For game developers, app developers, and content streamers, Coda Payments (1) offers options for monetizing consumers who might not have credit cards or may not feel comfortable using them online. This Singapore-based company produces games like Garena Free Fire, Teen Patti Gold, and Call of Duty and counts Activision Blizzard, Riot Games, and Tinder among its clients (2).
Investors recently donated $690 million to the company as a show of support for its ability to expand and handle the yearly processing of billions of dollars and the recently established digital products industry. The Directorate charged the company with influencing the youth and taking illegal deductions from customers' accounts.
According to the PDF, game producers like Garena and Coda Payments India (3) have purposefully created a payment system that operates after the first successful transaction, when a message pops up and asks permission to make additional payments without any authentication.
The agency also noted that kids, in particular, often do not fully comprehend the ramifications of clicking on pop-up ads, which routinely results in subsequent payments being authorized without additional involvement or notice. However, the operation allegedly revealed to Indian authorities that Coda's Singapore branch was merely a conduit for sending money outside India.
The Directorate further claims that the company, which is situated in India, was obtaining funds under the guise of the sale of digital content and was sending them to its parent company in Singapore under the guise of the sale and purchase of digital content. Coda India does not sell or buy digital content; rather, Coda Singapore oversees the full functioning of Codashop.
The India division allegedly received $349 million, of which $277 million was sent abroad, while the remaining sum was kept for tax payments and minimal earnings. Following that, Indian authorities froze all of Coda India's assets, totaling $8.4 million.
According to the corporation, Coda Payments has fully complied with the law throughout its operations in India. The company has stated that it cooperates with the inquiry and that the charges are unfounded and misunderstood. Additionally, he adds that the company has complied with the law completely and is helping the Directorate of Enforcement (4) with their investigation.
These unfounded accusations present an opportunity to explain misconceptions about the nature of Coda's business, which the company claims stem from the fact that it doesn't handle payment processing. On most e-commerce platforms and online marketplaces, end customers pay for goods using payment methods such as e-wallets, UPI, net banking, and credit and debit cards.
According to the Reserve Bank of India's Fifth Master Direction on Digital Payment Security Controls, the operators of the chosen payment method—not Coda—process the payments. They are responsible for end-user authentication.
While the ongoing inquiry continues, the business acknowledged that it is still working closely with its payment provider partners to ensure user security and compliance protection.