Original mobile pay disruptor Boku on the past and future of fintech

In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.

In a world where not everyone has a debit or credit card, Boku’s mission for the past 13 years has been to provide consumers a way to pay for online services with only their phone numbers. 

The mobile payments company, founded in 2008, directly connects online bank accounts to phone numbers so that consumers can pay for services like Netflix and Spotify without ever inputting a credit or debit card number. 

And one of the biggest stories in fintech continues to evolve today.

“The payment ecosystem is fragmenting quite a lot,” said Boku CEO Jon Prideaux.

While other former CNBC Disruptors such as Stripe and Square (now Block) “are riding on the card rail,” according to Prideaux, Boku’s opportunity is in providing consumers access to the brands, products, and services they want, while helping merchants sell to consumers in the way many now prefer to pay. 

Prior to Boku, Prideaux worked at Visa Europe for 17 years on its e-commerce capabilities and card technology.

The mobile payments opportunity remains so big, Prideaux says, that Boku sold its mobile identity verification division to Twilio, another former Disruptor, in January after operating in that space for several years. The identity division was the fastest-growing revenue source for the company, but Boku saw a much larger available market in mobile payments and Prideaux said specializing in the payments division gives it the best chance to compete against rivals from the ranks of financial giants and independent payment upstarts, including Worldpay from FIS, JPMorgan Chase’s Paymentech, Rapyd and dLocal.

With many people around the world stuck at home for the last two years due to the Covid-19 pandemic, and more content and services consumed digitally, the company saw a “Covid bump” in revenue and usage. It is business that Prideaux expects to be sticky. 

“Once you’ve discovered [entertainment streaming services], you don’t really cancel. So we’ve definitely had quite a lot of benefit from accelerated adoption, but it was against the background or something that was growing before and continues to grow now,” he said.

Boku’s 2021 results showed revenue up 22%, year over year, to $69 million, and EBITDA (earnings before interest, taxes, and depreciation) up by 31% to $20 million. Boku shares have risen roughly 60% since its first day of trading after a 2017 IPO — notable for being a U.S.-based start-up that went public in London — though like many tech stock stocks that boomed during the pandemic, its price has declined since last summer.

Much of the growth in mobile wallets and payments are expected to come from outside of North America and Western Europe. There are 2.8 billion people using mobile wallets today, according to Boku’s 2021 Mobile Wallets report, and it forecasts growth to 4.8 billion by 2025, representing 60% of the world’s population, with the biggest gains in Southeast Asia.

In August 2021, Boku launched M1ST, or “Mobile First,” a mobile payments network that standardizes options including WeChat Pay and Apple Pay into one network. 

Prideaux thinks the next big change in the mobile payments industry may come from the popularity of web3, also known as the metaverse. 

However, he isn’t worried about the rise of cryptocurrencies, which fintechs including Block are heavily investing in. 

“Crypto is a terrible method for payments on mobile,” Prideaux said. “It’s incredibly slow. It’s incredibly computer-intensive,” he said.

That doesn’t mean crypto won’t power a distinct payment ecosystem separate from mobile payments, though, and that is a factor he says Boku will continue to monitor.