Fantasy Sports

The U.S. fantasy sports sector is expected to bring in over $12 billion in revenue in 2023. This should be no surprise as sports are starting to come back to pre-COVID attendance levels with COVID restrictions generally easing across the globe. This means that fans and gamblers will now be able to put together their favorite fantasy teams for significant sports such as Football, Basketball, Soccer, and more.

Since Fantasy Sports can also be considered a form of gambling, many low-risk banks and traditional mainstream Processors choose not to approve this type of business.

Fantasy sports merchants run the risk of having their accounts frozen/ held or, in some cases, terminated should they choose a low-risk processing solution or Aggregators such as Stripe or Paypal. When those Providers hold payments, your funds can be frozen and withheld for more than 180 days, depending on your specific merchant processing agreement and your situation.

Fantasy Sports businesses can make sure this does not happen by choosing a high-risk processing solution, like Aacadia Payments, from the beginning. High-risk Banks that approve Fantasy Sports understand the risk and nature of the business more so than other Providers, and Aacadia Payments also offers ways to mitigate against chargebacks/fraud.  In the Fantasy Sports industry, chargebacks can be the lead to a merchants business demise,  as they are expensive and can even lead to processors shutting down your merchant account.

At Aacadia Payments, our executive team has over five decades of credit card processing experience as well as many years of experience processing in the fantasy sports market, and we are confident that we can offer payment processing services tailored to your business.

Applying For A Fantasy Sports Merchant Account/Credit Card Processing Solution

Applying for a Fantasy Sports payment processing account with Aacadia Payments will help improve your overall payment experience and strengthen your business. Our goal is to get you Approved and Processing payments as quickly and safely as possible.

At Aacadia Payments, we strive for:

• Quick account approvals ranging from 24-48 hours
• Waived Application, Set-Up and Termination Fees
• Robust Aacadia Payments Gateway with Fraud Prevention Tools
• Risk mitigation through Verifi and Ethoca

When applying for your fantasy sports merchant account, not all payment processors are created equally. Some of the fantasy sports that Aacadia Payments offers credit card processing for include:

• Fantasy Football
• Fantasy Baseball
• Fantasy Basketball
• Fantasy Racing (Nascar)
• Fantasy Soccer
• Fantasy Horse Racing
• Fantasy Golf
• Fantasy Boxing

When applying for your merchant account for Fantasy Sports, you will need the following information:

• Personal and business Bank Statements
• Articles of incorporation
• Copy of Signers Driver’s License
• Void Check or Bank Letter for Deposits
• Prior Processing Statements (if applicable)

Can you provide Stripe or Paypal Processing Statements or History?

Yes, you can provide this information as both companies provide a list of Sales, Returns, Chargebacks and Deposits.

Stripe and Paypal can approve merchants quickly, however, they can also audit your merchant account with them at any time and normally place your deposits on hold while they are completing their Risk Review.

Stripe and Paypal have absolute right and can hold your funds more than 180 days severely impacting your business and the ability to pay your vendors.

Many times, Stripe and Paypal will hold your funds for more than 180 days and they can end up closing your merchant account.  But, just because you are having issues with Stripe or Paypal or another aggregator, no worries as Aacadia can help!!  We are contacted regularly, unfortunately, by businesses in this situation looking for assistance.

We will do our best to quickly get you approved and set up with a bank that understands and appreciates your business.

Why are Fantasy Sports businesses deemed High Risk?

The largest reason Fantasy Sports is deemed High Risk is because of the amount of chargebacks and disputes that accompany this vertical.  Chargebacks can end up becoming losses for Credit Card Processors and Banks, causing this vertical to require more vetting for approval for a merchant account.

Outside of chargebacks, these are also considered subscription merchants with large recurring payment averages. Fantasy Sports businesses will automatically be considered medium to high-risk from Banks due to the chargebacks and larger ticket items.

Here are the main reasons why the Fantasy Sports industry is Considered High-Risk:

• Chargebacks & “Friendly” Disputes
• High-Transaction Averages
• Legality (Depending on the state)
• Fraud/Security Concerns
• Reputation Concerns by Banks (Association with Gambling)

Fantasy Sports Chargebacks

Chargebacks frequently occur in the Fantasy Sports industry. Having the right payment processing provider can significantly aid in chargeback prevention for your business by having a chargeback mitigation plan in place.

The way a chargeback occurs for this vertical, is when a customer is upset over results a bet they placed and disputes it with their bank. One Example, a person places a large bet on a Football game and loses and contacts their bank to issue a Chargeback, as they are looking for a way to recover from their loss.

This is, specifically, fraud; however, it is not easy to argue against the claim, if your business doesn’t have the proper Card Brand regulated procedures and guidelines in place. 

How can Aacadia Payments Help your business Prevent Chargebacks?

