Saltyannair, I am trying to understand the implications of Findi...

Saltyannair,

I am trying to understand the implications of Findi having their own “payments switch”. What’s follows is some input into this discussion. Wondering if you, or anyone else can clarify or corect the following.

The acquisition of Tata Communications Payment Solutions Ltd (TCPSL) by Findi provides a major operational advantage by integrating its own payments switch. Here’s an updated assessment of the cost savings and strategic benefits based on the new information and sources.

Key Transaction Details

1.Acquisition Cost: A$75.7 million.

2.Expanded Network:

•4,600 additional ATMs added immediately.

•Plans to deploy 3,000 more ATMs.

3.Payments Switch Integration: Enables Findi to directly connect to payment devices such as MicroATMs, biometric devices, and UPI-based systems.

4.Financial Projections (First Year):

•Additional Revenue: A$28 million–A$30 million.

•Additional Net Profit After Taxes (NPAT): A$2 million–A$4 million.

Cost Savings from Payments Switch

The integration of the payments switch eliminates third-party fees for transaction routing and processing. The cost savings can be estimated as follows:

1.Annual Transaction Volume:

•Findi processes over 1 billion transactions annually across its ATM and digital networks.

2.Estimated Third-Party Fees:

•Industry estimates for third-party switch fees range from A$0.01 to A$0.03 per transaction for large-volume processors.

3.Savings Calculation:

•Low Estimate:

1,000,000,000 transactions × A$0.01 = A$10 million annually.

•High Estimate:

1,000,000,000 transactions × A$0.03 = A$30 million annually.

Additional Financial Benefits

1.Operational Efficiency:

•The integrated switch simplifies the payment ecosystem, reducing downtime and optimizing transaction processing speed.

•This likely reduces maintenance and support costs, though exact savings require further operational metrics.

2.Revenue Growth:

•Enables Findi to integrate higher-margin services such as insurance, SME loans, and biometric payments, leveraging the switch for cross-selling opportunities.

3.Immediate Earnings Contribution:

•Findi projects an additional A$28–A$30 million in revenue and A$2–A$4 million in NPAT in the first year.

4.Franchise Model Impact:

•The White Label ATM platform allows franchisees to deploy ATMs at lower capital outlay for Findi, further enhancing margins.

Strategic Impact

1.Market Differentiation:

•Owning the payments switch sets Findi apart as an integrated end-to-end financial service provider, positioning it to compete with both traditional ATM networks and emerging digital payment platforms.

2.Expansion Potential:

•With 3,000 additional ATMs planned and the ability to integrate advanced payment solutions, Findi is poised for significant market penetration in semi-urban and rural areas of India.

3.Future-Proofing:

•Direct integration with UPI and biometric systems aligns with India’s rapid shift toward digital and cashless transactions.

Revised Savings Estimate

•Annual Cost Savings: A$10 million–A$30 million from eliminating third-party fees.

•Revenue and Profit Growth: A$28–A$30 million in additional revenue and A$2–A$4 million in NPAT in the first year.

Conclusion

The acquisition of TCPSL and the integration of its payments switch provide Findi with substantial cost savings and significant revenue-generating opportunities. The immediate financial boost and long-term strategic advantages make this a transformative move for Findi, enhancing its ability to compete in both the ATM and digital payments markets.

Cheers Anton.