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Payments Strategy 2008
Microgaming 2006
2
Mandate
• Most profitable operators in the world.
• Deliver competitive advantage to Microgaming operators through innovative, cost-effective and player-friendly payments and conversions programs
• Provide Microgaming with True Competitive Advantages against Rivals
Microgaming 2006
3
Examples
• At ITS in January:
2700 unique US players tried to use payment options with ZERO chance of success
– Firepay, Citadel – dead
– Use My Bank only available to Canadian players
– Mastercard not available!
Microgaming 2006
‘Insult Rate’ to Players
PurchaseBrandName
No. Unique Players
No. Attempted Purchases
Attempted Purchase Amount
Accepted Purchase Amount
Rejected Purchase Amount
No. Unique Players Never Successful
MasterCard 2,002 4,544 340,559 4,100 331,473 2,000
UseMyBank 314 410 44,987 0 0 314
PaySafeCard 160 178 16,625 144 905 159
MoneyBookers 116 145 27,382 0 6,131 116
NETeller 56 81 5,434 0 5,384 56
InstaDebit 45 50 7,572 0 2,460 45
FIREPAY 8 10 885 0 885 8
Unknown 9 18 1,351 170 1,148 7
Ukash 2 2 300 0 300 2
TOTAL 2,712 5,438 445,095 4,414 348,686 2,707
4
• ITS, Jan. 2008 – US Players
Microgaming 2006
5
Inefficient processing
At ITS Currently 7% of all Deposits players have pending cashouts
• $50,000 in unnecessary processing fees paid on players’ new cash-outs when they already had a pending cash-out in the system that could have been used
• Smarter withdrawal logic will save this money for all operators increased Revenue per month
Microgaming 2006
Inefficient Processing
Our Operators Coded running through Alternative
Bimonthly BIN # Players # Cards # trans attps # Accepted Purchases trx approval % #Cards with Success #Cards with NOSuccess Unique Card approval rate Status
Apr-08 403995 3,028 2,682 18,846 13,809 73% 2,262 482 84.34% friendlyApr-08 400768 1,970 1,723 12,622 8,985 71% 1,473 285 85.49% friendlyApr-08 400766 1,725 4,875 8,680 5,426 63% 4,512 391 92.55% friendlyApr-08 444796 803 743 4,038 1,557 39% 489 269 65.81% friendlyApr-08 487093 527 443 3,127 2,312 74% 350 101 79.01% friendlyApr-08 446024 489 445 6,590 4,959 75% 329 119 73.93% friendlyApr-08 400767 410 391 1,949 904 46% 243 160 62.15% friendlyApr-08 486830 402 370 3,343 1,937 58% 220 154 59.46% friendlyApr-08 400765 386 1,013 1,473 1,157 79% 950 63 93.78% friendly
average approval rate 64% average unique cards 77% G2Pay MCC 7995 accounts
BIMonth BIN # Players # Cards# Purchase Attempts # Accepted Purchases
trx approval rate #Cards with Success #Cards with NOSuccess Unique Card approval rate Status
Apr-08 400765 N/A 9387 34781 31142 89.5% 9367 20 99.79% friendlyApr-08 400766 N/A 9999 150463 102994 68.5% 9997 2 99.98% FriendlyApr-08 400767 N/A 3376 22656 12233 54.0% 2870 506 85.01% FriendlyApr-08 400768 N/A 4565 70054 54270 77.5% 4338 227 95.03% FriendlyApr-08 403995 N/A 6282 110052 88360 80.3% 5997 285 95.46% FriendlyApr-08 444796 N/A 5227 34068 19616 57.6% 4432 795 84.79% FriendlyApr-08 446024 N/A 4110 81724 71181 87.1% 3972 138 96.64% FriendlyApr-08 448830 N/A 38 248 206 83.1% 35 3 92.11% FriendlyApr-08 487093 N/A 953 13152 10537 80.1% 841 112 88.25% Friendly
average approval rate 75% average unique cards 93%
6
Microgaming 2006
• Add ITS, Forward Slash UK, French, Germany, US and Canada
• Here
7
Microgaming 2006
8
Costs for USAt ALL US facing operators:
• No MasterCard for the last 4 months
• No coded 7995 option:– 30% of US 7995 cards WORK!
– Operators paying 8% vs. 4%
– Operators reserves can move to 0%-5% from 10%
– Operators can get paid daily. Bi weekly, weekly not in 3 weeks
– Not penalized with huge FX fees
– Ability to process players with MCC 7995 cards at much higher $ amount levels
– REDUCE RISK!
