Online gaming has been seeing twice the growth in the number of users after the global COVID-19 outbreak. It saw a whopping growth of 21.9% in just the past year. This upward trajectory was due to many people being forced to stay at home during the pandemic and looking towards app-based games for entertainment, including the factors outlined below:
- Higher Smartphone Penetration
- Excellent Connectivity
- Rise of Digital Spectators
- Region-specific gaming
- Rise of Fantasy Gaming
However, in India, online gaming is complicated as its legality differs based on statewide regulations. Online gaming businesses need to ascertain the detailed credentials of the players, including the player’s geographical location, their age and financial details.
Impact of the New Rules in Onboarding Process for Online Gaming Websites?
The new IT 2021 regulations laid out by the Ministry of Electronics and IT hold gaming companies responsible for verifying and furnishing the information of their users and checking for any malpractices. For instance, the real-money gaming companies have to ensure the following:
- Meeting Compliance Requirements: These requirements will include age-bound verifications and location-based checks to ensure that users indulge in gaming activities from the states where it is legal. More importantly, it is also crucial to place anti-money laundering checks, preventing financial fraud.
- Tracing Fraudulent Activities: Primarily, ID tampering, duplicate accounts, and data breaches are some of the persistent frauds among real money gaming platforms.
Hence, It is imperative for online gaming platforms, especially real money gaming, to opt for KYC solutions as one can verify the details and act upon them easily with the help of an AI-based user identity verification. Moreover, these checks improve the gameplay experience. For instance, gaming platforms will be able to deal with account abandonment, forge a frictionless onboarding journey, ensure timely transfer of the winning amount, and foster fair play.
Why Does Real Money Gaming Need KYC?
KYC or ‘Know Your Customer’ is an important part of the onboarding process for any online business to identify its users, especially when money is involved. Hence, it is imperative for real money gaming companies for various reasons, including furnishing the user details in case of any mishap and avoiding partnering with skeptical players.
Real gaming companies must verify user identity, age, location, source of funds, and many other categories during the onboarding to protect the platforms and other users from fraud. Platforms that involve real money need to secure the platform so that participants do not use it to launder money or assimilate funds for terrorist funding and anti-social deeds. The laws in India seek the gaming companies to abide by it.
With the Intermediary Rules 2021, which empowers the participants to seek redressal of grievances, the companies require information to identify users and provide them with a secure and friendly environment.
Additionally, the data collected should not breach the user’s trust. Hence, the information collected must be safeguarded and handled appropriately.
The gaming laws, especially for real money games, need to discourage underage players (under 18 years of age) from playing on their platforms. Determining user identity is necessary for the company to secure its reputation from malicious activities. By using advanced identity verification solutions, companies can flag, monitor, or ban high-risk users.
Companies Focus on A Risk-Based Approach
A risk-based approach is very important, especially in the real money gaming industry, involving financial transactions. The AML control program will identify potential risks and take precautions against them.
Real-money gaming companies have started implementing AML compliances, especially while onboarding new customers, which is necessary as a risk mitigation effort. The KYC process helps gaming companies achieve that and meet mandatory requirements in user onboarding. For instance, an advanced Customer onboarding solution and Anti Money Laundering solution will help in:
- Carrying out age verification checks with Aadhaar-based or NID verification
- Identity verification check with video-based KYC
- PAN and bank account verification to prevent money laundering activities
- Capturing geo-coordinates with digital address check to verify the player’s location
- Ensuring real-time document verification with real-time database checks and document tampering detection.
Many end-to-end player onboarding solutions leverage AI to identify players and onboard them within the purview of regulation. In the absence of any clear central guidelines around real money gaming in India, these third party vendors are your best bet to stay on the right side of law while also ensuring a seamless player onboarding experience.