According to CNBC, “People around the world are expected to make 726 billion transactions using digital payment technologies by 2020”https://www.cnbc.com/2017/10/09/digital-payments-expected-to-hit-726-billion-by-2020-study-finds.html
Moving to a cashless society shouldn’t be a shock to most in North America, especially those younger than 35 years of age. What might be surprising though, is that many emerging economies especially in Africa, Asia, and the Middle East, are already steps ahead of their North American counterparts in the adoption of digital payments.
Take India for example. Its Unified Payments Interface (UPI) allows mobile apps from retailers and other businesses to take payment directly from bank accounts. Established in 2016 by an umbrella organization of Indian banks, UPI transactions comprised nearly half the value of debit and credit cards swiped at stores in India during the month of February 2018, according to a report by Bloomberg. https://www.bloomberg.com/news/articles/2018-03-25/move-over-mastercard-upstarts-gain-in-hot-india-payments-space
With India’s population of more than 1.3 billion, second only to China, payment integration into popular apps in India will create a $1 trillion digital payments market in that country over the next five years, estimates Credit Suisse Group AG, https://www.bloomberg.com/news/articles/2018-03-25/move-over-mastercard-upstarts-gain-in-hot-india-payments-space up from less than $200 billion currently. Using China as an example, Credit Suisse says just as China transitioned to digital payments from increasing mobile and data penetration, aided by e-commerce and social platforms, India too could follow the same path, as data usage for 300 million Indian smartphone users rose to 5-10 GB a month from 1GB last year.
I am interested in the Digital Payments space as it is growing. I am investigating a company The Mint Corporation (TSXV:MIT), that I believe holds some potential. To this point, I have not spoken with the company’s president in depth and am currently conducting more due diligence.
Mint Corp. has taken its first steps to compete in the lucrative digital payments sector in India with its April 5, 2018 announcement that it has obtained an option to acquire a 75% ownership interest in Vpay, a mobile payment automation platform with operations in India. https://stockhouse.com/news/press-releases/2018/04/05/mints-global-expansion-now-includes-india-a-massive-fast-growing-payments-marke Vpay’s fully-integrated payment engine currently connects 400 corporate clients and has posted 700% y/y growth in transaction processing volume. Its offering is integrated with all major credit card gateways, as well as more than 55 Internet banking interfaces and major wallets, such as industry-leading Airtel Money in the local market.
Mint has already established itself in the United Arab Emirates (UAE), where it provides employers with automated payroll services and a proprietary Automated Teller Machine (ATM) network for unbanked employees, with an installed base of about 400,000 cardholders. China’s UnionPay, one of the world’s largest bank card services provider, partnered with Mint to issue its payment cards for the UAE, as the country requires a bank and a third-party payment processor in order for payment card companies to conduct business there.
Their recent news release: https://stockhouse.com/news/press-releases/2018/04/14/the-mint-corporation-to-collaborate-with-interac-corp-in-uae is a positive step forward as MINT is collaborating with Interac.
Until recently, Mint has held a troubling balance sheet – about $4 million in assets compared to $60 million in liabilities. Kudos to management for taking steps to alleviate some of the debt via private placement and debt conversion but there is still about $20 million left to mature towards the end of 2021 which buys the company some time to execute their plan.
The digital payments space is heating up and I believe we will see a slew of new companies entering the space. As the colloquial statement reads, ‘only the strong will survive’ and it may be too early in the game to figure out which one’s will.
DISCLAIMER: As of this time: I do not own any shares in Mint Corporation - I may elect to do so in the future, and I am not being compensated by the company.
Happy Investing!
Dr. Kal Kotecha
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