Like clockwork: the story behind monthly payment volume spikes

July 31, 2018

There is a familiar ritual at Boku that takes place before the start of every month. The network operations center in Mumbai begins coordinating with technical staff in the US and Europe to run through its checklist: System response times? Good. Transaction error rates? Good. Hardware utilization? Good. This routine continues until every major component across Boku’s primary and secondary data centre is confirmed to be in good shape. While nobody expects a failover to happen, the second site is there just in case it did and if there was ever a time to be extra cautious, this would be it: the first 24 hours of a new month, immediately after the clock strikes midnight… in Japan.Japanese calendar
Meanwhile 7,000km away, Hiroshi is at home playing Monster Strike on his iPhone. Whilst it is past his usual bedtime, Hiroshi like so many other Japanese gamers has chosen to stay up late because come midnight, mobile games like Monster Strike will be releasing several highly-coveted characters, weapons, and armors to the public – sometimes at a discount but almost always with limited availability. And as soon as those special items are released, a tidal wave of payment requests come flooding in fast and furious. What does that look like? On the first day of the month, Japan alone will push through 10 times the number of payments than the rest of the world combined and more than half of these payments will be initiated within the first 15 minutes.

It’s not unusual to expect payment volumes to spike on famous shopping days like Black Friday and Cyber Monday in the US or Chinese New Year and Singles Day in China, but few know or understand why Japanese game publishers choose the start of every month to sell or promote their best in-game items. The answer has to do with carrier billing. Japanese mobile operators restart their billing cycle at the start of each month giving each of their subscribers a fresh new bill to load mobile charges onto. Given the intense competition for game revenues, publishers will try and entice as many gamers to use their new credit line to buy items from their game and not someone else’s game.

The origin of this phenomenon dates back to 1998 when NTT Docomo first introduced internet access for their mobile phones. With mobile internet access came early forms of premium content such as ringtones, wallpapers, and mobile games all of which were exclusively purchased using carrier billing. But demand for mobile games in Japan was unlike anywhere else in the world. Game publishers like GREE and DeNA earned staggering amounts of money selling game content on Japanese mobile phones – nearly all of it, charged to the consumers’ phone bill. But because mobile operators limited the amount of charges that can placed on a subscriber’s monthly phone bill, competition to sell as much premium content as possible before consumers hit their monthly limit became fierce. This gave birth to the midnight promotions.

Today, these midnight promotions continue to prevail but have moved well beyond the old WAP (Wireless Application Protocol) games played on feature phones and are now aimed at the latest mobile games played on smartphones. This is where carrier billing remains a popular payment option on both iOS AppStore and Google Play, especially in Japan where credit card penetration is stuck at 16% and PayPal remains largely absent. With growth showing no signs of slowing, Boku is committed to keeping its platform well ahead of demand, investing in more network bandwidth, faster database performance, and better application efficiency. Recent load tests show Boku’s platform processing in excess of 600 transactions per second without any noticeable degradation of performance and while this may appear sufficient today, the team has already begun work on doubling that performance. After all, if more scale leads to lower costs and lower costs lead to more volume, it is an investment that will ultimately pay off for carriers, merchants, and consumers alike.