During the period it added two major merchants, Betfair, the global betting exchange, and .Īdd to this the profile of Neteller’s customers. Neteller has also added some 300 merchants since December, taking the total to 1,700. By contrast, Barclays has just 5 million online customers and this figure is not growing. Total customers now top 1.75 million, and the company has only been in existence for three years. The company also has a growing business from online auction sites such as eBay.īut it is adding ‘sign-ups’ or customers at an incredible average daily rate of 2,732, up 82% on last year. To date, some 80% of revenues come from online gaming. Herman said it is amazing how many people are prepared to pay for this service, particularly when they want to play online poker or make an instant sports bet. However if they want instant money transfer, they are charged 8.9%.
#Netler building free
In addition, clearing money from a bank account into Neteller normally takes two to four days, but is free to the customer. Given that 48% of people win, they will transfer their money back to Neteller and start again. It charges the merchant between 2.5% and 5% per transaction, (the average is currently 3%) which compares with the 3.5% to 6% they pay per credit card transaction, where the money is not indemnified (customers can claim that was not their $1,000 bet and have the money stopped, which they cannot do with Neteller). Herman reckons that for every dollar deposited with Neteller, the company makes 13 cents. On top of this, the company is being paid royally for building its global infrastructure, moving into new territories only when a gaming customer requires it to do so. What is particularly ingenious about Neteller’s global ambitions is that instead of simply setting out to build a global online bank in the way that say ING is doing, it has piggybacked off an industry, online gaming, whose users are so driven to gamble online that they have no qualms about going through an invasive, 20-minute sign-up procedure. In this way, Neteller is as sure as it is possible to be that you are who you say you are, and because of this it indemnifies all of its merchants, guaranteeing that they will get their money.
Customers are virtually asked everything but their shoe size before being given a secure id and password, and most of the information they provide (address, bank details etc) is authenticated as they go.
#Netler building plus
Herman describes the procedure as ‘very invasive’, but rather than being a negative, this is a major plus point for the system. The Neteller service basically allows the user to sign up, deposit money from their bank account into a Neteller account, transfer money to make payments for purchases or online gaming and withdraw money.
And as if gross margins of 59% were not enviable enough, the company managed to push margins as high as 73.5% in the half by improving efficiency in customer service and decreasing bad debt. Earnings per share were $0.31.Ĭhief executive Gord Herman told Citywire that this performance was achieved in spite of the second quarter being traditionally the weakest. Turnover for the six months to June grew by 122% to $73.5 million (£40 million), with pre-tax profits up 122% at a hefty $40.6 million. However the massive hike in the share price since then reflects both the very high margins and stellar growth enjoyed by the business, and, just as importantly, the staggering potential that it has to overtake some of the world’s longest established banks. The company’s flotation was discounted to counter fears over its reliance on the online gaming industry, and therefore concerns about a potential tightening of anti-gambling legislation in the US. The company floated just last year at 150p, and Citywire tipped the shares in February at 562p after spotting several highly-rated fund managers piling in. Shares (NLR) in the online money transfer business leapt a further 14p today to 880p, pushing Neteller’s valuation over £1 billion. Citywire tip Neteller has sky-rocketed in the past year but it has pretensions to become a global online bank and the likes of Barclays and Western Union ought to watch out.
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