International Payment Services – It’s Easier than You Think
By Merrick Theobald, [email protected]
Virtually every major retailer today is looking for new revenue streams, more cash flow and a faster return on investment. One popular way to achieve this is to equip customer service counters for such payment services as bill payment and mobile phone top-up. Customers who operate on a mainly cash basis have learned to appreciate the convenience of paying bills and topping up phones at retail while shopping, and every retailer involved can appreciate the high margins these simple cash transactions deliver.
Yet many retailers offer only domestic payment services rather than expanding into cross-border payment as well. These retailers may not be aware of the size of the international market or the striking similarities between cross-border and domestic payment services. Or they may be unaware that any distribution partner assisting them with domestic payment services may be fully set up to help them with equivalent cross-border services.
The fact is, retail cross-border payment represents one of the fastest-growing classes of financial services, fueled by wage earners who immigrate from developing countries for higher wages and use the bulk of their earnings to support families back home. It’s also quite easy for retailers who offer domestic payment services to expand to cross-border payment and begin driving additional store traffic – often tapping into new revenues that eclipse revenue from domestic payment services.
A Huge, and Growing, Opportunity
The World Bank estimates that over 215 million people have emigrated from their homelands. The vast majority of them have left developing countries for better opportunities in high-paying labor markets while their families remain behind. According to The World Bank, money sent by these workers to their families in developing countries reached $325 billion in 2010, which represents a 6% increase over 2009. The World Bank expects this number to continue to rise, potentially exceeding $370 billion in 2012.
The top country from which these funds are sent? The United States — meaning U.S. retailers are especially well-positioned to directly claim some of this enormous international cash flow.
Similar to Services You May Already Offer
Cross-border payment services, which include bill payment, mobile phone top-up and in-country gift cards, will have a familiar feel to any retailer offering domestic payment services. The process of handling cross-border payments via a POS system is very nearly identical; it’s a simple matter of collecting cash and relevant information, and submitting data for fulfillment. The data to be collected may vary slightly, but the mechanics are the same. The only real difference is that the billing organization is located in another country rather than in another state, which also turns out to be a minor consideration.
Most retail distribution partners that support domestic payment services also have the ability to support flawless cross-border payment. Most of those who don’t yet offer cross-border payment are moving in that direction.
Tapping into New Revenues with Minimal Effort
For any retailer interested in expanding from domestic payment services into complementary cross-border services, the path is very short, with little effort needed to get started and a great deal to gain. The gains include all-new revenue streams in cash-based transactions with no credit card interchange fees, and a rich opportunity to up-sell and cross-sell to existing customers while attracting new customers.
As with domestic payments, cross-border payments take just seconds to process, so there’s very little impact on staffing. As the transactions use existing POS equipment, there’s little or no capital investment required.
In fact, for most retailers currently offering domestic bill payment, adding cross-border bill payment may require little beyond contacting the distribution partner that assists with domestic payments. Chances are they are also fully set up for cross-border payment and can offer a quick implementation. If not, it’s reasonable to inquire as to their cross-border plans. If those plans aren’t yet firm, it’s worth considering a second distribution partner eager to help drive additional revenue from competitive and attractive offerings for an important and growing customer base.
Merrick Theobald is VP of marketing at iSend, a leading international electronic payment service that provides multiple options for people who support family members in other countries. Customers control the use of the payments they make, and payments can be managed at more than 80,000 retail locations for recipients located in more than 40 countries. For more information, visit isendworldwide.com. Theobald can be reached at [email protected].
Tomra North America names new president
SHELTON, Conn. — Tomra of North America Inc., a wholly owned subsidiary of Tomra Systems ASA and leading global provider of advanced recycling solutions, today announced the appointment of Harald Henriksen as the new president and CEO of Tomra of North America. Henriksen, who joined Tomra ASA in 2004, previously served as SVP technology based in Norway.
As president Henriksen will be focusing on continuing Tomra’s growth in all lines of the business, including sensor-based and sorting solutions such as reverse vending machines, balers, compactors, and processing technologies, all of which aid in resource recovery and resource optimization.
In his previous role as global SVP technology, Henriksen was responsible for the company’s research and development, operations, production and project management. Together with the CEO, he also led the collection technology business unit. In another key role, he established and ran TOMRA’s sales, sourcing and production in China.
Prior to joining Tomra, Henriksen served as a VP BU Tactical Radio at Kongsberg Defence Communications; as a VP product management and VP for research and development at Kongsberg Ericsson Communications; and as a project manager and department manager at NFT-Ericsson. Earlier in his career, he worked in engineering roles at Elektrisk Bureau, Norsk Data and NDRE.
Henriksen, 48, graduated from University of Salford, in Manchester, UK, where he earned a BSc with Honors in Electronics.
Plenty of cash means best of both worlds for investors
There is some debate as to whether paying dividends or buying back stock is a more desirable method of returning cash to shareholders. Those in the dividend camp would prefer to have the cash in their pocket, whereas share repurchase advocates argue that retiring shares through buyback activity improves profits as net income is spread over a smaller number of outstanding shares.
Target satisfies adherents of both philosophies in that it has demonstrated a commitment to paying a progressively higher dividend while also maintaining a high level of share repurchase activity. With regards to the latter, CFO Doug Scovanner recently said what CFOs of company’s with buyback programs typically say regarding justification for the buyback activity.
“We believe that our shares currently represent an exceptional value in light of our U.S. and Canadian prospects in both the intermediate term and long term and we intend to continue to pursue the opportunity to selectively retire our shares on behalf of our shareholders,” Scovanner said during Target’s second quarter conference call.
The company spent $688 million during the second quarter to buy back 14.3 million shares at an average price of $48.11 and at the midpoint of the year has spent roughly $1.5 billion to buyback 29.7 million shares.
As for dividends, following a recent increase Target’s annual payout now stands at $1.30 a share. However, if the company’s long term sales and profit growth plan generates the volume of cash the company expect then the dividend is expected to increase by around 18% annually, which means by 2017 the annual dividend will be $3 a share.