Global Digital Payment Industry is set for a stellar run over the next several years. According to the World Payments Report 2017 (WPR) released by BNP Paribas and Capgemini, digital payments transactions are expected to hit 726 billion by 2020, a CAGR of 10.9%. A separate report from Statista claims that the global transaction value of the digital payment will grow at a compounded annual growth rate of 14.8% from 2017 to 2021.
Whatever might be the case, the point is, the segment would witness a double-digit growth. With new payment technologies and changing regulatory environment, the non-traditional players would be one to set the stage. On the other hand, traditional banking might take the back seat unless they upgrade their technology and policies. So, it is no surprise to see names like Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL), SAMSUNG ELECTRONIC (OTCMKTS:SSNLF), Facebook Inc (NASDAQ:AMZN), Amazon.com, Inc. (NASDAQ:AMZN), Square Inc (NYSE:SQ) and more to come with one or more products to win a slice of this growing industry.
Among all these big names, one unheard name (as of now) is GH Capital, Inc. (OTCQB: GHHC), which is poised well to benefit from this trend. GHHC, a FinTech holding company, offers the online banking electronic payment commonly known as OBeP services, and has two major business divisions – ClickDirect Service (CDP) and IPO Advisory Services.
ClickDirectPay Service – the CDP service is becoming a trend among the merchants because of the fixed pricing and low cost of switching. GHHC says that ClickDirectPay enables the customer to do the payment quickly and securely via personal banking information. Real-time transactions are the biggest benefit of CDP payments.
CDP is seen as an attractive mode of transaction for its competitive low merchant pricing model and no hidden monthly charges. Transparency is the key focus of the company, and this is something that customers always crave for. As credit card payments and carrying credit cards take back seat, services like CDP are poised well to emerge as convenient alternatives.
Infact, CDP is already challenging established names like PayPal of Paypal Holdings Inc (NASDAQ:PYPL) by keeping its processing fee very competitive. PayPal charges 2.9% per transaction, or an average of 30 cents per transaction. Another more closer rival to CDP, Sofort GmbH (a popular name in Europe) has a starting fee structure from 0.95% plus 0.35 euro (39 cents) per transaction. CDP, on the other hand, charges nothing for upto 30 transactions, irrespective of the value. Even for the volume above 30, CDP’s charges are quite nominal as can be seen in table below.
|Cost per transaction||2 cents – 32 cents||2 cents – 10 cents||1.7 cents – 4 cents|
As of May 2017, CDP had 350 online merchants, and the company expect to reach 10,000 online merchants by 2018 is quite encouraging. CDP has been constantly evolving, updating its service and charges to remain in-line with the changing technology. Just a few months back, GHHC updated its pricing model to make it more competitive.
With CDP, GHHC is also eyeing growing European e-commerce market, especially Germany. In 2016, Germany’s e-commerce market was worth $62 billion, and is expected to swell to $82 billion by next year. With intentions to expand in Europe, the company has collaborated with online payment provision aggregator, Allied Wallet, which is present in around 200 countries. The move gives GHHC an immediate exposure to all those countries.
GHHC also owns a 23% equity stake in VMoney, which operates in the unconventional money transfer segment that also has players like Azimo and Transferwise. Many believe that agent-based models will reel under the immense pressure, while digital modes will take the front seat. Connected devices are one of the biggest reasons why people would prefer digital transaction completely to the brick and mortar model. Low agent fees, overheads and transfer cost would start new trajectory of growth for the online money transfer services.
One big strength of CDP is it based on SEPA (Single Euro Payments Area). SEPA is a pan-European instant credit transfer scheme for real-time money transfers. The24/7/365 scheme, which is being pushed by European Payments Council, allows users to transfer up to €15,000, within 10 seconds between any of 34 SEPA countries.
Most of the companies that offer similar services to the customers have only little to offer to small merchants who do limited monthly transactions. GHHC, on the other hand, is strengthening its offering for the smaller companies. A monthly plan under CDP for the small customers allows them to do maximum 30 transactions without any monthly fee charged. Calculated steps like this make GHHC a likely candidate to abrupt the OBeP market.
IPO Advisory Services – GHHC is also a one-stop solution for small businesses that aims a capital exposure through OTC markets. Small and emerging companies are fond of the advisors who keep the process simple and small because it involves lesser cost. Also, International companies find it difficult to contact multiple organizations, and therefore, they find one point contact the better option.
GHHC reduces the administrative work, giving way to cost efficiency during the IPO launch. Further, IPO advisory services agree for equity compensation, thus allowing small firms to save on some cash, which they can use for operational expenses. GHHC says it have a dedicated team to take care of all listing needs of a private company irrespective of the region. This expertise across many countries such as the United States, Canada, Asia and Europe gives them an edge.
Year 2017 has been a good year for the IPO service companies as more private companies made their way to the stock market. EY expects 2017 as the best year for global IPO performance since 2007. One of the major reasons was the stability that large economies such as the United States and China have seen this year. The outlook also looks encouraging. Investors are showing confident in the stock markets globally, and this would help the global IPO market to advance by leap and bounds.
As the Fintech industry makes efforts to take over the traditional mode of payment, companies like GHHC could benefit immensely given their competitive offerings and low-cost models. Its alternative payment methods such as CDP are gaining ground in Europe, a major market for online sales.
Merchants can link with CDP and get real-time notification, enabling quicker delivery of service and products to the customer. Further, CDP is based on SEPA, which would be the way forward for the European countries. Thus, GHHC is poised well to mark a significant presence in Europe.
On IPO advisory services front, GHHC also has a lot of room for growth. A recent study shows that Asian and European countries are seeing start-ups mushrooming, giving GHHC a fair opportunity to pitch its services to these companies, who will not be big on budget but want to use the public money for growth.
Talking of the stock, there is not much to talk about for now. However, given the unique position that the company is in to benefit from its diversified businesses, this dark horse has the potential to be among your biggest win.
We don’t have positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours.
Aman is an MBA (Finance) with over 8+ years of industry experience. He has worked as Risk Analyst for a CAT Modeling firm, and now heads a boutique-consulting firm with a focus on stock research, business plans, valuation and accounting.