Boku and the Future of Agentic Commerce and Payments

[00:00:04] - [Speaker 0]
When most people think about payments, they still think about cards, debit cards, credit cards, plastic cards. But behind the scenes, the world of digital commerce is changing fast. And the way people are choosing to pay is becoming far more local, mobile, and fragmented. So the aim of my podcast today is to get you all thinking bigger than Mastercard and Visa. Because in today's conversation, we're gonna look at what the shift really means for global merchant subscription businesses and indeed the future of commerce itself.

[00:00:41] - [Speaker 0]
From local payment methods and cross border complexity to agentic AI and the infrastructure needed to support it. Today's discussion will challenge the idea that Visa and Mastercard are still the whole story. So as payment behavior evolves around the world, are you and your business moving fast enough to keep up with how customers actually wanna pay? And on that note, I'm gonna officially introduce you to my guest today. So thank you for joining me on the podcast today, Stuart.

[00:01:15] - [Speaker 0]
Can you tell everyone listening a little about who you are and what you do?

[00:01:19] - [Speaker 1]
Sure. Very happy to, and thanks for having me on the podcast. I'm Stuart Neill. I am a, I guess, twenty year veteran. I don't know how you become one of those, but a twenty year veteran of the payments and fintech industry.

[00:01:33] - [Speaker 1]
And since the beginning of 2024, I am the Chief Executive of a company called Boku. We are a company that was founded in Silicon Valley, very exciting. And we actually listed here as a public company in London in 2017. We're a global payments company. We span some 70 countries, and we aggregate what is termed local payment methods.

[00:02:00] - [Speaker 1]
Think So about every way that you can think of to pay for things that is not Visa and Mastercard, and that's us. And we do that for some of the world's biggest companies. So think mega merchants, big global tech companies who are looking to grow around the world.

[00:02:17] - [Speaker 0]
Awesome. And it's a pleasure to have you join me today. And twenty years in the business, you've seen so many big changes as we all have there from those clunky click machines there that you used to have to the rise of mobile to where we are now. And governments across Europe are increasingly questioning reliance on global card schemes like the traditional Visa and Mastercard. But I'm curious from your vantage point and everything that you're seeing now, why has control overpayment rails become a strategic priority for modern companies?

[00:02:49] - [Speaker 0]
Is it the the the transaction fees or something completely different?

[00:02:53] - [Speaker 1]
Yeah. I think it's a great question, and it's been a very fast moving space over the last sort of ten years. And sometimes things happen like socioeconomically that drives some of this behavior. And one that I would point to, for example, is way back in lockdown in the sort of dark place of 2020, certain governments around the world were looking at how they bring more and more consumers into the financial and the digital payments ecosystem. So if you think about countries like India or Brazil, more people had a mobile phone than had a credit card.

[00:03:33] - [Speaker 1]
And so in a world where people cannot get out to access services and they're trying to bring people into the digital ecosystem via their phones, they needed to invent new payment methods that would allow consumers to participate without having to rely on the sort of fifty year old payment technology that is plastic credit and debit cards. And so partly, this technology has been enabling rapid adoption of new payment methods local payment methods, as we call them. And then you've got the sort of political aspect of this, which is the card networks that we're also used to and reliant on in the Western world are big global U. S.-owned profit machines that I think what raised eyebrows along many central bank and governors was when the war in Ukraine started and Visa and Mastercard turned their services off for Russia instantaneously. Now whilst you may or may not disagree with what's happening there, if you're a central bank governor and you see just how easy it is to have your entire payment ecosystem switched off, you're going to start thinking about how you might want to have your own payment ecosystem that you can control yourself.

[00:04:54] - [Speaker 1]
And payment systems control taxation and spending and interest rates. The whole fiscal policy internally within that country is impacted by how consumers behave and the ways that they choose to buy goods and services. And that's why it's now become, again, with wars and the current state of you know, global economies, it's become imperative for governors and central banks and and governments to have more direct ownership of their payment ecosystem.

[00:05:29] - [Speaker 0]
And there's a lot of big stats and predictions out there at the moment. And if card payments are projected to fall to around 30% of e commerce transactions by 2028, which is just two years ago, while local which is just two years away, while local payment methods account for more than half globally. What does all this mean for merchants still operating a a card first payment stack? It feels like there's a a lot of opportunities and a lot of big changes here.

