Deal Activity in Payments Space Bodes Well for MoneyOnMobile
Digital payments companies continue to thrive as the spotlight shines brighter and brighter.
Over the past month, there have been three major M&A transactions in the space that bode well for the prospects of MoneyOnMobile (OTCQX: MOMT).
In late January, France’s Ingenico announced their acquisition of Mumbai-based payments firm TechProcess. The transaction is estimated to have been valued at between $81 - $88 million.
TechProcess has approximately 40 locations in India and generated a little over $14 million in revenue in 2014-2015 per filings with the Indian government.
In February, mobile payments provider MobiSwipe was acquired by UAE-based OMA Emirates.
Commenting on the acquisition, MobiSwipe CEO Suresh Santhanaramakrishnan stated, “With the recent demonetization announcement by the Government, India is swiftly moving towards a more cash free payment environment. The mobile payment market is witnessing a surge.”
Most recently, PayPal announced its acquisition of bill payments provider TIO Networks for $233 million in cash. The deal, expected to close later this year, will help PayPal reach the underbanked market in North America.
MOMT is of course focused on the massive unbanked and underbanked market in India, an estimated market of nearly 600 million people.
MOMT has spent several years building out its digital payments infrastructure in India. As the second largest network of its kind globally, and the largest in India, MOMT is set to rapidly accelerate growth in the months and quarters ahead.
MOMT is already processing an estimated 8-10 million transactions monthly and has an established footprint of more than 325,000 retail locations where consumers can use the service.
In addition to adding thousands of retail locations monthly, MOMT also teamed up with the Kalighat Society in 2016 to help more than 75,000 low-income women achieve financial independence while expanding the company’s reach.
"Kalighat Society is an excellent partner for MOMT. In many areas of India, it can be difficult to perform even the simplest financial transaction. This partnership extends our reach to these underserved communities. Women who are part of the Kalighat network will become MOMT agents and will introduce key financial services to other financially excluded women and families in their communities, taking MOMT's entire product set to their underserved neighborhoods and villages. They now have an opportunity to earn their own income, many for the first time in their lives," commented Ranjeet Oak, President and COO of MOMT.
India is the largest cash-focused economy in the world, with an estimated 600 million consumers still operating on a cash basis.
While the decision in November to remove 500 and 1000 rupee notes from circulation was primarily driven by the Indian government’s desire to crack down on “black money” – unaccounted for cash holdings that haven’t been taxed – there is also a clear desire by the government to modernize financial transactions.
The largest impediment to the government’s desire to modernize is the lack of necessary infrastructure to support changing habits.
And this is where MOMT really shines.
In addition to mobile payments, MOMT is now augmenting its services with additional offerings designed to drive user acquisition and increase the amount of transaction fees earned from each user.
One such service is a free 30-day accident insurance coverage which has been extremely attractive to the large migrant manual laborer population in India.
The Company has also introduced an e-commerce payments solution through Amazon and India’s largest shopping website, Flipkart.
And most recently, in early January, MOMT announced the launch of its new “MOM ATM”, filling in the final gap in its service suite.
In addition to long lines at ATMs, Indian consumers also face challenges when paying their bills. For those that haven’t made the switch to digital payments, it can sometimes take half a day to a full day of waiting in lines to make bill payments.
MOMT eliminates this pain for consumers, enabling bill payment in just minutes from basic mobile devices with SMS capabilities.
Earlier this month, MOMT announced a payments deal with a major utility, BSES Rajdhani Power, which serves more than 2.2 million consumers across India.
$15 Billion B2B Opportunity
Building off its sizable B2C foundation, MOMT has now added a product offering to address the $15 billion B2B market in India.
"On a recent trip to Kolkata, I met our local agents who expressed a need to have a business scale transaction service growing their revenue by attracting B2B payments. MOMT has opened this large new market, which will enable MOMT to increase our transaction count and revenue. We are very excited to be moving into B2B payments while maintaining our growth in consumer payments," said Harold Montgomery, CEO and Chairman of MOMT.
With the new offering, businesses in India can leverage MOMT’s 325,000+ agents to pay for goods and services. This is opportunity could lead to massive additional upside for MOMT and its shareholders.
We recently interviewed Montgomery and board member and Square co-founder Jim McKelevey. You can watch this exclusive interview here: https://youtu.be/jUAXpJfNbsM.
As you’ll see in the interview, MOMT is led by extremely capable management with a depth of experience that should lead to tremendous success moving forward.
McKelevey joined MOMT’s board in May 2016. Leveraging the experience he gained in launching Square with Twitter co-founder Jack Dorsey, McKelevey is a strong addition to the MOMT team.
McKelevey was attracted to MOMT due to its disruptive potential and its ability to enable “payments in electronic format for hundreds of millions of people in India.”
Just like Square transformed the payments landscape in the U.S., MOMT is positioned to do the same in India.
We expect MOMT to achieve profitability as its revenue and volume increase moving forward. If profitability occurs and revenues/gross profits begin accelerating rapidly, we would also expect market multiples for MOMT to increase in tandem.
To learn more about this exciting opportunity, visit the MOMT stock page.
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