Ann: Norwood Expands Markets and Payments Options, page-9

ASX ANNOUNCEMENT 22 December 2015
Norwood Expands Markets and Payments Options –
Announces New Payments, Pricing and World Credit Platforms to Power Future Growth

Highlights: Norwood announces comprehensive new payments, pricing and credit management initiatives to drive market penetration of the Company’s consumer Apps outside the roaming market into the long distance telecommunication market and beyond.
These initiatives will expand the size of Norwood’s potential customer base and revenue generating capacity.
o New Payments Partners: New platform will support multiple payments methods, and will bring new payment partners on board: Stripe, to process cards payments, and Peppermint Innovation, to serve unbanked customers in developing markets.

Norwood will see increased customer revenue and net income via these partners through both lower commission rates on card payments and access to unbanked customers who could not previously spend money with Norwood (or other VoIP providers).

o Global Dynamic Pricing: Norwood’s services will be priced optimally per calling location and destination, rather than using a fixed global rate.
The pricing will vary depending on where users will be calling from and to, with pricing set periodically to optimise gross contribution per region. Timed high-volume plans, including the Company’s Ultimate Plan, will continue to be supported.

o World Credit: Norwood will be switching from minutes-based consumption to a credit-based consumption approach, called World Credit, within all of its consumer Apps.
This will enable individualised route-based pricing.
Norwood’s App users will benefit from individualised corridor pricing by drawing down on their pre-paid “World Credit” balance per call, topped up through any of the existing or new payments methods added over time.
World Credit is designed to be shared across Apps, facilitating a “single account, multiple App” relationship between Norwood and its customers.

o New Payments Partners, Global Dynamic Pricing and World Credit platforms will be rolled out progressively for all of Norwood’s consumer Apps on Android and iOS through Q1 2016.

“Sharing Economy” telecommunications pioneer Norwood Systems Ltd (“Norwood” or “the Company”) (ASX: NOR) is pleased to announce a fundamental upgrade to the Company’s consumer App e-commerce framework, focusing on significant improvements to Payments, Pricing and Credit Management with its new World Credit platform.

The upgrade will maximise World Phone’s monetisation potential well beyond its existing geographically and pricing defined roaming market. Payment types Markets Roaming Long-distance Unbanked In-App Purchase:
Existing Loyalty Points Future Future Future Expansion of Payment Options and Addressable Markets Norwood is bringing additional payments partners on board, to support direct credit card payments, as well as novel non-credit card payments and remittances platforms to serve customers without bank accounts in developing markets.
Norwood expects these payment partner initiatives to lower average commission rates paid out to partners, as well as expanding Norwood’s addressable market to the ‘unbanked’ sector in the developing world.
Two new payments partners for Norwood are Stripe, a US-headquartered Internet and Mobile payments company, and Peppermint Innovation Limited (ASX: PIL), a Western Australianheadquartered Payments Platform company, focusing on bringing the “unbanked” into the global payments system.

This upgrade also marks a substantial change to Norwood’s pricing strategy, moving from a single global flatrate pricing regime to a more flexible, globally-tailored contribution-maximised pricing model.
This change will enlarge Norwood’s addressable worldwide market, as well as expanding use cases for World Phone and other Norwood Apps beyond the existing roaming traveller market into the generalised long-distance market.
This strategy will specifically target key identified high-value pricing corridors. Example Telco Pricing Corridors (not actual data) World Credit is a new shared-credit platform enables users to maintain a single, securely managed pre-paid credit balance with Norwood that can be applied on telecommunications services across multiple Norwood Apps.
Maintaining a stored credit balance per user that can be shared across Apps will provide Norwood with the basis for: o Flexible pricing, adapted per calling route on the World Phone App US – Mexico $0.80/min EU – Saudi Arabia $1.50/min Yemen – Ghana $5.20/min Australia – India $1.20/min
New Payment Options New Markets
o Support for streamlined multi-App relationships with Norwood’s customers, for example to support “family plans” or multiple Norwood Apps that address different targeted use cases.

World Credit operating across multiple Norwood Apps Norwood Systems CEO and Founder, Paul Ostergaard, commented: “I am very excited to introduce World Credit to the public, as it is an initiative that we have been working on for some time now. It leverages the best insights of one of the world’s foremost telecommunications pricing experts, who has been advising the Company on its global pricing strategy since August this year.
World Credit lays the foundation for a future consumer multi-App business for Norwood – a significant part of our strategy – with a single common payments framework across all such Apps. “The new contribution-maximised pricing model takes our Company into a new playing field, where for the first time we address the entire global long-distance telecommunications market, currently estimated at 600 billion minutes per year, opening many new opportunities in addition to our existing presence in the roaming market.
“Expanded Payments Options and the World Credit Platform will also provide Norwood with improved margins and market reach, as well as giving our customers unparalleled flexibility in how they transact with us.
“Our award-winning World Phone App has experienced great initial success since its launch only five months ago, regularly achieving daily download rates on App Stores that are higher than many competing VoIP Apps’ daily download rates – across numerous markets.

World Phone has also been generating highly encouraging early revenue in a number of interesting markets. “We see these new initiatives on pricing, payments and shared credit as really important and valuable additions to our overall revenue and go-to-market models.
Since launch, we have noted an asymmetric uptake and monetisation of the World Phone App across many markets.
In many cases, we believe this to be due to the competitiveness (or alternatively lack thereof) of our existing flat-rate global pricing when applied across many differently-priced markets.
These new initiatives are designed to drive additional App uptake and monetisation in a number of market segments that we currently don’t yet compete effectively in.

“Finally, on behalf of the entire Norwood team, I want to wish our investors and supporters the very best for the holiday season and the New Year. We appreciate that it has recently been a turbulent time in the market and want to re-affirm the team’s commitment and dedication to building the world’s most compelling telecommunications platforms, powered by an exciting array of beautiful, easy-to-use and monetisable consumer and corporate applications.

Having laid a robust foundation over the past five months, in terms of our people, systems, products and services, we are working very hard – through the break – on an amazing product pipeline and an equally amazing array of customer and partner opportunities before us.

We are looking forward to 2016 with great anticipation. Thank you for your support to date.”