[00:05:58] - [Speaker 1]
There really is. I mean, it's profound. And I guess within the stats, it isn't that card transactions are declining. They're just not growing as fast as all the other payment methods, the local payment methods. And that's great in that as much as consumers are deciding, actually, I want to pay using my mobile app or my digital wallet or I want to pay using a direct carrier billing solution.

[00:06:27] - [Speaker 1]
I would say the one thing that the card schemes had solved over the last fifty years or so is this idea of interoperability. So anywhere in the world, if you're using a Visa or a Mastercard, it will work the same as it does in The United States or The UK or in Japan or in Egypt or whatever. With the local payment methods, people are choosing to pay with their domestic popular payment method, but they've never been designed to travel cross border. And so it's actually going back some way down the line where actually there was not a way of traveling with your payment method. And so companies are having to reimagine, you know, whilst they will all have a credit card processor or an acquirer that they work with or or most companies have multiple, and that works the same way because everything is standardized and interoperable.

[00:07:25] - [Speaker 1]
Moving to local payments, that's no longer the case. And so given that there are hundreds of local payment methods all around the world, a new challenge has arisen that was kind of one that had already been solved by the card schemes, and that is how do I access all of these disparate disaggregated payment methods. Most companies do not want to spend time and money and engineering resource trying to build their own payments network. So that that's kind of a problem that has resurfaced, I guess.

[00:07:57] - [Speaker 0]
Yeah. Really is. And another change that we're beginning to see is Agentic AI. And I recently heard an example. We are in the very early stages where someone had created an agent, and it went off and spent $32 on eggs that he didn't actually need or want.

[00:08:13] - [Speaker 0]
But, obviously, these are just very early examples, but it it also almost gives us a glimpse into the future of where we're heading. And I was reading that you've described agentic payments as the last mile problem in the emerging world of agentic commerce. So as AI agents inevitably begin making purchase on behalf of consumers, where do you think payment friction risks, collapsing maybe the entire experience? Because, again, that last best experience we have anywhere becomes our standard expectation for what we expect to see everywhere. So it feels like there will be a lot of friction in the in the future.

[00:08:47] - [Speaker 0]
Where there is friction, people will go elsewhere. But how do you see this evolving even though it is in the early stages?

[00:08:53] - [Speaker 1]
I I mean, I think it's both exciting and frightening at the same time, isn't it? And, you know, I certainly envisage very quickly the the the sort of whole discovery process changing, the way that people choose to research and identify what they want to buy and then how they go through the process of buying. I think the bit that is yet to be resolved is the bit at which the discovery and the purchase bit, the bit that used to be going through a website or a search engine, landing on a merchant's page, building a shopping basket and getting ready to check out, all of that is going to change fundamentally and pretty quickly. The bit where I see friction remaining for a while is how that then interfaces with the underlying payment infrastructure that has already been built. So I get to the point where I have my shopping basket, I'm ready to press buy.

[00:09:52] - [Speaker 1]
And at that point, I need to go off and get the money from somewhere. I need to go to my credit card acquirer or I need to go to my bank or my banking partner and collect the money. That bit has always, by design, included some friction because we need to know who that person really is before collecting money. And so the bit that is involving authorization, do you have the money in your account? The bit that is around authentication, are you who you say you are?

[00:10:24] - [Speaker 1]
And do you have the right to make this purchase with that payment method? All of that has friction in it by design. And until people get comfortable with maybe biometrics as being a proxy and therefore you include that within your AI, I think that's probably some way off, if I'm honest. There will always be a certain amount of friction in the buying process, and it comes deliberately at the back end rather than at the discovery end at the front.

[00:10:53] - [Speaker 0]
Yeah. Completely agree. And you made a great point now around how search, discovery, adding things to basket is changing and evolving. And Amazon did master the art of that one click checkout. But then tech savvy shoppers, many will deliberately take a step back and leave things in the basket until that coupon drops, that offer drops, the price drops.

[00:11:13] - [Speaker 0]
So there's so many different avenues to explore there. But looking to the future, Agentic Commerce is projected to reach a $200,000,000,000 market by 2034. So what infrastructure shifts do you think need to happen now so merchants can capture opportunity that do. Going be that.

