So who is Smartpay Holdings Ltd (ASX:SMP) and what do they do?
Smartpay Holdings Limited SMP (ASX) designs, develops and implements innovative Point-of-Sale (PoS) payment solutions for customers in Australia and New Zealand including banks, retailers and merchant businesses.
Wait on Poindexter, layman’s terms please!!!
You know when you buy something from a shop, you need to tap your credit card on a little box next to the register to pay?
Yes
Well they own the little boxes and the associated software.
Boring….. Zzzzzzzzzzzzzzzzz
Hang on! Think about how many times buyers tap and go everyday across Australia and how many millions of dollars are being transferred.
Hmmmm so they get all that revenue?
Not quite. Let me explain. In New Zealand where they originated they own around 30% of all terminals and charge vendors a monthly fee to use the terminal. They have recently raised capital for a serious push at rolling out their terminals in Australia were they are able to charge a fee on all transactions processed, currently between 1-2% of the total transaction.
Hmmmmm. So I’m guessing if they can get a foothold into the Australian market they could end up a nice little money spinner
Very true, it’s a big opportunity for the company, but let’s not kid ourselves it won’t be easy.
Why?
For starters the market is currently dominated by the big four banks.
I knew there had to be a catch. So how can Smartpay possibly compete with the big four?
Good question. I recently attended the ASX small cap conference in Sydney and was able to speak with the managing director and I asked him the exact same question. What Smartpay offers, that others don’t, is built in software that allows shop owners to run reports and link into stock management software. They are also partnering with these software packages to offer Smartpay as an option. In Australia they are able to compete on transaction fees with the banks, offering vendors a better deal. Another interesting point is that they have just inked a deal to be able to accept Alipay on all their terminals. You will also be interested to learn that unlike many small cap stocks they are actually turning a profit from their New Zealand operations.
You know you really should attend these events
I’m far too busy
Did I mention the ASX offers free food and drinks at these seminars?
I’m so there
Now before you rush off to invest in Smartpay or any company for that matter, I suggest you start by doing your own research and discussing your decision with a qualified financial advisor.
I have included a link here of Smartpay’s presentation taken from the ASX small cap conference and their 2016 presentation here to kick start your research.
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Disclosure and warning
Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.
At the time of publication Alonzo owned shares in Smartpay. Price at time of publication 20.5 cents.