This is a VB Lab Insight article presented by Xsolla.
As the gaming industry grows, developers need to embrace new ways for players to interact with their favorite titles. Microtransactions, subscriptions, the emerging market for digital assets and more call for more advanced seamless payment experiences on both sides of the transaction. At GDC 2023, Jen Premisler, SVP Fintech Solutions at Mastercard, and Berkley Egenes, CMO at Xsolla, sat down to talk about the challenges gamers face with in-game payments, and how next-generation payment technologies and loyalty solutions will make the experience seamless, secure and rewarding.
A sponsorship with Riot Games that began five years ago extended Mastercard’s reach into the esports arena — and a close-up look at how payments function in the gaming ecosystem, across game genres and platforms. Now a partnership with Xsolla has unlocked the opportunity for Mastercard to add more value to the ecosystem, Premisler said, and tackle the major challenges in setting up secure payments for players.
“Early on we recognized somewhere between four and five high-level pain points that we could address,” she explained. “In addition to payment experiences and providing cyber fraud and intelligence capabilities, our other sweet spot is loyalty and data services. All of those things can be leveraged in the gaming space to make this partnership really pop.”
The payment pain points
The way a company handles its players’ payments has a direct impact on engagement and loyalty. Developers are on a constant search for solutions that address the need for simplicity, security and speed. They want transactions to be effortless for players to make, and for developers to process.
It also needs to be a seamless journey, embedded into the game, because players don’t want to be kicked out of a game in order to pay. And they certainly don’t want to fill out another webpage with credit card information. Integration means confidence that the transaction is secure.
Giving players choice in how they make payments is another powerful way to engender customer loyalty, Premisler said.
“That’s what we’re working on together — embedding Mastercard’s Pay with Points solution into Xsolla’s capability and making it available to every game on Xsolla’s platform, and therefore every gamer that plays those games,” she said. “Given how many games [Xsolla] touches, that’s a lot of gamers that will have access to use those points to buy in-game items and in-game currency”.
They’re also working on ways to ensure parent controls are in place, not just for content but for payments — so players don’t end up with an enormous bill say, if a kid gets a hold of their parent’s phone. They’re also strategizing to meet future challenges as they arise. For instance, as web3 games emerge, what will those web3 payments look like? As a broader group of players, less blockchain savvy, begin to enter the web3 gaming world, companies will need to decide how to accommodate all parts of their player base.
Payment technology that “revolutionizes gameplay“
While the initial joint initiative between Mastercard and Xsolla is aimed at making game transactions in the Xsolla ecosystem as seamless and accessible as possible, it will also change how player engagement is activated. Paying with points is an important aspect of this.
When a player wishes to top up their account, buy a bundle, set up a subscription and so on, they’ll click “credit card” in the checkout process and their accounts are set up with their bank information or points values and so on. More than 50% of all transactions made in games are through credit cards, and Xsolla counts thousands of games, servicing millions of players around the world, among their customers. They’re able to reach this scale with the Mastercard partnership.
It’s the points that are key, however. Mastercard has been running points programs for enormous industries, such as airlines, but now they’re bringing that to gaming.
“Consumers who use points are three times more likely to purchase,” Premisler said. “That in and of itself is helping our publishers get more stuff through the game. Then, if you pay with points, you’re generally likely to spend about 27 to 28 percent more in that one basket. We’re increasing basket size. We’re making it easier for people to be willing to pay and buy in-game items.”
The publisher determines the points value of their own items (they’re not usually a one-to-one conversion) and will have the support from Mastercard’s long-term experience and knowledge. Use cases can vary, from physical goods like branded developer merch to virtual goods and currency, subscriptions and so on.
“This is going to revolutionize how players pay and play games,” Egenes added. “It’s a big reward for them because they can say, okay, there’s some value in what they’re receiving. But we’re able to manage that, control it, and provide that activation. We can grow this. It’s not just a U.S. play.”
And it’s increasing accessibility — democratizing gaming, even, as anyone in the world with a Mastercard will be able to purchase securely as well as benefit from the points program from participating merchants and issuers. The Mastercard platform has reach in nearly every accessible market in the world.
And developers will see larger transactions and more frequent transactions, Egene added.
“We talk about user acquisition and incrementality all the time on mobile, from that perspective,” he said. “But to be able to come in on a web shop and make that purchase using points to top up your account, and then drive back to the mobile device to play the game, it’s the perfect connection and synergy we’re going to see, particularly on the mobile side of things.”
Watch the entire conversation here.
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