[00:11:41] - [Speaker 1]
And I think there's a few aspects to that. I mean, the sort of underlying shift in payment preference that we've talked about, which is happening aside from AgenTik. But it's about how do I access hundreds of millions of consumers in India that are using UPI or 170,000,000 consumers in Brazil that are paying using PIX. So whereas if I'm running a kind of payments infrastructure for a merchant, I'm used to be able to plugging into my credit card acquirer or maybe I have two because I have one for redundancy, but it's the same code, it's the same technology and it's the same process. Everything works in a harmonized way.

[00:12:27] - [Speaker 1]
That is the upside of the card schemes. However, there are billions of consumers around the world that are choosing different ways to pay, and I can't access those through my card acquirer. So I need to find an alternative partner who can help me do that. On top of that, I think the bit that is still and again, I think it's a good thing is still containing some friction or some complexity is, I want to launch my business across border. I want to launch in Thailand or I want to launch in Malaysia or I want to launch in Nigeria.

[00:13:04] - [Speaker 1]
That is difficult to do because you need to work with someone that has got a permission to do business in that market. They need a license from the central bank. They need banking infrastructure. They need to have access to currency to be able to collect the money on your behalf. That degree of complexity, can't have agentic access to central bank licenses.

[00:13:27] - [Speaker 1]
That still needs to be a robust and rigorous process. And so if I'm running a payment stack for a merchant, I can't ignore local payment methods because billions of consumers are now choosing to use them. But I now have a problem of if I want to do this myself, I have to go and do 200 different implementations into 200 payment methods across a multitude of countries and currencies, and I need to therefore think about licenses, which take two years to obtain a license in most countries. The complexity has suddenly just expanded a huge amount. And therefore, candidly, I would be working with a partner.

[00:14:11] - [Speaker 1]
And I would be trying to find someone that has solved some of that complexity of doing business in market. So I can have a centralized way of doing business, but I can now operate and monetize cross border into different countries.

[00:14:28] - [Speaker 0]
And bringing in some additional research here that I was reading recently, I think it's from Juniper. They showed that subscription revenues are forecast to hit 1,200,000,000,000.0 globally, by 2030 despite signs of subscription fatigue, and I would challenge everybody listening to have a look down their bank and credit card statements. I bet there's more than a few subscriptions on there already. But what what data and trends are you observing across 40,000,000 subscriptions and that you process? And how are you helping merchants combat subscription fatigue?

[00:15:01] - [Speaker 0]
Because it's something that we're all noticing, I think.

[00:15:04] - [Speaker 1]
It's a fascinating space, and it is still growing generally. I think you're right in that there is such a huge amount of competition between whether it is music streamings or digital downloads or gaming. There is still what I would call a sort of war for subscribers that is raging around the world where everyone is trying to get their streaming services to the top of everybody's agenda and therefore make sure that they're not the subscription that gets canceled when budgets get tight. What I would say as a general point is these types of digital streaming subscriptions tend to be countercyclical. And what I mean by that is when budgets get tough and economically times get tight, probably the last thing that they think to do is to cancel their Netflix subscription.

[00:16:04] - [Speaker 1]
Subscription. People tend to think, well, I'm not going to go out. I'm just going to stay in and watch Netflix. And that goes for all of the sort of digital subscription services. So it now tends to be almost not quite a human right, but people see it as the well, at least if I can't afford to go and do other things because budgets are tight, at least I can stay home with my TV and my subscriptions.

[00:16:27] - [Speaker 1]
So we do see it as being relatively robust, although, as you point out, getting more and more competitive. And so what we see with a lot of our partners is they are constantly looking for ways to grow their subscriber base. And we help them in two ways. One is by plugging them into different ways to pay, they can access more paying consumers. And that happens through geographic expansion into new countries, connecting your digital wallet so that you can now subscribe to a streaming service through that.

[00:17:02] - [Speaker 1]
And we also have a product which is specifically focused on distribution of subscriptions, and we call that bundling. And that's effectively saying to our partners who are mobile phone companies or digital wallets or cable TV companies, you know, why would you not want to offer a subscription offer bundled with your core subscription offering, either in your phone bill or in your monthly fees for cable TV. And you will see this type of proposition quite regularly, whether you're in The UK or anywhere in the world, that you do get offers thrown at you by your telco or your cable TV company, and you'll be one of millions of consumers that, that streaming service is targeting. And so the way that you combat fatigue is you continuously try and get more people to adopt the service. And then, ultimately, you may see a bit of churn, but it's not enough to negate the growth that you're seeing.

