Profitable and growing: Coda Payments’ niche in Southeast Asia’s brutal fintech scene

Singapore-headquartered Coda Payments has been profitable for around a year and a half. That’s quite a feat in the crowded financial technology space: there are around 67 e-wallet providers in the Lion City and Malaysia alone, not to mention a myriad of payment platforms.

To carve out a niche for itself, Coda targets digital content providers. These are mainly game developers and publishers, livestreaming platforms, and video-on-demand service providers.

“These companies have a completely different set of requirements from the ones that local payment service providers address: they want to make a small number of connections to establish regional or global payment coverage, they want to process microtransactions, and they typically want help with app discovery and marketing,” says Coda CEO Philippe Limes.

The company answers those pain points by offering a large number of payment options region-wide and launching Codashop, a platform that allows people to buy game credits.

Stumbling onto gold

Coda came upon the gaming market by chance – one of its first three merchants was a game publisher.

When they launched the company in 2011, co-founders Neil Davidson and Paul Leishman zeroed in on carrier billing, which are payments made through telecommunications companies by people who own prepaid SIM cards and postpaid mobile subscriptions.

This was largely due to their familiarity with the telco industry. Both Davidson and Leishman had stints with the GSM Association (GSMA), a global trade body representing the interests of mobile network operators. The duo managed GSMA’s Mobile Money for the Unbanked program.

Because of its relationships with the providers of alternative payment methods and carrier billing across Southeast Asia, Coda was well-positioned to meet the needs of digital content providers in the region.

Codashop

Direct carrier billing, explains Coda boss Limes, is “a channel offering unit economics that can’t work with merchants selling physical goods,” adding that it’s the only way “to collect payments from more than 500 million customers across Southeast Asia.”

Once the startup began working with gaming merchants, though, it realized that people in Southeast Asia’s emerging markets also wanted to make payments through bank transfers and cash.

Today, 80 percent of Coda’s business comes from mobile and online gaming, while 20 percent comes from digital content.

China and emerging markets

Revenue and profit