Microgaming 2006
Inefficient Conversions
Country No. New Registered Players
No. New Players with Accepted Purchases
No. New Players with >1 Accepted Purchases
New Player First Deposit Ratio
New Player Multi Deposit Ratio
United States 2,530 244 152 9.6% 6.0%
Canada 776 128 61 16.5% 7.9%
France 647 164 70 25.3% 10.8%
United Kingdom 360 141 65 39.2% 18.1%
Germany 288 87 35 30.2% 12.2%
Italy 126 36 19 28.6% 15.1%
Australia 118 20 11 16.9% 9.3%
Netherlands 65 12 2 18.5% 3.1%
France, Metropolitan 46 11 5 23.9% 10.9%
Spain 40 9 7 22.5% 17.5%
9
• Grand Mondial, Jan. 2008 - Top 10 countries by Number of New Registered Players
Microgaming 2006
Player Casino
B.O. Pending Queue
Approval Process
Allocations Process
Submit to Gateway
Import Payment
Responses
Request Cash-inPending for 48 hours
“Flushed” to Back Office
Work starts now
Usually asking for “hoop” documents
The cash-in is split into one or more payments.
A file is exported and uploaded
to the payment gateway.
A file is imported and payments are updated.
Failed payments go back into
Approval Process.
Current Cash-in Processing FlowchartUpdated: 22 May 08
Enter PMOP details
Microgaming 2006
11
Examples
‘Preferred method of Payout’
The chosen option is almost NEVER available: Carmen
Microgaming 2006
Limitscurrent system
• General
• Min Transaction Limits for deposits and withdrawals per currency
• Min Transaction Limits for deposits and withdrawals per deposit/withdrawal method
•
• Player (responsible gaming limits)
• Daily Limit
• Weekly Limit
• Monthly Limit
•
• Limits for credit card purchases
• Daily Limit
• Monthly Limit
• Transaction Limit
• Account velocity limit
• There are also limits on the number of financial accounts the player can register on the casino.
12
Microgaming 2006
The Partners
• Microgaming
• Derivco
• DC
• KG
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Microgaming 2006
Microgaming
• Strengths
• Unbelievable Team
• Leading edge Software
• Passion you can not buy
• Agressive and want to dominate new and existing markets
• Very Active in Legislation and establishing legislation and legalizing in various markets worldwide
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Microgaming 2006
Microgaming
• Weakness
• Not listening Operators
• Enabling Anarchy instead of controlling chaos
• Back end is very weak
• Pushing new markets and compounding the operators chaos
• Giving the Competition the weapons to use against it
• Makes bad dev call decisions on a operator by operator basis tying up valuable dev resources and not fixing the “real problem”
15
Microgaming 2006
Derivco
• Derivco is the most amazing place for work environment I have ever seen
• Passion you can not buy
• People care and want to produce the best product possible
• Believe with guidance they can build anything
• Has all the tools currently in place
• With Guidance the team can build anything and better than any operator themselves or their Rivals
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Microgaming 2006
Derivco• Weakness
• Speed to Market
• Adaptability
• Important issues been neglected
• Not prioritizing the queue strategically but doing ad hock projects based on other reasons
• Having Huge resources allocated to special projects that are not solving the real problems
• Treating symptoms rather than illness itself
• Not the Optimal relationship between Operators, Processing Partners and Banking team at Derivco
• Beat Up for years and you can feel within the teams
• Intregrations slammed to them, producing bad product
17
Microgaming 2006
Datacash
• Strengths
• PLC
• Willing to work with us
• Gateway with Multiple Payments Options, Cards, Wallets ect
• Processes other industries besides Gaming which is an advantage to us with access to methods that would not accept our operators directly
• Part of the “family”
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Microgaming 2006
Datacash• Weakness
• Bad Account Management to our Operators
• Overprotective with their turf including with areas they can not help
• Not problem solving
• Treat Operators, Microgaming and Derivco that they are responsible for the success’s the last few years and the operators and Derivco is responsible for all the failures
• In Defence Mode for processing not offensive
• Believes they are doing a favour processing for our operators
• Trust Issue with many operators that do not believe they have their best interests at heart.
• Plays the blame game
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Microgaming 2006
KG gateway
• Strength
• Willing to work in hostile areas
20
Microgaming 2006
KG gateway• Weakness
• Bad service to the operators I have talked to
• Overly expensive in areas where the do not have to be
• Is holding/or their processors is holding huge reserves on our operators, growth
• Some major players in the processing space believe them to be unprofessional and will not assist them
• Lack of transparency to the operators
• Sloppy and inefficient costing operators millions
• Trust issues that they do not have the best interests of the operator and players
• Loss of 5 million with no accountability to operators.
