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A subscriber forwarded a report from Insider Buying Report covering MoneyOnMobile (MOMT), which charges $29.99 a month for a subscription. Well written, subscription price sounds like a bargain. Find a small snapshot of the report below.
The report was released sometime in January when MoneyOnMobile was trading at $0.35 in comparison to it's current price of $0.55.
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As we watch the investing market go gaga over an industry and product, we are going to stick to our guns here. For example, we just can’t understand the rage over (cryptocurrency), so we’ll focus on an industry we do understand (fintech and digitizing cash)... or when the mobile device replaces cash and checks.
Very rarely do we see a nanocap with such an attractive cap structure, large management ownership and a clear competitive advantage that is rapidly penetrating a multi-billion dollar market. As the major players are chasing the “Next Billion” internet consumers, MoneyOnMobile is ALREADY capturing them with their unique mobile payment platform.
There are usually four variables with a mobile payment platform:
the number of possible initiators,
the dollar amount of the transactions,
the frequency of transactions
the number of recipients for these transactions.
As you will see, this company through the launch of new products and services, has found a way to increase or maximize each one of these variables.
This combined with a “pennies per transaction” cost and a 300K “bank” branch infrastructure, makes this company and their mobile payment platform, a formidable player in one of the largest and most sought-after markets.
Which came first, credit or the bank?
India, has a population of 1.4B people. Almost 600M of them do not have ANY bank account at all (unbanked), and approximately 200-300M of them cannot access one of the very few bank branches or ATM’s. They are described as (underbanked).
With that being said, the Indian economy conducts 95% of their business in cash and this usually consists of micro-payments. It means transactions are done in a dollar amount too cost prohibitive for retail to process using a credit card. In the U.S. you’ve all see the sign at the checkout counter saying “cash only for transactions less than $10.
Well the majority of transactions in India are UNDER $10 and that creates both a huge problem and opportunity. (we break down the average transaction later in the report)
India is so cash intensive, there is simply no cost-effective way of digitizing the vast majority of transactions. There really isn’t any incentive for banks or credit card companies to expand into India...yet that is!
Harold Montgomery, now the CEO and Chairman of MOMT, was running Calpian, a credit card processing company in the U S with high volume and a very low margin business. He has been in the POS payment processing business since 1987 and was a resource for the Federal Reserve Bank Card Payment Center in Philadelphia.
While running Calpian, he identified a rare opportunity in India, MoneyOnMobile. When Calpian initially acquired a stake in MOMT they had 45K affiliated retailers, and offered a mobile payment service for those 600M consumers without a bank account.
You have to realize here, bills in India for every utility are prepaid. So, this means the mobile, TV and utility payments are paid in tiny dollar amounts (<$1-15$). In addition, the typical in-store purchase using MOM’s are less than $20. Both the dollar amount per transaction and margins are tiny, but the transaction volume is very high, and thus the huge opportunity.
The combination of an extremely low transaction cost for 600M unbanked people offered a huge blue ocean opportunity.
What Harold saw was every one of those 45K retailers as a “bank” and credit card processing business. As an additional positive from this arrangement, the retailer gets more foot traffic and commissions every time money gets digitized, bills get paid, or purchases are made.
Think about it. Every retailer has an incentive to offer the MOM platform in their store.
Believe it or not, the company’s transaction costs are so low, they can make money on a .05 purchase transaction.
Now, that is small and low hanging fruit when 600M people are taken into consideration. That’s how low their transaction costs are!
The company’s secret sauce is lowering the cost of transactions for digital payments, so that they can handle small value payments.. Their cost to process these transactions are far lower than other companies active in the market who have based their systems on bank accounts, cards and point of sale terminals.
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