The COVID-19 pandemic rattled every market imaginable worldwide, with some changes becoming permanent as they simply accelerated existing trends. The digital payments market certainly benefited as online transactions skyrocketed with some brick-and-mortar stores even refusing to take cash because of the threat of spreading germs. But don’t confuse a truly cashless society — where cash and coins physically do not exist — with one where money is still around, just not used frequently. The world was already moving towards the latter, and the coronavirus sped up the process, which shines a spotlight on the opportunities in digital payments. Companies big and small are making the most of technology that serves as the backbone of the next generation of payment systems, such as GreenBox POS (Profile), a provider of customized blockchain payment solutions that is leveraging acquisitions to grow its international footprint. Others enjoying rapid growth in the exploding market of financial technology, or fintech, including significant developments from the likes of ACI Worldwide Inc. (NASDAQ: ACIW), NCR Corporation , Paysafe Limited (NYSE: PSFE) and Intuit Inc. to shepherd the industry along.
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- Some 29% of Americans go an entire week without make a single cash purchase.
- Since last summer, GreenBox has executed an M&A strategy to expand internationally, agreeing to acquire UK’s Roark Holdings and Bulgaria’s Transact Europe.
- Preliminary results from FY 2021 show GreenBox transaction volume reaching $1.95 billion, up more than 800% from 2020.
- In January, GreenBox expanded its portfolio to begin offering ACH services to an influx of demand as clients commit immediately to more than $50 million in monthly processing.
Click here to view the custom infographic of the GreenBox POS editorial.
Blockchain Shines as People Turn to Plastic
Whether one is a proponent or opponent of the notion of a cashless society, there is no denying the fact the people are not pulling dollar bills out of their pockets to pay for goods and services like they used to. Pew Research in 2018 showed that 29% of Americans go an entire week without making a single cash purchase. Data from Square showed that cash purchases transacted by its sellers decreased from 37% of sales in February 2020 to 33% in April 2020, a signal that the pandemic was having a meaningful impact. In its Resilience, Replacement and Renewal report, global consultancy A.T. Kearney identified going cashless as a top global trend while noting Riksbank data showing cash payments were used in just 15% of retail transactions in Sweden in 2016, down from 40% in 2010.
Within the fintech world, blockchain has become a leading subject for its ability to inexpensively facilitate extremely fast and highly secure digital transactions. The digital record-keeping technology that underscores Bitcoin, blockchain is becoming ubiquitous in countless industries and recognized as a bona fide threat to conventional banks because its structure doesn’t require a middleman to complete transactions. There is plenty at stake according to Mordor Intelligence, which puts a transaction value of the global digital payments market at $5.44 trillion in 2020 with expectations for 11.21% compound annual growth to reach $11.29 trillion by 2026.
And that’s not all. An estimate 21% of the world (~1.7 billion people) are unbanked. Blockchain could provide an affordable solution that is superior to today’s modality used to transfer about $500 billion across borders annually through personal remittances.
GreenBox POS (NASDAQ: GBOX) is an emerging fintech company offering proprietary blockchain ledger and smart contract token technologies. The company’s exclusive tech offers seamless payment processing solutions using digital encryption keys to verify, secure and record details of each transaction conducted within its private system. The company’s applications enable an end-to-end suite of turnkey financial products and fraud detection, improving the efficiency of handling large-scale commercial processing volumes for its merchant clients.
Since its founding in 2017, GreenBox has steadily checked the boxes to build value and position as a market leader. The list of GreenBox accomplishments is lengthy and impressive; the company has completed one major acquisition with two more under contract, forged key partnerships, graduated to the NASDAQ exchange, launched and spun-out Coyni (its smart contract stablecoin), initiated a stock repurchase plan, posted strong transaction and revenue growth, and secured $100 million in financing to keep executing on its growth strategies.
In addition, GreenBox has optimized and vertically integrated previous generations of its namesake platform to create a comprehensive ecosystem that is 100% scalable. The company can count itself as the only payment card industry (PCI) level 1-compliant blockchain payment solution. Level 1 clients are ideal customers because they are defined by PCI as processing in excess of 6 million transactions annually. GreenBox contracts are structured so the company generates revenue from every transaction, usually in the range of 2%–3%..
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The M&A Strategy
Since last summer, GreenBox has been more aggressive with its merger and acquisition initiatives. The company first completed the acquisition of ChargeSavvy, an expert in retail processing and point-of-sale (POS) systems. ChargeSavvy was an ideal fit for the GreenBox ecosystem because it immediately provided the company with a robust POS platform, including biometric technology and fraud detection. This tech was a perfect match for GreenBox’s blockchain and stablecoin portfolio. The merger further gave GreenBox exposure to ChargeSavvy’s large client portfolio earned since it began operations in 2012.
The ChargeSavvy acquisition was immediately followed by an MOU to acquire Transact Europe Holdings OOD, the single entity shareholder of Transact Europe EAD (TEU). A European Union-regulated electronic money institution. TEU is headquartered in Sofia, Bulgaria, putting it at the heart of one of the fastest-growing markets in the fintech industry. TEU holds numerous distinctions, including being a principal level member of Visa, a worldwide member of MasterCard, a principal member of China UnionPay and part of the SEPA Direct program, a pan-European Direct Debit system that allows merchants to collect Euro-denominated payments from accounts in the 34 SEPA countries.