Aacadia Payments understands how essential Chargeback Count is in the High Risk processing.  We keep close communication with all of our customers to ensure they are following Card Brand Procedures to communicate properly with their clients at the point of transaction to ensure they are protected best against friendly fraud.

Fantasy Sports businesses should have clear Terms and Conditions, Shipping Policy and Refund Policy stated many times throughout the checkout procedure for their customers.  Their clients should NEVER be surprised by anything during the transaction.

Businesses should also be easily contactable.  By having 24/7 customer service or being super responsive to customer emails, you can respond quickly to customers inquiring. Simply easing a customer’s frustration can sometimes prevent chargebacks.  Businesses need to have several ways of being contacted to make it simple for their customers.This alone can prevent disputes.

If this is done, there is a good chance this will prevent customers from going directly to their bank and filing a chargeback (sometimes with just the click of a button on their phone).  Again, remember that many times these are very large tickets as this is a type of gambling.

Another regular occurrence and reason for disputes is that many customers bet the same amount over and over, seeing many $2,500 charges, for instance, on their credit card statement. Many times it can be confusing as customers have a slight different recollection than reality and forget making some of the charges, when they actually did engage.  Your Terms and Conditions should make this very clear to customers.

Here are some common guidelines for mitigating disputes and chargebacks—

• Investigate New and Suspicious High Ticket
• Respond back to Customer Inquiries QUICKLY
• Make sure your Contact Information is easily accessible on your website
• Make sure your Terms and Conditions are Clear and Must be reviewed before purchases can be made
• Communicate often and immediately after any orders
• Use the Aacadia Gateway to prevent Fraud and help set up Fraud Prevention Tools to mitigate risk best for your business

Chargeback Mitigation

Aacadia Payments Gateway uses Fraud Prevention Tools to help you mitigate Risk. You can block customers’ card numbers who have disputed in the past. You can also use Geographical Controls to only allow transactions from lawful areas. 

Fantasy Sports falls into the MCC of 7994, which is considered Esports, banks, and processors typically come across larger transaction amounts and increased disputes.

When a customer bets a lot of money on a sure thing and loses, they can be very upset and contact their bank immediately to dispute the transaction.  Your business has to be set up with the correct Terms and Conditions and verbiage disclosure to protect your business from Friendly Fraud Chargebacks.  At Aacadia Payments, we make sure our clients have the most up-to-date solutions to fight fraud.

Friendly Fraud Disputes

Customers commit fraud when they engage in a Fantasy Sports transaction then later dispute the transaction, trying to get their money back.

This frequently occurs in the fantasy sports industry, but in many industries especially if the merchant doesn’t state specific guidelines presented to their customers during the transaction, in order to protect the merchant from their customer later disputing the transaction.

Fantasy Sports Not Legal Everywhere!

Fantasy sports are not yet legal in every state because each state has its own Gambling Laws.

Federally, Fantasy Sports is legal, as there is a specific exemption in the legislation that covers online gambling. However, the following are states that do not allow “daily fantasy sports”.

• Arizona
• Montana
• Idaho
• Louisiana
• Nevada
• Washington

**** It is important to understand that customers that live in states in which daily fantasy sports is banned will not be able to place bets and the merchants checkout page has to be set properly to not allow these purchases. ****

Why is Aacadia Payments the best solution for your Fantasy Sports Payment processing?

Choosing payment solutions in this industry is not always easy. Aacadia Payments suggests you make your decision on who to process your payments with very seriously and check into several different providers to compare their services.

Payment providers are all different and have different niches and different banks and vendors they use to process payments.  

See 5 Things Aacadia finds important with regards to High-Risk Payment processing.

• Industry expertise
• Chargeback Mitigation Tools/Dashboards/Alerts
• Flexible processing solutions and Software
• Easy Integration/Implementation
• Customer and Chargeback Mitigation Support

Fantasy Sports Gateway Fraud Prevention

Fraud is something that all Ecommerce companies deal with there is no full way to prevent it.  That being said, busnesses can increase their Fraud Prevention and Security, by bringing your company up to date with the most secure solutions, Aacadia Payments recommends the following standards be met within your business:

• Fantasy sports Apps/URLs should always partner with a payment service provider that has the #1 Focus on Security and Fraud Prevention
• Choose a service provider with a PCI-Level 1 Secure payment gateway such as the Aacadia Payments Gateway.
• Enable multi-factor authentication on all platforms and take every measure possible to combat Fraud and strengthen security.

Another way that Aacadia Payments helps eliminate Fraud is by having direct integrations with all of acquiring partners, thus eliminating unnecessary 3rd Party/access points.

Does my business need a High-Risk Merchant Account?

With regards to Fantasy Sports merchant accounts specifically, the industry isn’t all about the Superbowl and TouchDowns. While there are many industry perks, there are some like Friendly Fraud and high-ticket disputes.

Working with a high-risk processing provider will help combat Chargebacks and help prevent your business from Funds being held and merchant account Shut-Downs cause by high chargebacks.