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The Payment Revolution: Blockchain Changing the Game

NetworkNewsWire Editorial Coverage: Blockchain technology is disrupting an endless number of industries, but none more than the world of finance, a moribund market that for decades seemed mostly unmovable as big banks were in complete control. Then along came the decentralized ledger of blockchain, which leveled the playing field and tore down the barriers insulating the oligopoly by offering the potential to transform all types of financial transactions from remittances to capital formation. For the first time ever, blockchain technology makes it possible for global financial systems to be interconnected, secure, and accessible, as well as fast, cost effective and efficient. This has opened new market opportunities being exploited by customized blockchain payment solutions provider GreenBox POS (NASDAQ: GBOX) (Profile). Other companies are also focused on strengthening their unique positions in the burgeoning financial tech (fintech) market, including Fiserv Inc. (NASDAQ: FISV), Fidelity National Information Services Inc. (NYSE: FIS), Block Inc. Class A (NYSE: SQ) and Global Payments Inc. (NYSE: GPN).

  • Mordor Intelligence forecasts the transaction value of the global digital payments to reach $11.29 trillion by 2026 and grow at an 11.21% CAGR.
  • Since July 2021, GreenBox has expanded its portfolio across the world, entering deals to acquire ChargeSavvy, Transact Europe Holdings OOD and Roark Holdings.
  • Preliminary results for FY 2021 showed GreenBox processed nearly $2 billion in transaction volume, a stunning 800% increase from $202 million in 2020.
  • GreenBox recently began offering Automated Clearing House (“ACH”) processing services; clients have already committed to $50+ million in monthly processing.

Big Banks Biggest Threat

Derided by some not long ago as a misunderstood derivative of cryptocurrency, blockchain is now a mainstream technology that is upending the conventional finance world. The name blockchain is derived from individual pieces of data being recorded on immutable “blocks” that are linked together through a “chain,” or publicly accessible network. The blocks can include any type of data, including transaction details about money being exchanged, and are uniquely identified with unchangeable code.

These qualities make blockchain technology a serious threat to big banks that have been slow to adapt because a decentralized ledger allows two parties to transact without a financial services middleman, which cuts them out of the picture. In a world that is becoming increasingly digital, there is a lot at stake now and in the future. Mordor Intelligence puts a transaction value of the global digital payments market at $5.44 trillion in 2020 and forecast it to climb 11.21% annually to reach $11.29 trillion by 2026. Blockchain technologies also can provide an affordable solution to the 1.7 billion unbanked people in the world that contribute to the roughly $500 billion transferred internationally each year through personal remittances.

GreenBox POS (NASDAQ: GBOX) is an emerging fintech company offering proprietary blockchain ledger and smart contract token technologies to create seamless payment processing solutions using digital encryption keys to verify, secure and record details of each transaction conducted within its private system. The company’s applications enable an end-to-end suite of turnkey financial products and fraud detection, improving the efficiency of handling large-scale commercial processing volumes for its merchant clients. GreenBox has executed on a steady stream of milestones since forming in June 2017, including several acquisitions, a NASDAQ listing, key partnerships, product launches (including spinning-off a smart contract stablecoin, Coyni), a stock repurchase plan, impressive transaction and revenue growth, and a $100 million financing to keep fueling expansion.

The company is on its third generation of its eponymous product, effectively optimizing and vertically integrating earlier generations to create a robust ecosystem free of any barriers to scale, replacing individual products with their end-to-end solution. As such, GreenBox is the only payment card industry (“PCI”) level 1-compliant blockchain payment solution. PCI defines level 1 as a merchant that processes more than 6 million transactions annually. This is particularly important with the understanding that GreenBox earns revenue from each transaction (usually 2%–3%), so having leading merchants as clients drives the top and bottom lines.

Accretive Acquisitions

Since July, GreenBox has been aggressive in its M&A growth as a part of its overarching strategy. First up was the acquisition of ChargeSavvy, a fintech specialized in retail payment processing and point-of-sale (“POS”) systems. ChargeSavvy was a synergistic bolt-on that brought GreenBox a comprehensive POS system complete with biometric technology and fraud detection that dovetailed perfectly with its blockchain ledger and stablecoin technology, with the added perk of a large merchant client portfolio assembled over ChargeSavvy’s nine years in business.

Only days after closing the ChargeSavvy deal, GreenBox announced a memorandum of understanding to acquire Transact Europe Holdings OOD, the single entity shareholder of Transact Europe EAD (“TEU”). TEU is a European Union-regulated electronic money institution headquartered in Sofia, Bulgaria, one of the fastest-growing markets in the fintech industry. A principal level member of Visa, TEU is a worldwide member of MasterCard, a principal member of China UnionPay and part of the SEPA Direct program, a pan-European Direct Debit system that allows merchants to collect Euro-denominated payments from accounts in the 34 SEPA countries.

Just this month, GreenBox inked another deal, agreeing to acquire Roark Holdings Ltd, a United Kingdom-based licensed payment institution that allows the licensor to process debit and credit card and local payments within the UK. The acquisition brings additional infrastructure and cutting-edge software under the GreenBox umbrella that are instrumental in the long-term growth vision. GreenBox anticipates to soon be onboarding and processing merchant businesses throughout the country.

