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December 4, 2023
In the news

GIC-backed Coda offers fresh alternative to Big Tech app stores

SINGAPORE -- Coda Payments, a fintech startup backed by Singapore's sovereign wealth fund GIC, is broadening its outreach in processing payments, from game publishers to digital content creators, as developers seek an alternative to the major app stores run by Apple and Google.

In a recent interview with Nikkei Asia, Coda's new CEO Shane Happach said the company, which processes millions of transactions for some of the largest gaming publishers like Activision Blizzard, Sea Group's Garena and China's Tencent Holdings, hopes to win more customers from the overlapping "creators economy" like online streaming businesses.

"The video game industry is the largest on app stores, but they're not the only business," said Happach, a former executive at Worldpay who was in charge of new market entries including Japan. The fintech veteran assumed his new role in May. "We are trying to learn what it would take to broaden our market into wider digital content."

Last month, Coda launched a new service called Custom Commerce, a web store system that allows companies and creators to sell and process payments directly with consumers. The system lets merchants adopt the so-called direct-to-consumer model, in which a brand or manufacturer sells its own products directly to end users.

By owning and managing customer data directly through the system, publishers can gain better insights into their audience's behaviors, preferences and buying patterns. It gives customers "a lot of control" over the look and feel of their websites, he said, as well as pricing and content promotion.

Coda Payments CEO Shane Happach: "We are trying to learn what it would take to broaden our market into wider digital content." (Photo by Tsubasa Suruga)

Coda's renewed efforts come as the app stores operated by Apple and Google face greater scrutiny from regulators. Antitrust watchdogs in the U.S. and Europe, as well as Asian economies like Japan and South Korea, have targeted them over their dominant market position and alleged anti-competitive practices.

Happach noted the online app store economy has been "becoming more open" in recent years and will continue to do so as publishers and companies seek to develop a direct relationship with customers without a middleman.

"Nobody likes a complete black box," Happach added. "If you can get more control over it, there's good business reasons to do so."

Founded in 2011, Coda allows gamers to buy accessories, credits and vouchers for PC-based and mobile games on its Codashop platform. The commission gleaned from publishers is limited to up to half of what Apple and Google charge for content released through their app stores, according to Coda.

"It's a big tax that they pay to Google and Apple," Happach said, noting that publishers also compete with big companies in the gaming business.

Now operating in over 60 markets, including Southeast Asia, China, Latin America and the U.S., the startup also provides its own payment platform called Codapay, which allows game publishers to accept over 300 payment methods on their own websites.

Spending on digital games and online content, however, has been slowing after a boom during the pandemic. Global consumer spending on mobile games was down 5% in 2022, according to Sea's Garena, one of the largest mobile game providers and a Coda partner, continues to lose active users and revenue.

While already profitable, growth in Coda's transactions and revenue has also been affected. The company reported revenue of $310 million for fiscal 2022, up marginally from the previous year, according to regulatory filings. The revenue had nearly quadrupled in 2021 as consumers turned to online gaming and entertainment during the pandemic.

"We're not immune to wider market developments," Happach said. "I don't think we will ever see the kind of daily usage metrics we saw during the pandemic. But in the long run, the appetite for digital content ... still remains really encouraging."

Regarding an anticipated public listing, Happach said the company does not have any plans in the near term. "It's not the only thing that could happen to Coda, so we're not just marching on this very particular path," he said.

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