[00:18:06] - [Speaker 0]
For many people listening, when we talk about payments, as we said at the very beginning, they will only think of Mastercard and Visa. And I wanna get people thinking so much bigger than that and also shine a light on the scale of what we're talking about here. I mean, with 200 plus local payment methods across 60 countries and a 100,000,000 monthly users, At Boku, you sit at the intersection of global brands and local preferences, but I'm curious from everything that you're seeing there, what lessons of companies like Microsoft, Spotify, Netflix, other household names? What have they learned about meeting customers where they are? Because it'd be great to shine a light on that and some of the work that you're doing here.

[00:18:44] - [Speaker 1]
Yeah. It is a fascinating space. And you learn very quickly that people in different countries do things very different ways. And I'll give you an example. We have a product within our portfolio called direct carrier billing.

[00:19:05] - [Speaker 1]
And direct carrier billing is effectively a consumer who decides they want to subscribe to a digital service or make a download, and they put the charge for that download onto their mobile phone bill. And then a month later, their mobile phone company will send them a bill and it will include that purchase. So effectively, you're talking about a small line of credit. You get thirty days to settle up with your carrier, but it's super slick and very convenient, particularly online. Now that product is really popular in markets where people are time poor.

[00:19:43] - [Speaker 1]
Japan is a good market, Taiwan, Saudi Arabia, Germany, The UK, these are all great strong markets for that product. In the North American market, that product does not exist because everybody uses credit cards. And whenever I talk to people in North America about the direct carrier billing product, they stare at me as if I'm bonkers because they just say, well, why doesn't why don't people just use their credit card? Well, there's there's two answers to it. One is they don't want to, and and the second answer is they probably don't even have a credit card.

[00:20:20] - [Speaker 1]
And so I think the valuable learnings that we've seen are really focused around individual country preferences about how people like to trade and transact. Some people are moving out of cash economy and are adopting digital for the first time, So they're going straight from cash to mobile phone. They're not going cash to plastic credit card. It's a slightly bizarre concept when you think about it that people are carrying bits of plastic in their pockets like fifty years later, even though everyone has a smartphone. And so we're seeing this kind of leapfrogging of technology in developing markets that are skipping the fifty year old Visa, Mastercard stuff and going straight to, I'll pay using a wallet or my mobile banking app from my phone.

[00:21:08] - [Speaker 1]
I don't really I'll scan a QR code. I don't need to worry about putting my plastic card into a machine that goes off somewhere in the ether. So merchants have to accept that mean, take the Boku platform, for example. We connected to 200 payment methods, but behind those 200 payment methods are 7,000,000,000 individual accounts. If you were to ignore that and just say, well, everyone has a card and everyone's going use a credit card, you're going to miss 60% of your available market potential.

[00:21:43] - [Speaker 1]
That's absolutely profound, and that's why so many merchants are now waking up to LPMs as being a key part of their payment strategy.

[00:21:52] - [Speaker 0]
So many great points. And I love the The US example. I was recently in New York for a tech conference. Hotel, everything paid for. I arrived there at 11PM at night and lose the usual.

[00:22:02] - [Speaker 0]
You have to give your card for incidentals, etcetera. And I attempted to, provide Apple Pay, which is what I was using at the time because I didn't have my plastic piece of plastic to hand, and they wouldn't accept it. I was gonna write, kerfuffle for a few moments because, hey, we must have to see that plastic card in front of you, which I didn't have. Long story long, they made a special exception after forty minutes of arguing about this, but, yeah, everywhere is different, isn't it? Wherever you go.

[00:22:30] - [Speaker 1]
It's Really is. Yeah. It really is. And, you know, it's getting exciting. I think the technology is now there.

[00:22:35] - [Speaker 1]
The this sort of legacy infrastructure of card terminals and plastic cards sent in the post is very expensive. And with communications being what they are and and and secure smartphone devices and access to banking infrastructure through your phone, it's actually now a redundant it's redundant technology. It's just we're all it takes a long time to churn out of that because it's behavioral, particularly in markets like North America where everybody is wedded to credit cards and everybody is used to getting loyalty points and air miles and all that stuff that goes with it. So they are not incentivized to move to the newest technology.

[00:23:20] - [Speaker 0]
And one other area I wanted to highlight before I let you go today, if you do a quick search online, there are so many contradictions too because I think many merchants say cross border expansion is a priority for us. I've seen them say it at conferences, etcetera, but their payment infrastructure often tells a completely different story. So what needs to change there? Is building it yourself still still a realistic option, or is the partner model now the smarter player, do you think?

