Q&A

Boku has developed a platform that supports local payment methods (LPMs), connecting merchants with issuers around the world. LPMs include direct carrier billing, digital wallets and account-to-account payments. Merchants can access payment methods through a single contract and integration with Boku. Boku processes payments according to two methods:

1) Settlement: Boku provides the technical connection and settles the transaction

2) Transactional: Boku provides the technical connection but the merchant and issuer settle directly with each other.

Boku's long-term growth is influenced by the rate at which card payments (debit and credit) are replaced by alternative payment methods and the rate at which payment volumes shift online. More specifically, Boku's growth depends on existing merchants adding local payment connections, new merchants joining the platform and wider use of treasury services. In H126, Boku added 10 local payment methods and delivered 47 payment connections. Its Stripe channel partnership has already brought merchants onto the platform, and the direct sales team has signed new merchants. Launches delayed in the first half have since gone live and are expected to contribute revenue from H2. The pace at which merchants launch and expand services determines how quickly these opportunities become revenue.

The company earns a small percentage of the value of each transaction it processes, with a higher rate for the settlement method. Boku also charges fees for additional services such as currency conversion, early settlement and new integrations. In H126, 53% of revenue was generated from direct carrier billing, 14% from bundling, and 33% from digital wallets/account-to-account. The H126 take rate was 0.77% (calculated as total revenue divided by total payment volume).

The primary risks facing the company include the loss of a major merchant (in H126 three merchants accounted for more than 10% of revenue, totalling 58% of revenue), regulatory non-compliance, competition and the rate at which merchants grow and adopt additional services from Boku. In H126, a merchant moved to dual sourcing in one market, reducing volumes handled by Boku, while launches by the same merchant in other regions that could have compensated were delayed. Two direct carrier billing connections were also suspended by local authorities in one country. These events show how changes in merchant arrangements and regulatory action can affect payment volumes and revenue.