Razer to focus on B2B fintech with ceasing of Razer Pay e-wallet, card

Singapore

GAMING hardware player Razer sees B2B digital payments services as a promising growth driver, as it shutters its Razer Pay e-wallet and Razer Card project, according to chief strategy officer Lee Li Meng.

Mr Lee was speaking to reporters on the back of Razer's latest results. On Wednesday, the US and Singapore-headquartered company posted US$31.3 million in net profit for the half-year ended June, a turnaround from the year-ago loss of US$17.7 million. This was thanks to a record-high revenue of US$752 million, up 68 per cent.

However, the company will also be ceasing its widely-publicised Razer Pay project from end-September, with the Razer Card not available for use after Aug 31.

In response to queries about the move, Mr Lee said that operating an e-wallet involves high costs. He said that Razer Pay was a testbed and reckons that the company's existing B2B payments processing is more viable.

"If you understand and spend time in the e-wallet industry, that's a business that requires a huge amount of burn. Especially in South-east Asia, e-wallets require a lot of user acquisition costs," he said. Razer Pay had over 1.1 million users "as of last count".

In contrast, B2B digital payments processing has "pretty decent take rates which translates into revenue, versus the wallet", he added.

The ceasing of Razer Pay has "minimal" financial impact and affected staff have been redeployed across the group.

Razer Merchant Services (RMS), the company's B2B payment processing unit, has generated more than 95 per cent, or the "super majority", of the Total Payment Volume (TPV) of Razer's fintech business, Mr Lee noted. According to its website, RMS clients include e-commerce and food delivery services such as Lazada, Shopee, Grab and foodpanda, whose transactions surged amid Covid-19 lockdowns.

For H1, Razer Fintech processed US$3.2 billion in TPV, up 79.5 per cent year-on-year. RMS offers services such as online payment gateways and offline reloads - a space which Mr Lee noted is fragmented in South-east Asia.

In a call with investors on Wednesday evening, Razer chief Tan Min-Liang said that the company is pouring more resources into its B2B fintech strategy.

"We want to double down, we want to continue investing with geographical expansion across South-east Asia. We want to scale the TPV aggressively with an expanded merchant base. We want to enhance the services that we can provide to our customers, and of course explore M&A and investments," he said.

Razer could look at deepening its fintech footprint in markets such as Indonesia, Mr Lee said.

"If there are opportunities to partner with someone or acquire a stake in someone that allows us penetration into those markets, that's what we'll be focusing on."

The streamlining of Razer's business strategy comes amid a strong financial showing for H1, especially in its core hardware business, where revenue grew 77 per cent to US$677.3 million.

Within hardware, the peripherals segment has seen strong demand for products including the Razer Viper 8K Hz mouse and Razer Huntsman V2 Analog keyboard, the company said. Meanwhile, it retains a strong foothold in the US premium gaming laptop segment.

Razer's software business also saw growth, with the total number of user accounts increasing 50 per cent to 150 million, while monthly active users grew by over 51.4 per cent. Razer attributed this to the rise in gaming, e-sports and livestreaming.

In the services business, which includes virtual credits service Razer Gold and Razer Fintech, revenue grew 13.8 per cent to US$72.8 million. Razer Gold itself recorded a 13.8 per cent rise in TPV, with the boom in gaming transactions.

Ultimately, Razer's multi-pronged strategy - with hardware, software and services - aims to build a comprehensive ecosystem for gamers, Mr Lee said. The software element gives the company insights such as game purchase propensity and genre popularity, which helps Razer plan ahead for products, he said.

Razer has US$517 million in cash as at end-June, with no debt. Its shares closed at HK$1.89 on Wednesday, up 1.07 per cent.