Mobile gaming is dominating the entertainment world. The global gaming market is set to reach USD 256 billion by 2025, and mobile games alone account for 57% of that. But while the potential for growth is massive, so are the challenges for game publishers trying to expand globally. One of the biggest headaches they face is the labyrinth of payment regulations, tax rules, compliance, cross-border fund movement and localization requirements across different markets.

This is where the Merchant of Record (MoR) model becomes essential. It gives publishers the freedom to focus on building great games, while leaving the complex business of payments and compliance to the experts.

The Two Paths: Build or Outsource

Let’s get into the details. If you’re a game publisher looking to expand globally, you have two choices when it comes to managing payments and compliance.

1. Build everything yourself: This means you’ll need to form partnerships with multiple Payment Service Providers (PSPs) for each region you want to operate in. PSPs handle transactions, but you’ll also need to build systems for tax computation, billing logic, and compliance with local regulations. For example, handling real-time VAT and GST adjustments for every microtransaction across borders,currency management, and time zones is a huge challenge. On top of that, you’re responsible for keeping up with evolving regulatory frameworks, dealing with chargebacks and refunds, and ensuring your system can handle high transaction volumes. It’s not just a matter of doing this once—it’s ongoing, and it gets more complex as you enter new markets.
2. Outsource to an MoR: Alternatively, you can work with an MoR like Coda, where we take on all these responsibilities. We manage everything from the payment gateway integration to taxes, local currency pricing, refunds, currency conversion, fund movementand regulatory compliance. You just need to focus on building and optimizing your game, while we handle the backend operations.

The Complex Web of Global Payments

One of the main reasons an MoR model makes sense is because global payments aren’t simple.

In Southeast Asia, for instance, the payment landscape is incredibly fragmented. Credit cards account for just 11% of online payments in the region, according to the Worldpay Global Payments Report 2024. Instead, digital wallets like GoPay, OVO, and Dana in Indonesia or GCash in the Philippines dominate the market. That’s before you even consider bank transfers, carrier billing, and prepaid cards. Ensuring your game accepts all these local payment methods is essential to success, but integrating them all is far from easy.

It doesn’t end there. As you scale globally, each country has its own set of regulations. Take Indonesia as an example. The country introduced a 10% VAT on digital services in 2020, which applies to any foreign company offering digital goods to Indonesian consumers. Compliance with this kind of regulation requires localized systems that are not only capable of calculating and applying taxes in real time but also updating with every regulatory change. Countries like Vietnam have their own unique tax requirements, where local service taxes can be difficult to navigate without a team dedicated to constant monitoring and adjustment.

Transferring funds from emerging markets presents an additional challenge due to the presence of currency controls in many of these markets, often necessitating additional administration to facilitate the movement of funds

And then there’s the European Union. The EU’s Payment Services Directive 2 (PSD2) adds another layer of complexity, requiring two-factor authentication for certain online payments, even if the transaction is relatively small. Publishers have to ensure that their systems comply with this directive, or risk rejected transactions and a poor user experience. Handling PSD2 requirements is another example of how a localized regulatory environment can add layers of complexity to global expansion.

MoR for Less Hassle

Managing complexities across multiple markets is an expensive major distraction for game publishers. The MoR model consolidates all these operations into one solution. By using an MoR like Coda, publishers offload the burdens of:

• Regulatory compliance: We ensure that every payment adheres to local laws, whether it’s VAT collection in Indonesia, service tax in Vietnam, or compliance with PSD2 in Europe. We constantly monitor changes in regulation, so you don’t have to.
• Tax computation: Every transaction is processed with the correct tax for the market it’s in. We manage the calculations, remittance, and reporting, ensuring full compliance without any gaps. This is crucial as more governments worldwide introduce digital service taxes.
• Billing logic and payment methods: With over 400 local payment methods integrated across 65 countries, Coda makes it easy for gamers to pay however they want, whether that’s with a credit card, digital wallet, or carrier billing. More importantly, we handle the complexity of refunds, chargebacks, and even currency conversion.
• Local bank account and fund repatriation: Optimize operational costs associated with managing multiple banking relationships and transferring funds back to the home country
• Real-time scaling: As your game grows, the volume of transactions can skyrocket. Handling payment spikes, ensuring smooth flow across multiple currencies, and dealing with fluctuations in demand is something we’ve optimized over years of experience. Whether it’s for a new game launch or a special event, our systems scale automatically to meet your needs.

The Future of Digital Commerce and Gaming

The growth of digital commerce in gaming is unstoppable. In Southeast Asia alone, the number of mobile gamers is projected to reach 300 million by 2025, driven by increasing smartphone penetration and mobile payment adoption. According to Worldpay, global digital transactions are expected to surpass $10 trillion annually by 2027, with gaming being one of the top drivers. The intersection of these trends—regulatory complexity and soaring transaction volumes—makes the MoR model a no-brainer for publishers looking to scale quickly and effectively.

The gaming world isn’t just dealing with more players; it’s dealing with more regulation and more payment complexity. The MoR model offers game publishers a way to navigate these challenges while focusing on what truly matters: making great games and delivering awesome experiences to players around the world.