- A
partnership with Sputnik Bank in Russia will enable the provision of third
party bank processing services to local banks
- Regulatory
approval and completion of the agreement are expected in the final quarter
of 2018
- Net
Element is the only Nasdaq-listed U.S. company that stands to benefit from
the Russian electronic payment expansion
Global technology and value-added solutions group Net
Element, Inc. (NASDAQ: NETE) recently announced a partnership with Sputnik Bank
in Russia that’s aimed at offering third party bank processing to other banks
in the country. As the October 2 announcement states, Net Element will get 25
percent of Sputnik’s outstanding stock, and a per-transaction fee has also been
discussed, Zacks reported in a note published the day after the
announcement (http://ibn.fm/3UHj0).
The partnership will be executed via Net Element’s PayOnline
subsidiary. The agreement has to pass regulatory approval in Russia before it
gets finalized. Such an approval is expected during the final quarter of 2018.
Founded in 1990, Sputnik is a commercial bank that holds $35
million in assets. It offers a full range of banking services to both private
and corporate customers. Through its partnership with Net Element, Sputnik will
become the first entity to start offering third party bank processing in
Russia.
The partnership and the subsequent service will fill a
rather significant market gap. Currently, Russian banks use in-house processing
systems. These systems are expensive, and many of them have become outdated.
Net Element and Sputnik are expected to start selling a
processing service to small banks, Russian third-party vendors, credit
organizations, value-added resellers and sales organizations. The cost of
processing will be brought down, and the service will also give smaller Russian
banks a chance to utilize much more current software than the products on which
they’re currently relying for in-house processing.
Sputnik will provide the capacity for the data center needed
for the execution of the program. Financial instruments for settlement of
transactions will also be provided. The partnership will enable PayOnline to
process transactions as a payment facilitator. This way, PayOnline’s offering
will be expanded beyond the current electronic commerce.
The total transaction value of digital payments in Russia is
expected to reach $39.5 billion by the end of 2018 – a massive increase from
$27.9 billion in 2016. The CAGR in the period from 2018 to 2022 is expected to
be 11.9 percent, which means that the value of digital payments could amount to
$61.8 billion in 2022 (http://ibn.fm/oAIPS).
Net Element CTO Andrey Krotov said in a news release that
the innovative turnkey solution will enable frictionless onboarding for
merchants with integrated, value-added services.
Net Element is a payments-as-service transactional and
value-added services company that provides solutions to small and medium-sized
businesses. The company operates both in the U.S. and in selected emerging
markets. Its primary goal is to innovate SPE productivity services using
blockchain technology solutions for the purpose of growing transactional
revenue.
Deloitte’s 2017 Technology Fast 500 ranks Net Element as one
of the fastest growing companies in North America. It is the only U.S. company
listed with Nasdaq that stands to benefit from the Russian electronic payment
expansion.
For more information, visit the company’s website at www.NetElement.com
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