The world is fast moving towards a cashless economy. The Reserve Bank of Australia has revealed ATM withdrawals have hit a 15-year low. According to data from Mastercard, one in 10 Americans no longer carries cash at all, and almost half of Britons have less than ??5 on them at any time.
Now a small Australian outfit has taken a step towards killing the need for credit cards, with ASX-listed zipMoney landing a deal with local electronic payments company eWay.
The deal, announced to the ASX on Wednesday, will allow eWay's point-of-sale service to be coupled with ZipMoney's digital wallet technology. A "digital wallet" allows customers to make point-of-sale transactions with a smartphone, replacing the need for a credit or debit card.
EWay facilitates 5.8 billion online retail transactions a year in Australia, a quarter of all online retail transactions in the country. It was founded by Matt Bullock in Canberra in 1998 and was acquired by US payment giant Global Payments for US$50 million in 2015. Global Payments is a Fortune 500 company with $US2.7 billion of annual revenue.
"This deal is another step in the move to the digital wallet and away from the traditional credit card," says zipMoney founder Larry Diamond. "It will allow customers at point of sale to choose their digital wallet to pay, rather than use a credit card."
The decline in ATM use has been matched by a decline in credit card debt and EFTPOS cash withdrawals in Australia, as Millennials switch to other forms of credit, such as zipMoney's buy-now-pay-later offer.
The deal is part of a rapid rise for zipMoney, which was founded in June 2013 and floated in September 2015.
For the 2015 financial year, zipMoney had revenue of just $400,000, $1 million of cash and transaction volume of just $5 million, on a loan book of $3 million.
Fast forward 18 months and zipMoney has secured $200 million of finance from one of the big four banks. Revenue was $6.7 million for the December half alone, up 722 per cent on the previous year.
ZipMoney's share price closed at 70?? on Wednesday, up from 38?? this time last year.
Twitter: @HawthorneMark