As it awaits regulatory approval from the Bulgarian National Bank to complete the TEU acquisition, GreenBox has also agreed to acquire Roark Holdings Ltd., giving it infrastructure and leading payment processing software to expand overseas. Based in the United Kingdom, Roark is a licensed payment institution that allows for its licensors to process debit/credit card and local payments within the country. GreenBox management anticipates closing the transaction soon and subsequently record its first merchant transactions in Britain.
Volumes Nearing $2 Billion
GreenBox is posting impressive transaction growth even with only the acquisition of ChargeSavvy finalized and contributing to the books. Investors will be eager to see what TEU and Roark bring to the table. GreenBox in August crossed the $1 billion threshold for transaction volume for 2021, roughly a 400% improvement over $202 million in volume for the full year 2020. By the end of the year, preliminary unaudited results show GreenBox nearly doubled transaction volume again, reaching $1.95 billion in transaction volume for the year. That means that in about five average weeks for 2021, GreenBox essentially equaled transaction volume for all of 2020.
The growth showed up in revenue also, with GreenBox estimated revenue of $26 million for 2021, up 200% from $8.5 million in 2020. According to GreenBox CEO Fredi Nisan, 2020 was the year that the company proved it could develop and deploy cutting-edge technology. Last year — 2021 — was about executing on the strategy to build sustainable scale for GreenBox products, while adding team members instrumental to expansion and building a world-class brand.
“There’s a lot of pride around these 2021 results, no doubt,” said Nisan. “But, make no mistake, we remain laser-focused on molding the future of this company and our determination of becoming the global leader in the digital financial solutions marketplace.”
Regarding ChargeSavvy, GreenBox didn’t provide details but did say the fourth quarter was the best in the history of the company. Thanks in part to integrated efficiencies following the merger, ChargeSavvy’s retail division saw an average increase of 166%.
Add ACH Into the Mix
GreenBox is positioned to capitalize on a “myriad of verticals” going forward, including the recent launch of a new payment solution that allows GreenBox to provide bulk Automated Clearing House (ACH) processing abilities to its customers. This is a big addition to the services platform for which GreenBox will use its blockchain and smart contract technology to transfer funds electronically for ACH debit and ACH credit transactions.
This is a highly desirable and lucrative market. Tens of millions of Americans use ACH gateways daily for a multitude of reasons, such as direct payroll deposit, electronic check, credit card payments and more. ACH watchdog Nacha reported that 26.8 billion payments were made in the ACH network in 2020, a sixth straight year with growth of more than 1 billion payments. Total dollar volume for the transactions was a stunning $61.9 trillion.
The demand for ACH is immediately recognizable for GreenBox. Management says that current customers have already committed to $50-plus million in monthly ACH processing. An average transaction is $150, netting GreenBox 20 to 30 cents in margin. Based on $50 million in monthly volume, that’s up to $1.2 million added to the top line based upon early estimates. Furthermore, GreenBox has the opportunity to service higher risk clients, which bumps up margins by 20–30 basis points per transaction.
COVID-19 Did the Marketing
COVID-19 changed a lot of things in this world, but few things have been more impacted than the way people and businesses transact. With lockdown mandates and contagion fears rampant, people who would never before have considered making purchases or conducting banking through a computer or device were forced to do so. Consumer education is one of the biggest hurdles any tech company faces, particularly with older demographics. COVID-19 took care of that. Add in those from the younger generations, many of whom don’t even know how to use a checkbook, and the next leg up in the digital revolution has been catalyzed. That’s good for all involved and paints a promising future for fintech.
ACI Worldwide Inc. (NASDAQ: ACIW) is a global software company that provides mission-critical, real-time payment solutions to corporations. Customers use ACI’s proven, scalable and secure solutions to process and manage digital payments, enable omni-commerce payments, present and process bill payments, and manage fraud and risk. Last month, ACI participated at NRF 2022, the world’s largest retail conference and expo, where it highlighted the use of cryptocurrency payments along with partner, RocketFuel—a global provider of payment solutions via Bitcoin and other cryptocurrencies.
NCR Corporation (NYSE: NCR), once synonymous with a cash register, is now a global enterprise technology provider. This month, the company completed the acquisition of LibertyX, a leading cryptocurrency software provider and strategic fit for NCR because it accelerates NCR’s ability to rapidly deliver a complete digital currency solution to its customers, including the ability to buy and sell cryptocurrency, conduct cross-border remittance, and accept digital currency payments across digital and physical channels.
Paysafe Limited (NYSE: PSFE) was founded in 2007 as an eCommerce payments platform with the mission to enable millions of consumers to use alternative payment methods to make online purchases. Since then, it has grown into a leading specialized payments platform with a presence in 11 Latin American countries that it continues to expand. The company just completed the acquisition of SafetyPay, a leading payments platform operating primarily in Latin America that enables eCommerce transactions via a wide choice of open banking and eCash solutions.
Intuit Inc. (NASDAQ: INTU), a global technology platform and owner of the TurboTax, QuickBooks, Mailchimp, Mint and Credit Karma serves more than 100 million customers worldwide. Late in January, Intuit announced two new fintech products, QuickBooks Get Paid Upfront and QuickBooks Early Pay, that provide small businesses and their employees with faster access to their money in an effort to give them greater cash flow flexibility so they can succeed and prosper.
Looking across the internet, one can find countless arguments one way or the other about when cashless societies will begin emerging. The smart positioning is for a slow transition with the understanding that tech like blockchain and certain cryptocurrencies are going to be integral no matter the rate of change.
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