Alternative payment giant NETeller has purchased the firm behind 1Pay, the leading Chinese payment processor, for US$12.5m in a hugely important strategic move.
NETeller has agreed to pay the sum in cash over two years for Macau-based Quick Access, owned by Macau telecom service provider CTM.
The acquisition allows NETeller with instant access to the potentially huge Chinese market, and the firm said it will swiftly integrate the 1Pay system with its existing ewallet.
The timing of the deal, which has taken almost a year to complete, is unfortunate as it comes in the midst of a Chinese crackdown on internet gambling.
The General Administration of Industry and Commerce ordered its local branches to forbid overseas gambling companies from opening offices in China this week.
But insiders said 1Pay, which is still transacting although it is not accepting new customers, is unlikely to be adversely effected by this.
CTM has strong links with Chinese banking and government authorities and its contacts have allowed 1Pay to become established as the market-leading online payment system in the region.
It is used extensively by egaming operators in the region and is widely credited with facilitating the growth of online gambling in the region.
The purchase price of US$12.5m was called a “bargain” by one Asian operator, who said the true value of 1Pay to NETeller was closer to US$50m.
“1Pay has an almost exclusive presence in China and it is already making a profit,” an Asian egaming chief executive said.
NETeller will pay 60% of the price on completion of the deal with two further payments of 20% payable in 2006 and 2007.
Initially, a simplified non-NETeller e-wallet will be integrated with Quick Access, but there are plans to fully integrate the payment platform with NETeller in the near future.
Importantly NETeller has also appointed Benjamin Lee as vice-president and general manager - Asia to lead operations in the region.
Lee is a former deputy trade minister for the Hong Kong government, and is regarded as a hugely influential player within China.
“He is a big player in Asia, and I don’t think many people realise how influential he is,” Nigel Payne, chief executive of Sportingbet, said.
1Pay process around US$50m of debit card payments annually, and is expected to be enhancing earnings in the current year.
“By integrating an e-wallet payment platform with Quick Access, NETeller expects to generate significant growth in its processing volumes and profitability,” Herman added.
source : egaming review magazine
