GPWA Times Magazine - Issue30 - October 2014

Digitizing cash for online gaming By Vin Narayanan VN: How can InComm's prepaid cash so- lutions help in the online gaming sector? InComm: If you can take that (conver- sion) funnel and you can widen it, then your customer acquisition cost goes down. You've always got a fixed cus- tomer acquisition cost of marketing that drives that funnel. So if it comes all the way down to credit card, and that credit card is a denial, and the person uses an- other credit card and they abandon, that drives your customer acquisition cost up. So that's where you see the NETellers and the Skrills going; you're taking a customer and educating him to trust this payment option, give it his credit card number, then move money from here to there. That's where the difficulty is. That's why you see a company like PayNearMe be- ing fairly successful. "If you're telling me I can just put cash in the 7-Eleven, then I get it." I think that’s why they will be very successful. If you say just go to CVS, Wal- greens, WalMart, 7-Eleven, (the consum- er) gets it. People have never heard of In- Comm. But that's not what we're selling. We don't say learn about InComm. We're not saying get an account with InComm. What we're saying, what Caesars is say- ing, is just go to CVS and deposit money into your account. VN: You have a consumer market right now that expects, from an eCommerce standpoint, to use credit cards. To them online gaming is eCommerce. They're used to buying at Amazon, at iTunes with a nice simple process. InComm: A third of all of the revenue going into iTunes comes from prepaid cards. So there are consumers used to prepaid cards. VN: Yes, there are consumers used to prepaid cards. But how do you get the prepaid message across to consumers who prefer credit cards, but are seeing their online gaming charges declined? InComm: That's part of strategic abandon recovery. Let's say if a person abandons at the point of entering their social security number, if you pop something up (on the screen) and say, “Would you like to talk to a real person?” That becomes some- thing they might say yes to. The same thing happens if you say at the time that card is denied, “Would you like the op- tion of depositing cash at CVS? Here are the 15 locations nearest you where you can deposit cash.” Then you've immedi- ately taken away some of that frustration. You're saying, "Okay, here's an option that will work." VN: Are retailers like Walgreens and CVS okay with a card that's primarily used for gambling? InComm: What we have is cash in a net- work called Vanilla Reload. It is used to- day by millions of consumers to digitize cash at retail and direct it into an online account. So today, people go in and they buy a card, they activate it, the pin be- comes active and they redeem it to fund an online account. VN: There are other wallets out there. But they're required to actually ask whether con- sumers are using this money for gambling so they can code the transaction correctly. InComm: Here's the difference. When you take a MasterCard, it runs on associa- tion rails. When this gets used for gaming, this association requires that it gets coded 9754. If you were to use an American Ex- press, it would be flat out rejected because American Express does not accept online gambling wagers. If you were to use a pre- paid cash card, it would be coded 7995. The cash solution is a closed network that resides on InComm's network. It's a closed loop so it never hits any of these association rails. So what happens here is we're using our rails, if you will, to fund any number of these cards. This was not created to be a gaming card. This card is not saying it's a Caesars card. All it's intended to do is digitize cash to fund whatever. So there is no coding. This is simply digital cash. Since this is digital cash, the way this works is you give the cashier $100 plus $3.95 for the card. When you scratch off the pin, you go wherever your gaming account is, and on your ac- count funding page you enter the pin. It's no different than when you redeem an iTunes card in iTunes. When you re- deem a pin, iTunes or the gaming system pings InComm, finds out if the pin is valid and how much it's for and the funds are transferred to the consumer's account. All of the money associated with the card is transferred to the account. It's not a stored value card. Because this is cash, there are no chargebacks. There's no repudia- tion. You can't say, "I didn't do it." There's no fraud. VN: What's your distribution like? InComm: We reach 400,000 points of dis- tribution across big box, WalMart, Target, Best Buy, and across direct channels like CVS, Walgreens, and Rite Aid. That right there is 20,000 doors. We’re also in special- ty retailers like Toys“R”Us and GameStop and convenience stores like 7-Eleven. We have all of these different types of retail- ers and lots of consumers that use dif- ferent products. Now they can use one card for different products. We started in telecom and we leveraged our prepaid top-up technology platform for other ap- plications. It's secure while prepaid wire- less isn't secure. But the underlying tech- nology is the same. It's activating a pin at the point of sale. VN: Outside the gaming space, how pop- ular is this card? InComm: Within the last two years, we've become the number-two (prepaid card) provider. We have the largest foot- print. We do tens of millions of transac- tions every year worth billions of dollars. It's pretty prevalent. We're just expand- ing into new applications for it. So right now, we've partnered with MasterCard rePower for instance. They have 7.5 million cardholders that are using it. NetSpend has 3 million cardholders. PAYMENT PROCESSING IN IGAMING Digitizing cash for online gaming