Neteller Building out in Taiwan, Prepaid Card Market

28 August 2008

Moving forward with its business strategy, Neteller, the Isle of Man payments processing company, this week took steps to broaden its online payments offering.

The company this week announced a deal with TransSend Payment Services, a prepaid card solutions provider, to provide a prepaid MasterCard solution to its existing e-wallet customers.

The offering includes a virtual Net-Plus MasterCard for use online and a physical Net-Plus MasterCard for terrestrial use.

"We think these will be some of the leading card products in the market when they come out in October," Andrew Gilchrist, vice president of corporate development and communications for Neteller, told IGamingNews by telephone today.

Speaking in more detail on the prepaid card industry, Mr. Gilchrist said it is expected to be a rapidly growing sector with the United States already 12 to 18 months ahead of the rest of the world, particularly the United Kingdom and Europe.

Furthermore, the cards apply to more than just online gaming, making the products more attractive to customers who just use other online payment options.

"So, we certainly see this will be an important driver of both our active customers and our revenue from next year onward," he said.

Looking back to 2007, Neteller's two founding members pled guilty to federal charges relating to processing illegal online gambling transactions in the United States.

Then in July, the company paid out $136 million to the United States government in a deferred prosecution agreement for handling billions in what were deemed illegal gambling proceeds by the United States Department of Justice.

Needless to say, 2007 was challenging for the company, according to Mr. Gilchrist, who quipped: "That's one way of putting it."

Coming back from a trying year, Mr. Gilchrist said the key for Neteller was refocusing the business.

"We refreshed the brand image in the market," he said. "And I think what we realized is that we had a lot of really good products that weren't really packaged together.

"We have the Neteller e-wallet, we have the Netbanx payment processing business -- what we call our gateway business -- and now we have our Net-Plus card business," he continued. "What we weren't really doing was cross-selling these into our existing customer base, which, as everyone knows and understands, is the online gaming market."

The London-listed company reported in April a 48 percent decline in first-quarter total revenue to $16.98 million from $32.6 million in the same period last year.

Its interim results are due out on Sept. 3 and Mr. Gilchrist provided IGN with a glimpse into what to expect from the report and from the company in the near future.

"I think everyone recognizes we needed to diversify as well and we've made some good steps along that way as well," Mr. Gilchrist said. "Net-Plus is helping. We've really pushed Netbanx to new customers and new markets and I think you'll see more of the same in the second half."

Neteller also said in its first-quarter update that it expects growth in key European and Asia Pacific markets. However, due to regulatory concerns, the company recently shut off access to online gambling payment processing for its e-wallet customers in Hong Kong and Macau, Mr. Gilchrist confirmed to IGN.

"What we're talking about in Hong Kong and Macau is very small customer numbers," he said. "Customers in those countries can still have an e-wallet; however, it's quite similar to where we are in Canada. They cannot use the e-wallet for online gaming transactions."

Meanwhile, Neteller is looking at opening up a merchant offering in Taiwan that would include payment options, currencies and language functionalities, Mr. Gilchrist adding that the future looked exciting for the company.

Shares in Neteller rose 6.5 pence to 63.5 pence on Wednesday's announcement, and then closed at 62 pence. Shares rose to 63.5 pence today.

"From the stock price reaction yesterday, people got fairly excited about Net-Plus and that's only one thing we're working on at the moment," Mr. Gilchrist said. "Hopefully we can give people a flavor next week when the interims are out."




Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.