The Novatti Group Ltd (ASX: NOV) share price has surged 40% after revealing a partnership with Afterpay Ltd (ASX: APT).
Novatti is a digital banking and payments business with billing and business automation platforms. Services includes card issuing, merchant acquiring, payment processing and settlements.
What’s going on?
Novatti has been selected by Afterpay for the delivery of its payment card program in New Zealand.
As part of the partnership, Novatti will leverage its licence with Visa to enable Afterpay to issue Visa card solutions. This includes enabling Afterpay’s users to access Afterpay-branded payment cards in their digital wallet for use at participating merchants across New Zealand.
The initial agreement is for three years. Novatti will receive project setup, monthly recurring and, depending on the take up of the service, transaction-based fees.
Management comments
Novatti Managing Director Peter Cook said: “This new partnership with Afterpay again highlights Novatti’s digital banking and payments ecosystem in full operation, enabling innovative fintech companies to leverage our assets to bring new products and solutions to market. Working with Afterpay will see Novatti generate further revenue and value from existing assets, highlighting our increasing shift from a development to a monetisation phase.
“This is another great example of Novatti’s ability to work with the world’s most innovative fintech companies.”
What to make of this for the Afterpay share price?
Afterpay has been working towards expanding into the personal finance space. New Zealand is a fairly small market, so it’s not going to do much for Afterpay. However, it’s a great testing ground for Afterpay to see what would work for the Australian and even the US market.
I think this move shows the direction that Afterpay is heading. It’s no wonder that Commonwealth Bank of Australia (ASX: CBA) wants to push into Afterpay’s space before it gains too much momentum in the non-BNPL space.
For Novatti, it’s a great vote of confidence by one of the world’s largest fintech businesses.
It’ll be interesting to see how this New Zealand product goes for Afterpay. I’m not a buyer at this Afterpay share price through, particularly because of competition (and knock-on effects) worries.
