The Hidden Costs of Payment Processing for iGaming Merchants

For iGaming operators, securing reliable payment processing is a critical factor for success. However, beyond the standard transaction fees, there are several hidden costs that can significantly impact profitability. Understanding these costs is essential to optimizing financial operations and ensuring sustainable growth.

Rolling Reserves: The Unseen Security Deposit

Almost all payment processors impose rolling reserves—a percentage of transactions held as collateral against chargebacks and fraud. These funds are typically withheld for 3-6 months, impacting cash flow and liquidity. The cycle continues until the merchant process with the provider.

For high-risk industries like iGaming, rolling reserves range from 5% to 15%, depending on the processor and risk assessment.

Let's understand this with calculation

• Your Monthly Processing Volume: $1,000,000

• Rolling Reserve Rate: 10%

• Rolling Reserve Holding Period: 180 days (6 months)

  
  

Step 1: Monthly Reserve Deduction

Each month, 10% of the processed volume is held in reserve:$1,000,000 × 10% = $100,000

Step 2: Accumulation Over 6 Months

Since the reserve is held for 180 days, the merchant will have 6 months' worth of rolling reserves locked at any given time:$100,000 × 6 = $600,000

Step 3: Available Volume for Use

After 6 months, the first month’s reserve ($100,000) is released, but a new month’s reserve is added. This creates a rolling effect, where at any time, the merchant has $600,000 locked in reserves.

Final Impact:

• Total Funds Held in Reserve at Any Time: $600,000

• Effective Available Volume Each Month: $900,000 (previous months' release + new reserves added)

Chargeback Fees: More Than Just Lost Revenue

Chargebacks are an unavoidable part of online gambling payments. However, aside from losing the transaction amount, operators also face chargeback fees, which can range from $20 to $100 per dispute. High chargeback ratios can lead to penalties, increased processing fees, or even account termination.

At PayConsults, we help you implement advanced chargeback mitigation strategies, including AI-driven fraud detection and strong KYC procedures.

Compliance and Regulatory Costs

Operating in multiple jurisdictions means dealing with a maze of regulatory requirements, including licensing, AML (Anti-Money Laundering) protocols, and payment compliance rules. Failing to meet these standards can result in heavy fines and operational restrictions.

Our team of experts provides guidance on compliance-friendly payment solutions that align with global regulations, reducing the risk of legal issues.

FX and Cross-Border Transaction Fees

International iGaming platforms often process payments in multiple currencies. Converting funds and handling cross-border transactions can lead to additional FX fees, typically ranging from 1% to 3% per transaction. Over time, these costs add up and erode margins.

Even for USDT setttlement, 2-2.5% are charged.

We connect operators with local payment providers offering competitive rates and multi-currency processing solutions to avoid the settlement fees.

Managing Payment Costs with the Right Partner

The true cost of payment processing for iGaming merchants goes beyond standard fees.

Pay Consults specializes in helping high-risk merchants secure the best payment solutions, negotiate better terms, and optimize cash flow.

If you're looking for a tailored payment strategy for your iGaming business, let's connect today to maximize your payment efficiency.

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