Neovia has put a torrid time at the hands of US authorities behind it, and with an award-winning new product to its credit and an array of strong business units has repositioned itself for future growth. Dan Starr, a senior Neovia executive, discussed with EPI progress made and the company’s strategy.
Shrugging off a mauling by US authorities in 2007, Isle of Man-based payments solutions specialist Neovia proved it remains a force to be reckoned with when it walked off with the award for the Best New Prepaid Card Product Launch at the 2009 Cards & Payments Europe Awards ceremony held in Prague in June.
Neovia was honoured at the event organised by EPI and its stable-mate publication Cards International for its Net+ Prepaid MasterCard, which faced stiff competition from the PayPal Top-Up Card and the M-Cube/Ryanair co-branded prepaid card programme. The Net+ card was selected by an independent judging panel, comprising representatives from the payment card organisations and payments industry commentators and experts.
“The Net+ card has all the functionality of a normal debit card and places Neovia at a considerable advantage over competitors offering conventional prepaid cards,” Dan Starr, Neovia’s executive vice-president, sales, marketing and product, told EPI.
He added that since its launch in October 2008 the Net+ card has enjoyed a strong uptake, a welcome development after the grueling ordeal Neovia went through in 2007.
In short, Neovia, then named Neteller, fell foul of the US Unlawful Internet Gambling Enforcement Act, a highly controversial piece of legislation outlawing with few exceptions online gambling by US residents and effectively criminalising online gambling provided by foreign operators.
Neteller was taken to task by the US Attorney’s Office (USOA) for allegedly having processed online gambling payments executed by American users of its Neteller e-Wallet electronic money product. To resolve the issue Neteller agreed to pay the USOA a settlement of $136 million and took the decision to terminate all North American operations which had generated about two-thirds of its transaction volume. Neteller was renamed Neovia in October 2008.
“We have come through difficult times and still remain a strong and resilient company,” Starr said. “We have had tremendous support from our customers and merchants.”
Despite the significant drain on Neovia’s financial resources, it reported that it had $82.3 million in cash on its balance sheet at the end of 2008. Fee revenue excluding North America totalled $69.5 million in 2008, up 26 percent compared with 2007.
Neovia is clearly aiming to use the Net+ card as an important driver of revenue which, given the card’s unique features, appears to be well-founded optimism.
The card, which incorporates chip and PIN technology, is linked to a Neteller e-wallet account and enables a cardholder to instantly load funds from the e-wallet onto the card when required, explained Starr. This real-time loading ability makes the card in all respects the equivalent of a conventional debit card. Net+ has another unique feature: it is also available in a virtual format for use in online transactions.
Starr explained that in its virtual format the card, which is downloaded by an online user, generates a unique, single-use 16 digit MasterCard number and the user’s identification when executing an online purchase. Funds for the purchase are drawn from the user’s Neteller e-wallet account.
The Net+ card represents the first solution in which an e-wallet has been used to load both virtual and physical cards, said Starr.
Neovia’s ability to offer what is effectively a debit card is of particular significance at a time when consumers are shying away from credit cards.
In particular, Starr said, the card is attracting considerable interest from German consumers who have traditionally shunned credit but can experience difficulty in obtaining a suitable debit card. Specifically, he explained, German consumers under the age of 25 are not eligible for a Visa or MasterCard card product.
Another competitive advantage enjoyed by Neovia is low cost to the user. The Net+ card is free when used for POS or online payments with fees only levied for foreign exchange and ATM withdrawals.
“We feel our fees are the best in the market,” said Starr. Neovia, he added, derives its revenue from the e-wallet. Neovia reported 97,673 active-wallets at the end of 2008 and average fee revenue for the year of $128 per e-wallet.
More strings to Neovia’s bow
Neovia’s reach in the payments market also extends to online payments processing via its Netbanx gateway, which launched in 1996 to become the UK’s first card-not-present payments service provider. Netbanx supports global online and offline payments with real-time authorisation and offers an extensive range of payments options including all major card brands and alternate payments such as Neteller, PayPal, giropay, iDeal, Laser, Ukash and Poli. Notably, Poli is a product of Australian-based Centricom, in which Neovia acquired a 25 percent stake in 2007.
“Netbanx is a strong business and has a lot of great merchants,” commented Starr.
He added that Asia is “a huge market for us” with, in particular, Netbanx being one of the few Western companies servicing Chinese consumers foreign online purchases.
Being in the strong position of having its own alternate payments product and a gateway a key part of Neovia’s strategy is also to promote the use of Neteller cards and e-wallets and is being done by means of marketing and loyalty programmes, said Starr. “We want merchants to see the value of using our product combination.”
Strengthening Neovia’s value proposition for merchants, Starr continued, is its fourth “low profile” security unit specialising in know-your-customer and online consumer identification.
“We have a lot of skills is this area,” said Starr. He added that the unit draws on major data bases and utilises techniques such as geolocation and risk scoring of individual consumers.
Looking to enhance it capabilities Neovia will shortly begin fasing in its new business platform Newteller, the product of a two-year development programme and a considerable investment. Starr explained that the decision to develop Newteller formed a key part of Neovia’s refocusing strategy after exiting the North American market and will facilitate rapid product enhancement and development of more customised solutions.