On May 19 2011, Mint Technology Corp. (TSX-V: MIT) announced that the Company has entered into a binding Term Sheet with a Payroll Card Services provider, an arm's length company located in the Middle East, for the acquisition of the prepaid card business owned by that Company with a portfolio of approximately 160,000 prepaid cards.. This acquisition represents a significant win for Mint and doubles Mint’s cardholder base. The acquisition price is $5,000,000, of which $1,250,000 is payable on closing (expected to be no later than June 15, 2011), $1,250,000 is payable on the transfer of the card portfolio to Mint's platform (anticipated to be 45 days after closing) and $2,500,000 is payable 135 days following closing.
This acquisition, along with the recent wins from new customers totalling a further 75,000 cards, should take the total card base for Mint to over 400,000 cards in United Arab Emirates (UAE). Ubika Research views these developments very favourably as we believe Mint can add the revenue from this extra 160,000 cards portfolio with very little incremental costs. The operating leverage for Mint in this business is huge and hence this acquisition has the potential to be accretive to the bottom line in the near-term. This acquisition offers some evidence that Mint has the potential to emerge as a consolidator in the UAE market by acquiring other smaller card portfolios. This is a strategy which can allow Mint to grow much faster than organic growth, which has also been quite impressive with the recent customer wins. Having a larger cardholder base further facilitates Mint’s strategy to offer other value added services like money remittance, mobile top ups etc, which can further boost revenue and profits
Mint Technology Corporation (TSX VENTURE: MIT)(CVE: MIT) headquartered in Toronto Canada, through its subsidiary Mint Middle East LLC, is a major provider of prepaid debit cards and alternative financial services to the un-banked or under-banked worker segment in Dubai. Unlike traditional prepaid card providers Mint offers a payroll solution for employers that in turn lead to employers mandating Mint prepaid cards for all their employees. Employee’s wages get loaded onto a Mint card. Mint has an attractive business model of recurring and longer term revenue from its customer contracts, unlike traditional prepaid cards which are essentially “use and throw” cards with short shelf life.
Mint derives revenues primarily from set up fees and subsequent payroll processing fees (monthly fees) charged to their corporate clients based upon the number of active cardholders per month. Mint’s card solution for payroll processing is ideal for companies with seasonal and migrant workers as it avoids the need for bank account, credit checks, credit history, or permanent employment, and ensures compliance with the local laws, which mandate electronic payment for unbanked migrant workers introduced in UAE in 2009. Unlike typical prepaid card providers Mint has sticky relationships with cardholders as their pay is loaded to Mint cards. This makes Mint cards an essential part of their customer’s wallet. Given the sticky nature of customer relationships, Mint is well positioned to offer value added services to its card holder base with services like money remittance, mobile top ups, micro credit etc.
The Middle East is a fast growing market for prepaid cards. For example, Visa saw a 182 percent growth in the prepaid card sector in the Middle East last year making it their fastest growing prepaid market. Mint has established a significant presence in Dubai, United Arab Emirates (UAE) and is now looking to expand its marketing footprint by entering other markets like Saudi Arabia and Jordan. This portfolio acquisition is another sign that Mint is building good marketing momentum.