Unlike the traditional merchant transaction processing environment, the delivery of cash access services, and the products through which they are delivered, need to meet extremely high standards of reliability and efficiency in order to handle the high transaction volume of the casino gaming industry.
Gaming Industry:
The overall US gaming industry operates in over 40 States and generates an estimated $90 billion in revenue (Data: American Gaming Association). Cash access services are present in numerous venues, which include the traditional casinos of Las Vegas and Atlantic City, Native American Casinos, Riverboat Casinos, Pari-mutuel Race Tracks, and Card Rooms.
Cash access products play a mission critical role for gaming operators with an estimated 70% of gaming revenue being derived from such services. Most gaming operators rely on outsourced third party companies like Sightline Payments LLC to provide these services to their patrons. We estimate the North American (on an annual basis) Gaming Cash Access market to be $25 billion dispensed to patrons and over 100 million transaction approvals, generating an estimated $950 million in revenue for the industry.
The largest provider of these cash access services includes Sightline Payments (PRIVATE: Sightline), Global Cash Access, Inc. (NYSE: GCA), Global Payments Inc. (NYSE: GPN) with an approximate combined 90% market share. The remaining 10% is divided amongst other providers including Money Centers of America (MCAM.PK), DiTronics Financial Services, and ASAI.
Here is a description of the common types of Cash Access Services found in a casino:
• Credit Card Cash Advances (Smart Station Advances): Credit card cash advances enable a gaming patron to access funds up to a specified limit set by the card-issuing bank. The consumer fees average about 6% of the amount requested.
• Debit Card Cash Advances: POS debit card transactions are processed much like a regular merchant transaction, whereby a patron is able to access funds up to the cardholder’s purchase debit limit, which is usually higher than the daily ATM limit. The consumer fees average about 3.5% of the amount requested.
• ATM and ATM3X: A patron can withdraw funds directly from his or her checking or savings account subject to a daily limit average of $300. The consumer fees average about $4.00 per transaction requested. A recent phenomenon throughout the industry is the migration of ATM services onto Glory, NRT, and Western Money Ticket Redemption and Bill Breaking Devices.
• Check Cashing (Certegy and Global Payments): Check verification, processing and guarantee services, enables the cashing of patron checks at the casino cashier. Generally there are no fees to the consumer, but, in certain geographic regions the fees can be upwards of 6% of the amount requested.
• Markers and Gaming Credit: Casino establishments subscribe to credit bureau services to obtain detailed credit information for the purpose extending markers or credit to patrons. Generally these services are reserved for a casino’s “high end” players and there are no fees to the consumer.
The principal costs and expenses of Cash Access Services include:
• Casino Commissions: For cash advance, ATM and check cashing transactions, service providers pay a commission to the gaming establishment at which the transaction occurred.
• Interchange and Processing: Service providers pay credit card associations like Visa and MasterCard interchange fees for services they provide in settling transactions routed through their networks. In addition, fees are paid to participate in various ATM and credit card networks. The amounts of these interchange fees are fixed by the card associations and networks and vary base on the network and the amount requested. Connectivity and processing fees are paid to those companies that provide the service providers with network services.
• Check Cashing Warranty: Check cashing warranties relate to the costs incurred in connection with dishonored checks that are warranted.
• Operating Expenses: Operating expenses consist primarily of salaries and benefits, armored carrier expenses, the cost of repair and maintenance on the cash access devices.
• Interest Expense: Interest expenses in connection with the procurement of currency to fund the operating requirements of the ATMs.
Archive for January 31, 2012
Casino Payment Systems – How They Differ From Traditional Payment Systems
Disadvantages of Electronic Payment Systems
Electronic money, also known as e-money, electronic cash, e-currency or digital cash, refers to money or scrip which is exchanged electronically. Basically, electronic payment systems are key enablers for mass acceptance of electronic commerce over insecure systems such as the Internet. In Business-to-Business (B-2-B) e-commerce, there is a rapidly growing interest in processing payments online.
However, these electronic payment systems have a number of a number of disadvantages also. You need to record to the establishment in order to be empowered to perform money transactions with them. Now, you need to have a username and password, and for that you need to have password aegis. Moreover, you also need to keep up an account per organization, which can be very irritating or pesky for you.
To make sure that your online transactions are solid, it is essential that you observe strict security policies. If password is capable of being hacked, it can mean serious fiscal loss for you. Banks or financial institutes that have your financial information can expose it to cyber-terrorist. So, there is unstated risk of your personal and account particulars being stolen.
The transfer of digital currency arouses questions such as how to impose taxes and the potential ease of money washing. There are also possible macroeconomic results such as exchange rate stabilities and shortage of money supplies.
Moreover, you are always at a loss if your card is stolen. If the card falls in wrong hands, there is a danger of expenditure of entire bank balance. You will obviously inform the concerned authorities about the loss but the time taken between loosing the card and informing the authorities is critical.
The purpose of the above article is not to discourage people from making electronic payments but to mkae them aware of the inherent dangers that such payment systems involve.
Escrow Payment Services For Import Export Data
It is important to ensure quick and reliable payment processes for importers and exporters to enable them to carry out their business without apprehension. After all, many of them take loans and credit from the government authorised institutions to get into the business and perform a very important role in helping the country’s economy to grow. If they cannot get their dues in a swift and reliable manner, they would not feel encouraged to continue this business and that would only affect the country.
One such payment mechanism that is safe and ensures that the seller gets his due payment on time is the Escrow payment service. This service drastically minimises the risk factor of dealings between the importer and the exporter by mediating the transaction and holding the funds to be released at the appropriate time and only when all conditions are met as per the import export documentation and agreement between the parties concerned. The services are provided by specific agents trained and authorised to carry out these transactions.
Such a service is ideal for low to medium valued deals where the usual payment systems of working through the letter of credit negotiated by banks and other financial institutions are not viable. They are particularly effective for dealings at auction sites and where the value of the transactions is not very high.
It is also used for transactions when both the buyers as well as the sellers are new to each other and are dealing with each other the very first time. It is natural that the trust level during such times is quite low and going through the Escrow payment service is the best way to build mutual trust and confidence so that in future, they can move away from this system and try the conventional modes of payment. By that time, the business volume as well as value of transactions may also go up warranting a bank letter of credit.
One more area where this kind of a payment service is used is when exporters send samples to the importer for approval before they can ship the actual material. Some cost of the samples needs to be recovered and can be done through this service. Software exporters can also make use of this payment method for their services in providing source codes or domain oriented services.
Exporters prefer receiving payment through the Escrow payment service rather than through the credit card due to the absence of any ‘chargeback’ where they would lose some money. From the importer’s perspective, making payment to an unknown exporter is also fraught with some risk and that is why this system of an intermediary negotiating the entire deal and ensuring payment becomes very important.