• Possible Not exclusive to Microgaming Operators
• At least some of their major suppliers are not loyal
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Microgaming 2006
Current State for Operators in US using Managed Services
• Limited Processing Options
• Alternative Visa Only for the most part, restricted Velocity limits difficult to acquire player as efficiently as possible
• Expensive 7.5%-9.5% MDR, 10% Reserve (180 days), and extended settlement timeframes 14-21 days. Worst terms I have heard in the business. www.pitbullpoker.com at 130K a month has better over all terms than us at many 10’s of millions a mth
• No Coded Visa and MasterCard for any of them for the last year according to Carmen. Approx 33% of all transactions will go through CODED. Stars was 52% approvals for Coded in the US
• NO MasterCard Coded the last 4 months
22
Microgaming 2006
Operators• Feeling abused
• Very upset
• Do not believe they have an advocate at either Datacash or Microgaming when it come to processing and been taking for a ride
• Building their business plans based the way they are forced to process, causing their own problems.
• Can not “really” compete
• Easy targets for your rivals to take their business from you
• Spending their time and resources on areas that are not their core strengths during ad hoc patches to the cashier and adding processors that they think will solve their problems and only enhance them
• CashFlow is a challenge and preventing growth
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Microgaming 2006
24
Start with the data
Opportunities identified so far in:
– Reducing processing costs
– Lower Insult Rates in pay in and pay outs
– Increasing conversion and retention rates
– Speeding up operator cash flows for turnover to grow faster
– Increase speed of pay to the players once the operator releases it
– Millions of dollars declined deposits per month will be salvaged
– Lower chargeback rate
– Provide our operators with the tools to compete more effectively and provide much better service to their players
– Banking Team working towards treating the sickness and not treating the symptoms
Microgaming 2006
Recommendations
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Microgaming 2006
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Drive Player-centric Approach
• Everyone in the payments food chain to adopt the following philosophy: “If that happened to me, how would I feel?”
• Move focus from declines and abandonment to ‘Insult Rates’ “How many players did we insult today”
• Drive-approach across Microgaming:
–Microgaming, Derivco, operators, suppliers, processors, market, etc.
Microgaming 2006
Options to Add in the US For Operators
• Add Coded processing Visa and MasterCard NON 3D Secure Worldwide
• Add Cash Payments Western Union and/or Money Gram payin and payouts
• Add Webtrade as an alternative Credit card processing to KG Gateway
• Add Money Orders/Cashier Cheque Paying ability
• Add Wire transfer pay in and payouts
• Add Echecks paying and payouts
• Add cheque payout suppliers with better velocity terms and less cost to operators
• Add Additional Wallet(s) close loop ONLY the Microgaming Crews
• Propriety Stored Value systems closed and open loop
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Microgaming 2006
International
• ADD GC for Methods DC does not provide and redundancy for methods they do
• ADD Nerex for challenging areas for CC or the ability to have gaming process through certain payment schemes, i.e.: Carte Bleue
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Microgaming 2006
Recommendations
• Data Queries to establish “cause”
• All suppliers performance are benchmarked
• Speed of the money turnover examined and enhanced where ever possible
• Custom quick sign ups with all wallet partners
• Have the ability to have players treated as VIP, Newbie sect right away for a in the conversion stage
• Establish where are Competitive Advantages and disadvantages are and prioritize queue according
• STRONG TRUE PARTNER RELATIONSHIPS with the operators and suppliers
29
Microgaming 2006
Cashier Redesign
• Parameter Driving
• Profiling Capabilities
• Context Sensitive Messaging
• Targeted News To Players
• Queuing Ability
• Self Service Collection Terminal
• Limits system to be based on transactional count as well with pending cleared
• All declines giving the players a real way to take care of themselves and simple
• All Rules in the first module for Payouts, not having the customers and operators deal our bad logic eliminate the bad taste in the mouth of winning players and small players
• Custom quick sign up with our preferred wallets suppliers to have our Players
• Limit structure changed, to include pending cleared
30
Microgaming 2006
Questions
• Questions
31
Microgaming 2006
Current State for Operators in US using Managed Services
• Estimated Loss to Operators of $30-$40 million (estimate) Purchases to date with loss of Coded MasterCard alone. ( Add Data if BIN request is received in time.
• Estimate loss 20million/yr of processing based on low limits and heavy velocity restrictions attempting to process coded through Alternative and not been able to service VIP properly
• Estimate Additional Cost to operators having to Process Coded eligible Visa’s in Alternative Accounts $5-6 million/year (With Data can make an easy cost comparison if received in time) Coded USD 2.5%-3.5% MDR (Max) 5% reserve or LOC and no reserve, option for Quality Operators to receive pay daily or at least BI weekly.
• Adina 20 million in reserves and holdbacks that are overly high
• Estimate loss of 30million/min a year with inefficient processing
• Estimated Loss of New Player acquisition with NO Coded MasterCard. Estimate 15000 (guess need data) for the US Groups
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