
The first known organised horse racing event in Australia took place in 1810. Back then, bets could only be placed trackside and in cash. Fast forward to 1990, and nearly 80% of all bets in Australia were still being placed using physical cash. While this method has a nostalgic charm, it comes with drawbacks:
- Security Risks: Carrying large amounts of cash is risky.
- Limited Accessibility: You had to be physically present at a betting location.
Credit Cards: The Double-Edged Sword
The late '90s and early 2000s marked the rise of online betting platforms. Credit and debit cards quickly became the go-to payment methods, making up about 45% of all online transactions. However, this convenience came with challenges:
- Delayed Transactions: Funds could take 3-5 business days to clear.
- Fraud Risks: The fraud rate for online betting platforms was 1.8%*, higher than the e-commerce average.
E-Wallets: The Digital Revolution
E-wallets like PayPal, Skrill, and Neteller revolutionised the game. By 2015, these digital wallets accounted for 26% of all online gambling transactions in Australia*. The advantages were evident:
- Instant Transactions: Funds could be transferred in real time.
- Enhanced Security: Two-factor authentication reduced fraud risks.
Real-Time Payments: PayID and PayTo, Tomorrow's Tech Today
Real-time payment platforms, like NPP, are the latest disruptors in Australia. A 2021 report showed that 35% of online bettors prefer real-time payments for speed and convenience. As PayID and PayTo gain further traction in Australia, this number is likely to continue to grow, due in part to two key advantages:
- Instant Funds Transfer: Just seconds for placements to be paid or winnings to be available. Real-time transactions benefit both parties.
- Lower Fees: Real-time payments often come with lower transaction fees.
Australian Payment Rails of Today
If you want to modernise your payment capability, understanding the current rails in Australia is an essential first step. Here’s an overview of the most popular:
- Domestic Card Payments: Eftpos is a significant player in Australia's domestic card payment rails, innovating to include digital receipts, warranties, and loyalty programs.
- New Payments Platform (NPP): Launched in 2018, NPP enables real-time retail and peer-to-peer payments with PayID, OSKO and more recently PayTo. As people are moving away from credit and debit card transactions the take up of instant account-to-account transactions on the NPP rails has grown significantly since its inception, according to NPP’s October roadmap 2022 it’s sitting around 100m monthly transactions worth $110b+ .
- Consolidation of Payment Schemes: Australia is working on consolidating its three major payment schemes into a single rail to streamline and enhance real-time payment efforts.
- Automated Clearing House (ACH): A popular payment rail that's also used globally, often for batch processing.
- Blockchain: Gaining traction for its security and transparency features.
- SWIFT and SEPA: Essential for cross-border transactions involving Australia.
What's Next? A Glimpse into the Future
- Biometric Verification: Fingerprint or facial recognition could soon become standard for secure and quick user verification.
- Blockchain Technology: Offers a transparent and immutable record of transactions, potentially reducing fraud rates and enhancing user trust.
- AI and Machine Learning: These technologies can deliver personalised betting experiences by analysing user behaviour and preferences, thereby enhancing user engagement and increasing revenue for operators.
Real-time Payments and Wagering Conclusion
The payment technology in Australia's wagering industry has evolved from a simple cash-based system to a complex digital ecosystem. Continued innovations like real-time payments, biometrics, and blockchain are set to redefine the landscape. At Monoova, we're excited to be at the forefront of this evolution, offering real-time payment solutions that meet the industry's growing demands.
The importance of real-time payments and enhancing the customer experience is fundamental to the service we provide. In offering a single API solution that supports all Australian payment rails, we make it easy for businesses to integrate real-time payment capabilities.
Along with providing access to the traditional and online card payment rails, Monoova are specialist in real-time payments, responsible for ~13% of all issued PayIDs and over 70% of all PayTo transactions in FY23. If you'd like to learn more, connect with our growth manager, David Grant.
*Citations and Sources
Monoova Payments Pty Ltd (ABN 38 126 015 227) trading as Monoova (“Monoova”) is the authorised representative of Monoova Global Payments Pty Ltd (ABN 77 106 249 852; AFSL No. 421414 ), the issuer of the Combined Financial Services Guide & Product Disclosure Statement Non-Cash Payment Products and Services dated 20 September 2023. (FSG/PDS). This information is given in summary form and does not purport to be complete. To the maximum extent permitted by law, Monoova does not assume responsibility for, the content, accuracy or completeness of the information presented. Before acting on any information you should consider the appropriateness of the information having regard to these matters and seek independent legal, financial and tax advice. To the extent that the information contained above is sourced from third parties or provides link to third party websites, Monoova takes no responsibility for the accuracy, currency, reliability and correctness of any information included in the material provided by third parties nor for the accuracy, currency, reliability and correctness of links or references to information sources (including internet sites) operated by third parties. To the extent that the information contained above is sourced from third parties or provides link to third party websites, Monoova takes no responsibility for the accuracy, currency, reliability and correctness of any information included in the material provided by third parties nor for the accuracy, currency, reliability and correctness of links or references to information sources (including internet sites) operated by third parties