Why direct payments are bullish for the app economy

Morgan Stanley says a growing shift to direct payments—routing purchases outside Apple and Google app stores to avoid roughly 30% platform fees and instead pay ~2–3% processing costs—is becoming a material earnings tailwind for the app economy. The bank cites concrete examples and metrics: Roblox and web-based virtual currency discounts, Playtika’s 600-basis-point sequential increase in direct revenue mix, Match Group raising its FY26 direct-payment benefit to $90–105 million with >30% adoption, and an estimate that every 5% move to direct payments could boost large publishers’ EBITDA 0.5–1.8%, with knock-on benefits for ad-tech firms like AppLovin and Unity. While regulatory rulings and the EU Digital Markets Act amplify the opportunity, Morgan Stanley flags frictions—lower trust/conversion off-app, potential new platform fees, and the risk companies reinvest margin gains into marketing—that could temper the pace or full realization of margin upside.

Analysis

Morgan Stanley identifies a growing shift to direct payments—routing purchases outside Apple and Google app stores to avoid roughly 30% platform fees and instead pay about 2–3% processing costs—as a material margin and earnings tailwind across the app economy. The bank cites concrete examples: Roblox offering cheaper web-based virtual currency, Playtika reporting a 600-basis-point sequential increase in direct revenue mix, and Match Group raising its FY26 direct-payment benefit to $90–105 million with more than 30% adoption.

MS estimates that every 5% shift to direct payments could boost EBITDA 0.5–1.8% for large publishers, implying meaningful upside even with modest adoption; NCSOFT’s move for Lineage titles and Konami’s quarter where direct payments supported a beat illustrate company-level leverage. Morgan Stanley also flags second-order beneficiaries in performance ad firms such as AppLovin and Unity as margin dynamics shift.

Material frictions could temper outcomes: lower consumer trust and reduced conversion off-app, the risk that platforms introduce new fees, and the possibility companies reinvest margin gains into marketing, raising acquisition costs. Regulatory catalysts—recent court rulings and the EU Digital Markets Act—clear the path for alternative checkout flows, so investor focus should be on adoption rates and conversion economics rather than headline adoption alone.

Key Decisions for Investors

• Consider increasing exposure to large app publishers publicly reporting rising direct-payment shares (for example Playtika, Roblox, Take-Two, EA) since Morgan Stanley estimates each 5% shift can raise EBITDA 0.5–1.8%,
• Add selective positions in ad-tech/performance firms (AppLovin, Unity) as second-order beneficiaries while keeping position sizes modest given execution and conversion risk,
• Monitor regulatory catalysts (EU Digital Markets Act, court rulings), platform responses (possible new fees), and company disclosures on direct-payment adoption and off-app conversion as explicit triggers for scaling positions,
• Favor companies demonstrating net operating-profit improvement from direct payments (eg Match Group’s $90–105m FY26 uplift) and be prepared to hedge or avoid names that appear likely to reinvest margin gains into increased marketing spend