As detailed recently by Net Element CEO, Oleg Firer, at the Noble Financial Capital Markets 11th Annual Equity Conference (recorded presentation: http://dtn.fm/nete-noble-presentation-2015), the company’s continued success providing mobile payments and value-added transactional services for both domestic and emerging markets is attributable to the wide range of flexible online and offline solutions available via their TOT Group, Inc. subsidiary’s family of companies. TOT Group is a holding company for NETE’s U.S. based payment processing company, Unified Payments, as well as their cloud-based POS (point-of-sale) platform development company, Aptito, and the TOT Money operation, which is a specialized provider of mobile payment solutions and SMS messaging focused mainly on the Russian market.
The mobile app market in Russia, largely led by Apple’s AppStore, Google Play and the Windows Phone Store, is on track to hit $1.6B over the next two years, up 171% from 2013 figures according to a report by J’son & Partners Consulting, published by major Russian tech site Digit.ru. One of the driving trends for the app market is the growth of mobile payments and mobile commerce in general, as consumers learn to enjoy the ease of using their mobile devices to pay or make online purchases, in lieu of using credit and debit cards, which are now increasingly seen as a potential source of security vulnerabilities, given the numerous high profile hack attacks at major retailers (and even large banks like JPMorgan) over the past several years. This is solid news for a mobile commerce-focused outfit with a foundation in secure card processing like NETE, which even announced back in November of 2014 that they’ve signed a major $15 million financing agreement with one of Russia’s largest private listed banks, Bank Otkritie, in order to expand the company’s already firm foothold in Russia’s transactional services market. The Otkritie agreement is complementary to the company’s $11 million Alfa-Bank factoring facility from earlier in 2014 and gives investors an idea of just how ambitious Net Element is about pushing out further into other markets beyond their U.S. footprint.
Unified Payments, a wholly-owned TOT Group subsidiary, has risen to become one of the leading providers of credit and debit card-based payment processing in the U.S., in part thanks to their extremely reliable 24/7 merchant assistance, chargeback and support services. In addition, Unified Payments has garnered substantial receptivity in end markets due to their socially responsible initiatives like Process Pink, partnering with merchants in order to allow consumers to give donations to worthy causes via leading national charities whenever they make a credit card purchase. Proprietary technology developed by Unified Payments, like their cost effective and highly flexible Payment Browser, which is designed as a secure and reliable end-to-end processing solution for merchants, processors, software developers, value-added resellers and sales organizations, makes the company really stand out in this field. When it comes to secure card processing, even major retailers are now learning the costly lessons of leaving their payment architecture’s development to less experienced in-house personnel.
This firm foundation in traditional card payment processing, backed by a reputation for diligent customer service, is perhaps one of the reasons NETE has such an advantage as they move further and further into the burgeoning m-commerce sector, as their user-experience orientation translates quite naturally into providing superior m-commerce experiences. M-commerce success continues to be defined by creating ease of use for the consumer and merchant alike, providing colorful, simple, yet engaging apps and the rock-solid security backbone to go along with them. As mobile payments continue to grow and eventually dominate the retail sales industry, merchants will be increasingly turning to companies like Net Element, which is well-positioned to take advantage of established successes by front-runners like ApplePay and Google Wallet, as shown by their rapid integration of Apple Pay into their Aptito platform’s POS acceptance hardware and software. The company even recently optimized Aptito for iOS 8.1 and continues to make the platform a winning solution for engaging, feature-rich and big data-driven POS executions, allowing even SMEs to deliver gorgeous, truly 21st century mobile POS (mPOS) systems that can capture consumer’s attention, while simultaneously alleviating workload for a given merchant’s personnel.
The mobile payments and m-commerce sector, increasingly dominated by companies which can elegantly fuse in-store POS and mobile activation schemes with brand recognition-empowering, consumer experience-driven mobile wallet platform executions, continues to heat up at an unprecedented rate. Google (NASDAQ: GOOG), in a move to double down in their head-to-head m-commerce battle with Apple (NASDAQ: AAPL), has now moved to acquire Apple Pay’s biggest rival, the mobile payments outfit jointly-owned by AT&T, T-Mobile USA and Verizon Wireless, known as Softcard. Pair this news up with a recent announcement by Panasonic (OTC:PCRFY) that they are throwing their hat into the already crowded mPOS ring with their Toughpad FZ-R1 tablet’s showcasing at the National Retail Federation Big Show in mid-January, and you can see why investors are buzzing about the m-commerce sector’s future potential.
It seems clear given smartphone and tablet proliferation – as evinced recently by major IT research and advisory firm Gartner (NYSE:IT), which reported over 2.1 billion devices shipped globally in 2014 (1.2B of which were Google Android-based), and which also offered forward guidance that tablets will overtake PC sales in 2015 – that m-commerce will soon eclipse credit and debit cards’ market share when it comes to retail sales. Indeed, a report last year by WorldPay indicated that mobile payments are on track to hit somewhere around $117 billion by 2017 alone, up 550% from 2012 figures, with the broader alternative payment space (including bank transfers, e-wallets and mobile payments) set to easily outstrip cards over the same interval, as cards decline to 41% of retail sales and alternative payments rise to 59%.
The recent report by Forrester Research (NASDAQ:FORR) on the mobile payments market in the U.S. indicates that the domestic market alone will grow to around $142 billion by 2019, up 184% from 2014 estimates, with considerable market maturation leading to a decisive tipping point over the next five years. One of the lead researchers at Forrester even estimates that Apple Pay alone will grow to around $34 billion in the U.S. by 2019, a whopping 900% leap from 2014 estimates.
To learn even more about Net Element, visit: www.NetElement.com
