Understanding the assessment of merchant fees is just half the battle. All businesses are flagged as high-risk to varying degrees, but fantasy sports entrepreneurs know their platforms incite competitive, uncertain and often misunderstood environments. They are flanked by gambling regulations, inconsistent player experiences and fluctuating odds. Therefore, payment processors worry about potential chargebacks from disgruntled players who feel cheated and not necessarily by the fantasy sports operator. Accidentally exposing a player’s sensitive information or not processing a timely transaction can lead to credit card fees and fraud alerts; as a result, processors turn to fantasy sports operators to pad their bottom lines with increased merchant fees.
Fantasy sports businesses are considered high risk when it comes to merchant fees for chargeback frequency and payment processor regulatory requirements, in addition to their resemblance to gaming. For example, there are a lot of disputing charges related to fantasy sports—monthly subscription fees that people don’t want to pay, fantasy contests people decide to cancel, etc.—that increase chargeback rates, meaning extra fees for processors. Furthermore, fantasy sports exists in a somewhat uncertain regulatory legal environment; thus, fantasy sports business payment processors need to ensure compliance on an intrastate basis, which adds to their costs[1]. Thus, it would take too much time to do it for just your business—they’ll assess higher merchant fees than other low-risk merchants and regular e-commerce or subscription businesses do not see. Therefore, fantasy sports require high-risk merchant services with reliable POS.
What Are Merchant Fees?
There are certain merchant fees that fantasy sports businesses can come to expect. Merchant transaction fees are charged per transaction or deposit and are the most visible. Monthly gateway fees occur when a third-party merchant translates online payments for fantasy sports. Chargeback fees range from $20 to $100 per dispute and can seriously cut into fantasy sports profit if the monthly fee reaches a certain level. Furthermore, some processors require rolling reserves where a percentage of settlings is held for x amount of time to secure against chargebacks. Other processors have cross-border fees if they’re paying international players, compliance audit fees, or added fees for fraud detection.
How to Choose POS Merchant Services
Choosing POS merchant services is crucial for fantasy sports. The ideal company has experience with high-risk credit categories, transparent pricing, and effective fraud prevention. Fantasy sports companies must avoid those that boast low rates yet fail to disclose all the hidden fees because this can adversely affect a company’s financial situation down the line. Thus, the best companies will have good payment options and flexibility and assist companies in compliance to ensure transactions follow card network specifications and state laws. The ability to process recurring payments, flexible payouts, and seamless integration with dedicated fantasy sports league software only helps daily operations.
How to Decrease Merchant Fees
It’s challenging to decrease merchant fees when the fantasy sports world is assessed such high fees to begin with, but several steps a league can take to help reduce them. Clear billing descriptors help prevent chargebacks, so if a consumer sees a charge from a fantasy league, they know what it is and that will prevent chargebacks, as opposed to no descriptors and a customer making a hello chargeback. Online refunds and customer service help communicate effectively and lower chargeback possibilities. Fraud detection services help avoid charges before actual charges occur, lessening liability charges in the future. Licensing with processors about what is needed for rolling reserves helps, too, if companies can prove a low chargeback history from the start[2]. Therefore, as long as minimizing dispute factors are prioritized, fantasy sports leagues can reduce fees by proving they have no reason to have negative histories and instead, want to work with their processors positively.
Merchant Fees in Fantasy Sports: What's on the Horizon?
As fantasy sports continue to take a more international approach, changes in merchant fees could be in the works. With international standards for regulation, more transparency could mean that more processors want to enter the marketplace for competition purposes and lower expenses. Similarly, advancements in payment processing—cryptocurrency, foreign payment processing—could give platforms a means to avoid some traditional fees. For now, however, fantasy sports platforms should expect that merchant fees will continue to be a significant line item expense. Plan pricing according to a business plan, including them. Merchant fee structures and selecting the right POS merchant services for successful risk management can assist fantasy sports operators in stabilizing payment processing so they can focus on growing their business instead of worrying about fees[3].
FAQs
Q: What are the merchant fees associated with fantasy sports platforms?
A: Merchant fees are the costs associated with credit and debit card processing transactions. This includes per-transaction fees, gateway fees and chargeback fees. Due to the high-risk associated, it also carries higher percentage fees over other industries[4].
Q: Why do fantasy sports companies incur higher fees than other industries?
A: Because fantasy sports are tied to online gambling (even if it’s not), it has the potential for chargebacks, and the regulatory concerns and considerations are equal to real-money gaming. This adds more liability for the processor and thus, its costs[5].
Q: What types of merchant fees should operators anticipate?
A: Per-transaction fees, gateway fees, chargeback fees, potential rolling reserves, which maintain a percentage of payment to combat chargebacks and cross-border fees for international payments.
Q: What are some ways a platform can lower its merchant fees?
A: A platform can lower its fees by using fraud prevention services, a clear billing descriptor, good customer service, and assessing if a rolling reserve is needed.
Q: Why are merchant services for POS important?
A: Merchant services for POS allow for the ability to process/manage payments. Platforms that cater to high-risk industries will have better compliance, transparency, and options for payment.
Sources
- NerdWallet. “Merchant Fees Explained.” Accessed August 2025.
- CardFellow. “High-Risk Merchant Accounts: What You Need to Know.” Accessed August 2025.
- Business.com. “Merchant Account Fees: What to Expect.” Accessed August 2025.
- Visa. “Chargeback Management Guidelines for Merchants.” Accessed August 2025.
- PCI Security Standards Council. “PCI DSS Overview.” Accessed August 2025.
