16
GHL Systems Berhad
(293040-D)
While the overall number of prepaid mobile users only
grew 4.5% in 2014, e-pay’s growth in the transaction
value of telco prepaid reloads was larger at 6.5%.
This is primarily due to consumers switching from
paper based scratch cards to electronic reloads
at the various e-pay outlets. As GHL group’s sales
organisation now cross-sells e-pay’s products, this also
has quickly increased the number of acceptance
points, thereby further contributing to the growth. Bill
collection services is relatively newer and represents
only 8.8% of e-pay’s total revenue in 2014. However,
this segment is growing at 25.6%, approximately 4
times higher than the top-up segment. Given this
trajectory, this component will constitute a significant
portion of e-pay’s overall revenue within the next 5
years. The Revenue/Transaction Value % declined
marginally due to changes in the product mix and
lower margins in certain products. The Margin/
Transaction Value % however, increased slightly due to
changes in distribution and merchant mix. The table in
Figure 5 shows the growth of e-pay between 2013 and
2014. As can be seen, e-pay is growing faster than the
overall market for reload and collection services.
Figure 5
e-pay
(All stated in RM’
Millions unless stated
otherwise)
2013
2014
%
change
Transaction Value
Processed
2,533.7 2,757.9
8.8%
Gross Revenue
115.0
118.6
3.1%
Revenue/Transaction
Value*
4.5%
4.3%
-5.3%
Gross Margin
32.6
35.6
9.2%
Margin/Transaction
Value*
1.3%
1.3%
0.4%
Number of Merchant
Acceptance Points
(Thousands)
17.5
23.0
31.8%
* Gross Revenue or Gross Margin respectively divided by
the Transaction Value Processed expressed as a %.
GHL (card payment services)
Our existing business of sourcing merchants on behalf
of banks under a rental and revenue sharing model
has served us well in transitioning away from the
previous business of ad hoc hardware and software
sales. The main limitation of the current business
model however, is that we can only operate within
the banks’ own targeted segments i.e. the larger sized
merchants with higher card payment transaction
volumes.
The vast majority of all merchants however, fall in
the smallest merchant segment which constitutes
over 90% of the markets in which we operate. Today,
this segment is underserved by the banks as it is
challenging for any bank, with its internal cost structure
to penetrate this segment. To address this, we have
entered into TPA agreements with Banks regionally,
whereby through the underlying TPA agreement
with the bank, GHL is able to directly contract with
merchants to provide card payment services. This TPA
arrangement therefore enables GHL to tap into this
largest segment of the market using low cost devices
and a scaled operational process that makes it
economically viable.
Much of 2014 was spent in building up the necessary
risk management processes, people as well as
automation within our operations units to enable us
to undertake scaled merchant acquisition under
TPA. The investment was heavy and much of this was
incurred in 2014 with returns expected in 2015 and
beyond. While TPA agreements have been signed
with Banks, actual implementation of the TPA business
will only likely occur towards the end of 2Q 2015. In
Malaysia, we have contracted with two banks for
TPA services (at the end of 2014 and early 2015) but
implementation will only occur in May 2015 when
our systems are fully integrated and tested with the
banks. In Philippines we have similarly contracted with
a Bank, a Telco and a non-bank card association
member to provide TPA services but this is still subject
to central bank approval.
ceo
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