Most operators, with all of their desire and ambition to enter the European market, simply don’t know how to do it and doubt whether there is an opportunity to distribute their gambling business to new countries legally.
There are several myths related with the most fears of operators willing to enter the European market. Slotegrator decided to review the most important of them in order to conclusively prove that entering the European market is not as difficult as it seems.
Does the market entry require the European license?
To work with European banks one doesn’t require a special license of the certain jurisdiction. Most operators consider that they can’t work in Europe having an offshore business with the Curacao license. It is a mistake. The offshore company has a full authority to operate at the European market and doesn’t have to buy licenses of such authoritative jurisdictions as the UK or the Isle of Man. Financial operations will be conducted legally even with the most ordinary license and the revenue will flow to the venue owner account.
Opening the European legal entity is a very difficult task
Many operators are afraid that the legal entity registration is an expensive and complicated procedure and European taxes won’t allow to obtain revenue. In fact, the European legal entity is required only to sign a contract and control documentation. This legal entity doesn’t include any finances and, consequently, doesn’t face the taxation burden.
Risks of working with payment system aggregators
A lot of operators fear the partnership with aggregators because in this case financial flows pass through the third party, and who knows what operations the aggregator will conduct with money. In fact, in order to escape risks the operator can sign a direct contract with authoritative European banks and conduct all operations without third parties. Every company can obtain a direct MID in the bank.
What makes dealing directly with banks good?
First of all, the operator loses doubts regarding partnership with third parties, all transactions are conducted transparently and the bank is the guarantor of compliance with all the international payment systems rules. The direct work with the bank provides a persistently high level of successful payments. The bank transfers all money directly to a client account in any bank throughout the world. One more important advantage is a high conversion the operator obtains dealing directly with the bank.
Price formation: inter and intra
One more significant aspect in dealing with European banks is a price formation. There are two kinds of price formation at the world market: inter and intra. Surely, these two kinds are different. Intra-European payments and the work with cards issued in Europe have pricing from 1.5% and higher; payments from all countries worldwide (outside Europe) have 2.5% pricing. There is a difference as the interchange fee differs. It is possible to obtain 1.5% dealing with the bank directly, if the operator works for the whole world, for example, for Russia, or CIS countries from Europe having the European company.
Fears related with rolling reserve
Security deposit – rolling reserve – is the reserve that keeps a provider for supplying charge backs, payments guarantying players’ security and possible return of their money. A standard rolling reserve in Europe is 10% from the traffic per 180 days. But the fact that this percent can’t be reduced is misbelief. Just shouldn’t require its reduction straight off the reel.
It is possible to get more profitable rates after a while, if processing venue operation will show good performance. Obtaining bank credibility and showing good results within 3 months or a half of the year, one can request for lower rates and obtain them, or even turn rates into zero.
10 cents for transaction is the traditional rate in Europe. Here is a similar situation to the rolling reserve: if the company shows good results after 3-6 months of operating, transaction cost can be reduced to 5 cents or even to 0. With really good turnovers it is absolutely objective to think over communication with the bank and reach a desirable result.
The most efficient payout systems in Europe are Visa Original Credit and MasterCard Payment Тransaction. These technologies are very convenient allowing to conduct transactions immediately – easy, convenient, cheap. But it should be mentioned that Visa OC system works for the whole world, including Russia and CIS countries and MasterCard operates only at continental market. However, one transaction costs from 2.5 euros.
Let’s sum up
Is it possible to operate at the European market without third parties and including occurring risks? – Definite yes.
There are direct and transparent ways of partnership with European banks that guarantee business security. Thus, business has to be operated without any tricks and fraud. Do not risk if there is a possibility to work legally. Getting into a blacklist means trouble: none of providers won’t deal with such legal entities.
So, the conclusion is the following: entering the European market is not a difficult task; it is possible to operate legally obtaining revenue and attracting a lot of loyal customers.