CRO’s International/Global partners and possible acquisitions, page-7

“KEY HIGHLIGHTS The BPSP agreement incorporates a discounted merchant rate that will increase Cirralto’s profit margins on credit and debit card payments by up to 40%. The discounted merchant rate reduces the Company’s interchange cost price to process card transactions. Significant efficiency improvement in AML / KYC compliance and approval times.Significant Business Model improvements for Cirralto and its customers. Cirralto Limited (ASX: CRO or the Company) is pleased to announce that it has entered into a Business Payments Service Provider (“BPSP”) agreement with Fiserv (NASDAQ: FISV) and Visa International Limited (“Visa”, NYSE:V, market capitalisation US$434 billion), in which Fiserv will serve as the exclusive merchant acquirer for Cirralto. Cirralto’s Managing Director Adrian Floate commented: “The BPSP agreement puts Cirralto in a prime position to build its market share in the digital payments sector and is a significant milestone for the Company. The agreements gives us the ability to compete with other global payment players and financial institutions targeting B2B customers and networks.”COMMERCIAL SUMMARY Cirralto has entered into a Business Payments Solution Provider Agreement with Fiserv (NASDAQ: FISV) and Visa International Limited (“Visa”, NYSE:V), in which Fiserv will serve as the exclusive merchant acquirer for Cirralto under Visa’s BPSP merchant services agreement. The BPSP Agreement enables Cirralto to commercialise the Spenda product with improved transactional profit margins and streamlined processes. This agreement has been entered into following many months of mutual due diligence. The specifics of the agreement and the Visa BPSP program include: Specifies Cirralto as the Merchant of Record on payment transaction, or the entity authorised to process consumer credit card and debit card purchases on behalf of a business on all B2B Customer payments. Profit margin increase of up to 40% on all digital payments where Cirralto is processing transactions between two businesses, being a retailer / or retail service provider and its suppliers.Cirralto will utilise A$500,000 in capital as security deposits for the BPSP capital requirements; these monies will be used to secure the facility and ensure Cirralto meets its Customer settlement obligations. Streamlined merchant payment process / onboarding, reducing onboarding times by 50%, accelerating merchant revenues and revenue ramp-up. Full merchant funding control requiring Cirralto to settle funds into merchant accounts via EFT within 3 business days of cardholder transactions. Business model enhancements, delivering better scope of data sharing and an expanded scope for Cirralto to offer business credit and pay by installment services (B2B Buy Now Pay Later) to customers in the form of merchant cash advances (see Figure 2). Complements the existing agreement with Fiserv (our merchant acquiring partner), enabling Cirralto to offer a broad range of B2C payments via terminals and eCommerce as well as the BPSP digital payment services. Improved bank statement notation control and customer reconciliation automation. When merchant deposits are made, the supplier will receive the exact amount of the invoice payment, reference details of the transaction (invoice or other transaction number) and the customer particulars to streamline the receipt reconciliation. The Company will pay the discounted BPSP merchant interchange rate on payments processed via its payments platform to FISERV, the BPSP merchant interchange rate is a 40% discount to the Company's current merchant rate. No other fees are payable under the agreement by the Company.The agreement commences on December 2 for a term of 12 months. The agreement automatically renews unless terminated.The agreement can be terminated by giving 30 days’ advance written notice to Cirralto of material breaches of the Agreement that are not remedied within 30 days of receiving notice of it. A material breach includes fraud, excessive chargebacks, material change in operations or insolvency. BPSP technical implementation is already underway and will be completed in the coming eight weeks. This implementation will improve the customers onboarding journey, AML / KYC delivery and when completed will improve the company’s transactional margins in Q1 2021. The Company will continue to deliver services under its existing arrangements whilst these changes are delivered. SIGNIFICANCE OF THE BPSP AGREEMENT The BPSP agreement is an enabler of our vision to create a Ledger to Ledger payments service between businesses that provides operational efficiencies, improves trading relationships and most of all creates liquidity and cash flow optimization outcomes for our customers. With the additional controls the BPSP agreement gives us in the formation, processing, settlement and reconciliation of payments transactions. We have positioned Cirralto and the Spenda ecosystem as an agile platform capable of adapting to different industries and B2B payment use cases. “The BPSP gives us the flexibility to supply payments services to customers at a different scale and price point than would otherwise be possible via traditional merchant services. Without the BPSP, larger customer networks and market segments with thousands of buyers and sellers would be so time and resource-intensive that we simply couldn’t pursue them. “With the BPSP, we are able to automate substantial amounts of the onboarding process and perform the AML / KYC steps required to protect cardholders and merchants with digital steps that protect everyone and get them transacting in days, not months” said Managing Director Adrian Floate. BUSINESS MODEL ENHANCEMENTS With the BPSP, Cirralto will bring to market an integrated eInvoicing, ePayment and financing services with a combination of direct and 3rd party funding that will bring liquidity and drive cash flow for buyers and sellers. With applications across multiple industries, this integrated set of services will enable Cirralto to not only utilise the strengths of its SaaS platform in the acquisition and retention of the customer but monetise by charging both payment processing and SaaS subscription fees. This income diversification enables us to bundle services and reduce the Customers total cost for the business payments software. As the merchant of record, Cirralto is in control of disbursing Customer payments to Merchants via its open banking payments services. These open banking services also enable account to account transfers or traditional EFT’s and the ability for the Customer to utilise their bank account as their preferred payment method. CHANGING CUSTOMER TO SUPPLIER PAYMENTS (B2B) At present, Customers are required to pay their Suppliers statement at the end of each month or a set number of days from the invoice date. Often these payment dates are viewed as a “guide” by the customer, with 53% of invoices paid outside of terms . That said, sometimes a strict credit management regime is a strength, but at times it can create or force customer purchases outside of a Supplier’s network to attract extended terms, resulting in lost revenue for the business if Customers are able to source more favourable terms elsewhere. Today, B2B payments are accessed as a discrete service and only integrate partially for either the payer or the payee but never both players simultaneously. Traditionally these payments are made directly between the customer and supplier using billing platforms like BPay, ABA based EFT transfer via internet banking and direct merchant credit card facilities. Each of these attracts fees and charges from the processor but none simplify the process end-to-end making the lives of all parties simpler. With the BPSP agreement we are changing this structure and giving Customers and Suppliers more ways to trade and pay each other with reduced fees:”
https://www.cirralto.com.au/news