Ballooning Volumes

While the finalization of the acquisition of TEU (which is pending regulatory approval from the Bulgarian National Bank) and Roark Holdings are hammered out, the acquisition of ChargeSavvy is already paying dividends for GreenBox. In August, GreenBox hit an important milestone by processing more than $1 billion in transaction volume for the year, representing a nearly five-fold increase in total processing volume for all of 2020. This month, GreenBox released preliminary unaudited results for the full year, which showed $1.95 billion in transaction volume, a stunning 800%+ increase from $202 million in 2020.

The surge in processing volume directly translates to revenue for GreenBox. For the year, the company reported revenue of $26 million, up an eyepopping 200%+ from $8.5 million in 2020. In the words of the company, the focused efforts undergirded the remarkable growth while also positioning “the company for further expansion across a myriad of verticals in 2022.”

Looking exclusively at ChargeSavvy, the POS company reportedly recorded its best quarter ever during the fourth quarter of 2021. The retail division saw an average increase of 166% compared to the same period of 2020 with increased efficiencies now completely integrated in the GreenBox ecosystem.

Add ACH Into the Mix

The aforementioned “myriad of verticals” includes GreenBox launching a new payment vertical this month, offering bulk Automated Clearing House (“ACH”) processing abilities to merchants. Utilizing its blockchain technology and smart contract technology, GBOX will be able to transfer funds electronically for ACH debit and ACH credit transactions.

The ACH Network is a massive addressable market for GreenBox. Nacha reported that the network in 2020 processed 26.8 billion payments, marking the sixth consecutive year of adding 1+ billion in new payments. ACH payments involve a wide swath of money transfers, including bills, paychecks, dividends, person-to-person, charities, and much, much more to the tune of $61.9 trillion in processed payments in 2020.

Since initiating its new program, GreenBox clients committed to more than $50 million in monthly ACH processing, with the number steadily rising. Typical transactions average about $150, which nets margins in the range of $0.20–$0.30 per transaction for GreenBox, or approximately $66,667–$100,000 per month based on $50 million. There is additional upside insomuch that GreenBox can also serve clients in higher risk categories, which boosts margins by 20 to 30 basis points per transaction.

Only the Beginning

The new digital financial revolution is exploding as consumers and businesses the world over change how transactions are done. As with many other industries, the COVID-19 pandemic simply accelerated existing trends as people shopped, entertained, ate and worked from home. Younger generations were already growing up with new financial modalities, and the lockdowns and contagion fears prodded older generations to become more quickly familiarized with digital payments, which has directly benefited companies covering a broad spectrum of fintech market segments.

Fiserv Inc. (NASDAQ: FISV) is a global leader in payments and financial technology and a member of Fortune World’s Most Admired Companies. The company offers its customers a multitude of services and products, including account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover(R) cloud-based point-of-sale solution. This month the company said that more than 1,000 users representing businesses of all sizes across a range of industries are using its PolCard(R) Go, a first-to-market application in Poland for contactless payments via mobile phones.

Fidelity National Information Services Inc. (NYSE: FIS) is a leading provider of technology solutions for merchants, banks and capital markets that recently has been adding to its already formidable list of clients, as regional and community banks embrace the digital revolution. FIS’ HORIZON is a flexible and modern banking platform that uses a multi-tiered architecture, which allows for a consistent, powerful user experience across most devices and browsers. According to FIS’ most recent PACE Pulse survey, “digital banking” is more appealing to new regional or community bank customers than others—26% of respondents started a new relationship with a regional bank or community bank for digital banking services.

Block Inc. Class A (NYSE: SQ), which was known as Square until December before partitioning off that name for its seller services, is diverse in the digital payments sphere with its Square business, along with Cash App, TIDAL, and TBD54566975. In August, Block disclosed an agreement for which it will acquire Australian-listed Afterpay Ltd. In an all-stock deal valuing the “Buy Now, Pay Later” (“BNPL”) pioneer at $29 billion. Afterpay will join Cash App, bringing the highly popular BNPL payment model to Block consumers worldwide.

Global Payments Inc. (NYSE: GPN) delivered a record third quarter despite facing incremental challenges from COVID-19. Not only did the payment technology company renew key partnerships with the likes of CIBC and CITI, bring on Mercedes-Benz stadium as a new client, complete the acquisition of B2B company MineralTree and expand its relationship with PayPal (including support of cryptocurrencies), amongst other things, GPN increased its GAAP revenues to $2.20 billion, compared to $1.92 billion in the third quarter of 2020, and diluted earnings per share to $1.01 compared to $0.74 a year earlier.

The financial world is going digital; it’s just a matter of time, although the transition is still in its infancy. After all, it was only three years ago that the Federal Reserve found that ACH transfers were outstripping physical check payments for the first time. Safe to say, the digital payments space still has exponential upside.

For more information about GreenBox POS (NASDAQ: GBOX), please visit GreenBox POS (NASDAQ: GBOX).

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