August 07, 2020
Disrupting the Payments Market for 70 Million Consumers
There are 70 million consumers in the US that are unbanked or underbanked, according to data from a 2015 FDIC report. These consumers make an estimated $500 billion in payments annually.
Without access to traditional banking products, unbanked consumers rely on cash transactions and money transfer services for their financial needs, creating myriad challenges to meeting basic needs in an increasingly digital world.
The proliferation of mobile technology, a surge in financial technology (Fintech) innovation, and a rapidly growing Miami-based firm called Cuentas (OTCQB: CUEN) are about to change all of that.
Interview with Co-Founder of High-Growth FinTech Revolutionizing Payments Market
Fintech is Revolutionizing Payment Transactions
Mobile payment revenue is expected to surpass $3.6 trillion by 2024.
Pre-COVID-19, stores and restaurants were already learning that consumers are increasingly relying on a variety of payment options beyond traditional cash and credit, and if they don’t meet this evolving demand, they risk losing business. With much of the world operating virtually today, this changing dynamic is even more pronounced.
These days even the corner coffee shop needs to offer in-store as well as desktop and mobile ordering options to customers, while accepting physical payment in cash, credit, debit, gift cards, as well as digital payments from mobile wallets on phones and wearables to money transfers from apps.
But not all consumers have access to these new payment options.
Nearly all mobile payment platforms require their users to already have a credit and/or debit card as well as a bank account. This is in large part due to anti-money laundering (AML) and “Know Your Customer” (KYC) regulations in the US.
Banks in turn require social security numbers and approved US IDs to open new accounts.
Those with limited or restricted access to banking services due to poor credit, or their international status, are getting left behind as the fintech revolution gains speed.
New FinTech Targeting Unmet Needs of Underbanked Consumers in US
US Latino Buying Power Expected to Reach $1.7 Trillion by 2020
In 2015, Latinos in the US controlled $1.3 trillion in buying power, an amount larger than the GDP of Australia or Spain, according the Selig Center for Economic Growth, up 167% since the turn of the century.
The increase is more than double the 76% growth in non-Hispanic buying power during the same period.
Analyst projections show US Latino buying power continuing this trend, reaching $1.7 trillion by 2020.
Yet nearly one third of this community is underbanked, according to a 2014 report from the Center for American Progress.
Cuentas: Innovative FinTech Solutions Positioned for Rapid Growth
Cuentas Meets Large Unmet Need
The US Latino population has unmet needs for remittance, payment, and purchasing facilities for themselves and the millions of their extended families living throughout the Americas and the Caribbean.
Not having a bank account is a primary disadvantage, but more so, the underbanked are challenged to transfer money electronically, purchase online across all platforms, pay bills online or by mail, or benefit from loyalty programs and new payment trends like mobile banking and wallets.
The Cuentas brand, created in partnership with global branding and advertising powerhouse Crispin Porter + Bogusky (a shareholder of Cuentas), was designed to cater directly to the US Latino community, particularly its underbanked and unbanked segments.
Developed to be a robust solution on par with the payments industry’s biggest players, Green Dot (NYSE: GDOT) and PayPal (NASDAQ: PYPL), the Cuentas platform currently provides certain banking services, mobile wallet, gift cards, mass transit reloads, mobile topups, ATM access, long distance telecom service, and other complementary services designed to meet the needs of underbanked consumers.
International ID Acceptance and Vast Network Provide Key Competitive Advantages
Despite the size and reach of payments leaders GDOT and PYPL, neither company has successfully gained significant market share within the underbanked/unbanked Latino communities in the US.
Cuentas sets itself apart in this arena.
Through its partnership with Ohio-based Sutton Bank, founded in 1878, and IDology, an industry leader in identity verification, Cuentas has the unique ability to meet KYC/AML requirements through the acceptance of a variety of international IDs together with standard US-issued tax IDs.
This key differentiator places Cuentas in an ideal position to service the immigrant-dominated US Latino market.
Further strengthening its position, Cuentas has built a vast network of bodegas, small grocers often found in Latino and immigrant communities.
Through joint ventures with Black011 and SDI Telecom, leaders in the prepaid international calling markets, Cuentas has gained exclusive access to prime counter space at more than 31,000 bodegas in key markets across the US, which is expected to lead to rapid user adoption within its target market.
Extensive National Coverage Network
Once a customer obtains a Cuentas prepaid general purpose reloadable (GPR) card, which is the cornerstone of Cuentas’ offering, providing access to a comprehensive suite of banking and consumer services, they can reload their card at more than 200,000 locations across the US.
Cuentas GPR Cards will be able to be reloaded at Vanilla Reload locations, the same POS network used by the largest operators in the reloadable card market, such as American Express, H&R Block, Jackson Hewitt, and others.
Vanilla Reload POS network locations include Walmart, 7-Eleven, Walgreens, Rite Aid, Speedway, CVS, Family Dollar, and more.
Additionally, with its new mobile app launched earlier this year, available for iOS and Android, users can set up accounts right from their mobile devices.
Fee-Based Business Model Provides Multiple, Repeatable Customer Revenue Opportunities
To acquire customers quickly, Cuentas will offer special promotions that eliminate its one-time initial account opening fee for new customers, making it the lowest acquisition cost for a Prepaid GPR card in the industry. The bulk of its business model is built around repetitive transaction-based user fees and a monthly fee which is among the lowest in the industry.
The Company conservatively estimates each customer will generate an average of $17 in monthly revenue from purchasing third party gift cards (many discounted), mass transit reloads, US & international mobile phone topups, digital content, retail & online purchases and ATM use. Future activities such as bill payments, money transfers, government programs, health insurance and more are planned to bring additional benefits to accountholders and revenue to Cuentas.
At just 100,000 users, or just over three users signed up from each of the 30,000+ bodegas in its POS network, Cuentas will generate an estimated $1.7 million in monthly revenue.
At three million users, less than 10% of the US Latino population, and less than 5% of the US underbanked market, the monthly revenue potential jumps to $51 million.
These eye-popping figures represent fee and revenue generation only from Cuentas mobile wallet and GPR cards.
The Company also has robust pre-paid mobile phone and international telecom services, both highly in-demand services within Cuentas’ target demographic.
Telecom services could average another $5 per month in recurring fees. This is in addition to the $17 in monthly fees generated from the Company’s mobile wallet and GPR cards.
At three million users for both Cuentas wallet and telecom services, the Company could generate $66 million in revenue per month at 3 million users.
Strong Foundation for Rapid Growth
Prior to launching the Cuentas GPR card, the company built and operated a sizeable long-distance calling card operation, servicing more than 1 million customers in the past 10 years before transitioning to its current business model.
This is important competitive advantage for the company.
The customers that used Cuentas’ calling card products are the same target market for the company’s GPR card, and due to its past business relationships, it can openly market to a good percentage of this enormous customer base, giving it unique access to an often hard-to-reach demographic.
In the coming months and quarters, Cuentas should be able to rapidly transition a significant percentage of this large base of potential customers onto its GPR card platform and Mobile Wallet.
Low Relative Valuation Could Lead to Big Gains
As a relatively unknown stock on Wall Street, CUEN trades for a market cap of around $20 million today.
With plans to uplist to NASDAQ, CUEN won’t remain unknown for long.
As word gets out about the company’s potential and rapid growth in the quarters ahead, the stock will begin to catch the interest of more investors, eventually sending shares to a much more realistic valuation.
When that happens, investors accumulating at current prices could see significant gains.
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August 07, 2020
|Fiscal Year||December 31|
As of August 07, 2020