How Codashop spurs gamers to make more in-game purchases

GamesBeat
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Coda Payments recently raised $690 million in funding to enable cross-border payments for games and other digital products, as well as alternative app stores.
That secondary funding showed investors still have confidence in Coda Payments and its Codashop division. The latter bills itself as a trusted source of in-game currencies and other premium content for millions of consumers in more than 50 territories worldwide. And it says it is the only independent content marketplace with a global footprint.
Neil Davidson, executive chairman and cofounder of Coda Payments, spoke with me about the opportunity in our fireside chat at the online part of our GamesBeat Summit 2022 event.
Through Codashop, developers and publishers make it easier for their customers to access the content they love by allowing them to choose from more than 300 convenient payment methods. Coda also operates Codapay, which publishers use to accept the same range of payment methods available on Codashop on their own websites, and Codacash, a closed-loop e-wallet that offers loyalty rewards to customers.

Coda Payments started over 10 years ago. Codashop’s first market was Indonesia. Now it operates in about 50 markets, starting in Southeast Asia and expanding into place like South Asia, the Middle East, Latin America, and since September, Europe. Many of the markets where it operates are emerging markets.
“What was happening at that time was hundreds of millions of people around the world were coming online for the first time through the proliferation of smartphones,” Davidson said. “And we foresaw that a large number of these users were going to be coming online, they were going to be eager to participate in the internet economy. But they were going to be prevented from participating fully because so many of them didn’t have a payment instrument that was widely accepted online.”
He added, “We set out to build a platform and build infrastructure, which would allow users to pay for purchases online using local payment methods and payment methods that they were perhaps already familiar with using for purchases offline. And then we made infrastructure available to merchants who were looking to reach these newly connected consumers.”
Game publishers needed to reach players all over the world and use payment systems that worked across borders. Those merchants had some unique problems dealing with tax cross-border settlements and local regulations.
“We found that we could build a set of solutions that was specifically geared to the requirements. And so that’s what we have been working on, really for the last 10 years,” Davidson said.
To make a purchase in Codashop, you submit your player ID for a game. Then you choose the denomination of virtual currency that you want to purchase and then it is instantly added into the app. The shop is connected directly to the API for the game so that the delivery can be instant. Instead of taking a 30% commission as the traditional app stores do, Codashop takes 15%.
“As soon as that payment goes through, we send an API call back to the publisher to ask them to increment the ending balance of that particular user. And so as soon as he or she switches apps, once again, back to the game, they’ll see their in-game currency incremented,” Davidson said. “This is a pretty unique user experience and it is something that we were one of the earliest to adopt. And our customers, once they’ve started to use Codashop, find it just about as seamless as making a purchase.”
You can pay for the purchase with any of 300 alternative payment systems, like Venmo or the Cash App. Right now, on iOS, Codashop is not allowed to sell apps that are in the App Store already. But it can sell virtual currency that you can assign to your account in a variety of app stores. And people are willingly doing this for the convenience of paying with a local payment system on their phones or to get access to special marketing deals, Davidson said.
Alternative stores are becoming more intriguing to game companies thanks to a ruling by a federal judge in the Epic Games vs. Apple antitrust lawsuit. While Epic lost most of its claims (the case is under appeal), the judge ruled in the Fortnite developer’s favor in saying that Apple could not prohibit developers in its iOS app store from promoting deals off the store. That, in turn, has raised the prospects for alternative app stores on mobile devices.
Publishers and developers work with Coda to generate new revenues, reduce their monetization costs, and reach new paying audiences. Backed by a secure and reliable payments infrastructure and offering a seamless user experience, Codashop allows customers to select from a wide range of popular payment methods and enjoy exclusive deals.
“It’s really striking how different that consumer payments landscape is in some of the markets that Coda operates. And I think the high-level summary here is that what we see typically is a much higher degree of fragmentation among the payment instruments that the customers use,” Davidson said. “In the U.S. and Europe and other developed markets, the vast majority of online transactions are paid for with credit or a debit card.”
In emerging markets, the market fragmentation is growing.
“This adds up to a huge challenge because you want to make sure that you’re able to accept payments from your users, however they want to pay,” Davidson said. “But you have this maze of different methods around the world, which you need to support. And so we think it makes a lot of sense to have built an aggregation layer where we do the hard work of integrating with all of these payment methods. We’re integrating with several new payment methods every month.”
For publishers, Coda also acts as a trusted go-to-market partner, ensuring compliance with local regulations and tax requirements, providing market insights, offering tailored marketing support, and providing 24/7 customer care. The Coda vision is to be the platform of choice for taking life’s digital experiences over the top.
While the Apple ruling drew attention to the option for alternative app stores, nothing has changed yet with Apple as the order has been stayed until further litigation. Some regulators around the world are likely to race ahead of the U.S. antitrust appeals court ruling in the Epic vs. Apple case, and that may mean it could get complicated around the world to comply with the rules.
“We definitely believe that the direction of our industry is towards more openness and more choice,” Davidson said. “Yes, we are seeing an increasing number of interventions, whether judicial, legislative, regulatory, into this market. But I think even if we set aside those interventions, I think that there’s just really strong demand from both sides of this of this ecosystem. For more more options, and for more flexibility. I think we are very focused on what are the opportunities, what are the services that we can provide, that are fully permissible today without any additional changes caused by regulation.”
As for how alternatives to in-app payments will work, it’s about accepting payments on other platforms.
“Typically what that would mean for a game publisher who’s exploring this is accepting payments on the web. Now, publishers who are looking to start accepting payments on the web generally have two big options, there’s a big fork in the road. The first option which they can pursue, is to create a transactional website of their own with their own branding, or rather, the branding of the game that they’re looking to monetize. And collect payments there,” he said.
But it’s not easy to build a new e-commerce platform. And if you’re not allowed to tell consumers inside a game that they can find better deals elsewhere, then that’s a big barrier and it makes the enterprise more costly. The other option is to use something like Codashop, which already has an established marketplace.
The company has more than 500 people. Davidson said Codashop hopes to help both publishers and new users with game discovery through its store, as the mobile game industry has become extremely cutthroat. As game companies deal with Apple’s push toward privacy over targeted ads, this kind of discovery will become more important.

As for the funding, the company believes that investors agree that the payments and app store world will continue to fragment in different ways.

“So our view is that as that market becomes more fragmented, as more and more options are available for the publishers as to how they want to collect payments and to users as to how they want to pay, then that’s going to create an enormous opportunity for a challenger like Coda to take part in that market opportunity.”
As for cryptocurrency payments, the company is listening closely to customers who come to Codashop. And so far, the customers are rarely saying they want to use cryptocurrency as a payment method.
“However, we do think it’s important that we put ourselves into a position where publishers who are starting to experiment with selling NFTs for use in game or other kinds of crypto-based assets can use us. We position ourselves to support that and to allow customers to make those purchases on Codashop, in exactly the same way that they would purchase a traditional in-game item.”
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