AS developments in electronic data capture (EDC) terminals mature, payment solutions specialist Revenue Group Bhd is targeting higher contributions from its electronic transaction processing business, in line with an expected growth in transaction volume post-Covid-19.

“We see the electronic transaction processing segment as being more important with huge room to grow. As travel is allowed, transactions will in turn increase,” its managing director and group CEO Datuk Eddie Ng Chee Siong tells The Edge in an interview.

Revenue’s products and services are divided into three segments — deployment of EDC terminals, electronic transaction processing, as well as solutions and services related to payment infrastructure.

In the financial year ended June 30, 2021 (FY2021), the EDC terminals segment contributed 64.8% to the group’s top line, while electronic transaction processing and solutions and services contributed 20.6% and 14.6% respectively. Note that Revenue, with over 90,000 terminal points, controls a 12% market share in Malaysia’s terminal industry.

Electronic transaction processing revenue is derived from a net merchant discount rate (MDR) from the processing of electronic transactions via the EDC terminal channel; pre-determined commissions; a share of net MDR as a third-party payment processor; as well as a share of the net MDR as a master merchant.

Under the electronic transaction processing segment, Revenue recently launched its e-wallet known as wannaPay. Its key features are shopMyairports, China’s health declaration certificate application, and UnionPay QR, says Ng, who has a 10.59% stake in Revenue.

“wannaPay allows users to pre-purchase duty-free products at the airport and the items will be available at the counter after you have cleared immigration. This feature provides convenience to users due to the lack of shopping time at the airport. It also provides some sort of comfort to users who are worried about coming into close contact [with infected people] during the pandemic. At the same time, we are working on delivering purchases to the user’s flight seat.”

“Second, Malaysians travelling to China can key in their health declaration on our app. As for the UnionPay QR, we are in the development stage and the rollout is targeted [to be in] two to three months. Our users can make transactions via the UnionPay QR in China,” Ng shares.

Going forward, Revenue is looking to incorporate financial products into wannaPay, which include peer-to-peer (P2P) crowdfunding, robo-advisors, digital insurance and convenience stores.

In addition, Ng says the group is in talks with various existing merchants to enable easy payment, pending the release of the “Buy Now Pay Later” (BNPL) framework by the central bank.

Bank Negara Malaysia has said that it is working together with the Ministry of Finance and Securities Commission Malaysia to enact the Consumer Credit Act this year to strengthen regulatory arrangements for all consumer credit activities, including BNPL schemes offered by non-bank operators.

Citing the central bank’s report, Ng says Malaysia’s terminal industry is forecasted to expand 15% to 20% per annum, with a target of having 970,000 EDC terminals this year from 805,000 last year.

“We still expect growth in the EDC terminal segment, whether it is sales or maintenance/rental. There was one quarter where we didn’t sell any machines due to the pandemic, but our income was not affected.

“The cashless industry in Malaysia has expanded very aggressively in the last five years, from RM147.4 billion in 2015 to RM277.8 billion in 2021. In the next five years, we want to reach out to the rural areas as well as untapped and underserved markets. There is still a large number of micro SMEs (small and medium enterprises) that have not participated in this cashless payment system.”

On expanding abroad, Ng says the focus will be on providing solutions and services to help overseas customers implement cashless payment systems. This is because the payment industry is highly regulated and governments in other countries may not want foreign firms managing their payment systems.

Nonetheless, he says the group has not identified any markets thus far, as uncertainties linger despite the various transitions to the endemic stage of the pandemic.

Digital banking licence catalyst

On the award of digital banking licences, Ng is of the view that the development will benefit Revenue regardless of whether its consortium — with Kenanga Investment Bank Bhd and the Sarawak government — wins a digital banking licence. The consortium submitted its application to the Bank Negara last August.

“If we are awarded, we will be fully supporting the consortium with our payment capabilities and will be able to extend the financial products deeper into our ecosystem.

“If not, we can still work with others to continue providing our payment services and infrastructure. Ultimately, there will be five new digital banks coming to the market and with our core strength, definitely there will be opportunities for us,” he explains.

In the event Revenue is successful, it may need to embark on a private placement exercise to raise funds for such a venture, according to Ng. The group remained in a net cash position with RM89.5 million in hand as at end-December 2021.

“As a digital bank, we are talking about an initial paid-up capital of about RM100 million for the whole consortium. From Revenue’s point of view, the investment will be heavy. But from the bank’s perspective, the entry level is low.”

Bank Negara is expected to announce the successful bidders for the digital banking licences soon. The Edge had reported that frontrunners include RHB Bank Bhd-Axiata Group Bhd’s Boost; Grab Holdings Inc-Singtel; the Sunway Bhd-led consortium; and the YTL Corp Bhd-Singapore’s Sea Group partnership.

Planned dividend policy

Having transferred its listing status to the Main Market from the ACE Market in February, Ng opines that it is about time the company sets a dividend policy for FY2023 to reward shareholders. The group made its debut on Bursa Malaysia in July 2018.

“We are waiting for board approval for a dividend policy. When we were listed on the ACE Market, we needed cash to grow our business. Now the company is healthy and making money, so [we] should reward the shareholders.”

Ng says the group will move its head office to the four plots of land in Mukim Batu, Kuala Lumpur, that it recently purchased for RM44 million. The building will be ready in about two years’ time as the plots are still tenanted. “We have seven offices in the Klang Valley, which is tough for me to manage. So, we decided to consolidate into one building, which will also cater for business expansion.”

For 1HFY2022, Revenue’s net profit rose 30.5% to RM8.02 million from RM6.15 million, driven by higher income from the electronic transaction processing segment.

Revenue’s shares have gained 15.5% since its recent low of RM1.29 a month ago. At its close of RM1.49 last Thursday, the company had a market capitalisation of RM694.9 million.