[00:23:47] - [Speaker 1]
I think there will always be some companies who are big enough and incentivized enough to try and do some of it themselves. It is expensive to build and maintain a payment infrastructure. And so really, you might look at, say, Amazon as being big enough and margin sensitive enough to want to own that themselves, particularly in big markets like India or Brazil or whatever. But for most companies, they just don't have engineers sitting around looking to build a payments infrastructure. And so most companies do outsource this, the complexity of this, to third parties.

[00:24:29] - [Speaker 1]
It isn't just about the tech either. I mean, the tech is one aspect to it, and it is complicated when you're dealing with sort of spaghetti of 200 different payment methods that you have to connect to. But it's also the permission to play. As I mentioned before, it's about I've sold something. A U.

[00:24:50] - [Speaker 1]
S. Company. I've sold something to a consumer in Thailand. That consumer in Thailand has paid for that using their bank account, which is Thai baht denominated. I need to collect that Thai baht somehow into my banking infrastructure.

[00:25:08] - [Speaker 1]
Actually, what am I going to do with Thai baht? I've got no staff in Thailand. I want to be able to get that money back to The U. S. In dollars where I can use it.

[00:25:17] - [Speaker 1]
And so firstly, I need a license that allows me to do that. And then I need banking infrastructure to be able to do the conversion of the currency. And that stuff is quite heavy lifting when really your core business is selling stuff to consumers. And so really, it makes sense to bring in experts who can build economies of scale around this stuff, scalable infrastructure on banking, licenses that can be deployed across multiple players and just be a lot more efficient at it. So I think the role of the aggregator still is very, very relevant.

[00:25:52] - [Speaker 1]
It just maybe not quite so heavy handed as a formal scheme in the way that Visa or Mastercard are.

[00:26:01] - [Speaker 0]
So much, to think about there. And for anybody listening that wants to continue the conversation we started today, because we did cover a lot there, where would you like to point everyone listening? For anyone, wanting to read more about the upcoming announcements, stay up to speed with things, where should I point them?

[00:26:17] - [Speaker 1]
Sure. I mean, we're always happy to hear feedback and comments and then take questions. So I would either recommend going to our website, boku.com, or we are pretty active on LinkedIn. We have a domain there under boku, and we are forever posting hopefully useful pieces of information around what's happening in certain countries or happening with certain payment methods. And and we'd be very happy to talk to to anybody who would like to speak to us.

[00:26:45] - [Speaker 0]
Well, as I said, we covered a lot there from the global shift that you're witnessing in relation to the dominance of card schemes. We've seen Europe's ambitions to reduce that dependency on Visa and Mastercard, for example. Looking to the future, we've got agentic payments, subscription bundling, and so many other different topics there. So I'll have links to everything you mentioned. I'd encourage people to reach out to you and look at that bigger picture, look beyond Visa and Mastercard.

[00:27:11] - [Speaker 0]
And, also, feedback to me, Tech Talks Network. I'd love to hear your thoughts and your experiences. But more than anything, Stuart, thank you for starting the conversation today.

[00:27:20] - [Speaker 1]
Thanks, Neil. Much appreciated. Thanks for having me.

[00:27:24] - [Speaker 0]
I think one of the things that stood out in this conversation is just how quickly the payment story is changing and how much the opportunities there are for businesses that are willing to think beyond a card first model. So from local payment methods and subscription growth to the rise of agentic commerce, I think today was a timely reminder that payments are no longer just a back end function. They're actually becoming a strategic part of the entire customer experience, not to mention market expansion and future growth. So for any business looking to scale globally and understand why local preferences are no longer optional, I encourage you to go check out the Boku website, and there's lots of information there around the trends we discussed today. So head over to boku.com, find the team on LinkedIn, and as always, I wanna hear your thoughts too.

[00:28:20] - [Speaker 0]
Are you or your business still thinking too narrowly about payments, especially in a world that is moving far beyond plastic cards? Let me know. Techtalksnetwork.com. You'll find so many different ways of contacting me there, and please contact today's guest and his team. But that is it for today, so I'll be back again tomorrow with another guest.

[00:28:40] - [Speaker 0]
Hopefully, I will speak with you all again then. Bye for now.