The Swedish distributor of the SEQR mobile wallet reported net revenues for the fourth quarter, on an annualized basis, increased by 6% in comparison with the previous year.
For the fourth quarter, sales declined in comparison with the same quarter last year by 17%. The launch of SEQR Shop Spot – where all advertising surfaces will become direct sales channels. Seamless receives a new order for the distribution of prepaid airtime and data via stored value cards and vouchers for top-up payments. The contract is initially worth over USD 1 million and comprises ERS distribution of eProducts and management of loading of stored value top-up cards and vouchers. The launch of direct access to bank accounts in Sweden was initiated – enabling all Swedes with a bank account to be SEQR customers, irrespective of bank.
FROM CEO Peter Fredell
As I write this, we are just about to launch a direct connection to consumer bank accounts in Sweden. Until now, SEQR has been a revolving credit for the consumers that use it. This fact has been seen as the single most important hurdle in achieving larger consumer adaption in the Swedish market by observers.
In the other markets where we are currently present, this direct debit link to the consumer bank accounts already exists, and in those markets we are working on adding the revolving credit as an alternative product. We believe that our product offering has to consist of Direct Debit, Revolving Credit and Prepaid solutions in every market where we are present. There is a demand for all these products in various degrees in all the markets.
Our competitive advantage over most other players in the mobile payment market is our independence from using the card “railroad tracks” which gives us a significant technological and cost advantage. However for certain markets, where the revenue stream is sufficiently profitable, we may also add the normal Visa/Mastercard as an option.
Our strategy has been clear from the start; create a large enough geographical footprint in order to be able to reach a positive cash flow even at an extremely low early consumer adaption rate.
We are today in live production in five markets with the SEQR product. These markets together represent around 30 million inhabitants and potential users of SEQR, assuming that everyone with a bank account can use our service. In this estimation we do not count Romania because our ability to reach consumers are limited to Garanti Bank’s current client base.
After the first quarter 2015 and in the beginning of the second quarter, we will be live in production in eleven markets that represent approximately 600 million potential users of SEQR assuming that everybody with a bank account can use our service. This is very far ahead of any global competitor. We currently don’t see any mobile payment service in live production in more than one country.
Our goals in 2013 and 2014 have been to build the ability to launch in these markets with a full product suite that is also portable across borders ( i.e. a consumer in one country can also use our service in any other country) and the ability to launch quickly in new markets.) This has been a big project and has taken most of the company’s development resources both in man-hours and in capital. The money that we raised in 2013 was, in fact, targeted for this goal.
I am pleased to say that this work is now done and this has a few important effects for our company. First, all the resources that have been used in this heavy build-up period are now unnecessary. Therefore, the large production team has been laid off and various other costs associated with the build-up have been discontinued. This has a profound positive effect on the cost base of the company. Second, the company can now focus fully on the third step in our strategy, which is to increase consumer adaption and conversion rates in the markets that we are present, as well as expand easily into further markets.
If we look at our competitive situation, it is clear that we currently enjoy a significant advantage on a global basis. There is no other company in our sector globally who has achieved the breadth and depth of our offering with SEQR. This is where we wanted to be and what we planned for. Now is the time to convert this advantage into tangible results in the form of earnings. Although earnings obviously lag the geographical expansion, we believe that we will see significant effect of our increased footprint during 2015.
For the uninitiated, or as simplification, one can describe it that we have managed to create a new “card” network that performs many more functions than the VISA / MasterCard network does. This accomplishment has not been easy and has been an extremely complex operation. We did this due to that we very early realized that the old VISA and MasterCard networks did not meet the requirements one need to have when launching an international mobile payment service, with all the opportunities that mobile payments provides.
A special mention of the new product “Shop Spot” or “Active Media” as we call it internally.
This Service/product changes everything in both the media landscape as well as for the traditional sales channels I.e. Physical, and online stores. We have turned media itself into a sales channel. We can achieve very high margins in this segment since we currently are the only ones in the world that can use this channel.
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