Eftpos Payments Australia Limited has reported a full year profit of A$7 million despite incurring large one-off costs to fund the rollout of its new digital identity business and the acquisition of the Beem It payments platform.
The domestic debit scheme, which is owned by the four major banks, Coles, Woolworths and 13 other financial institutions, continued to grow its core payments processing business during the period after posting a 23 per cent lift in revenue to $93.5 million.
However, the strategic expansion of Eftpos’ operations took a toll on the bottom line, which declined 33 per cent from the 2020 profit of $10.6 million.
The lower profit was mostly attributable to implementation costs incurred on the ConnectID platform – the first private sector ID verification service to secure national accreditation.
Eftpos absorbed an 80 per cent rise in product and implementation costs to $28.5 million.
Chief executive Steve Benton indicated in the annual report that the higher cost base would be a “short-term” phenomenon and was necessary to provide capacity for the new businesses.
He characterised 2021 as a milestone year in terms of the company transitioning to a multi-faceted digital business.
“The financial year marked a turning point for Eftpos, as the implementation of our strategy accelerated, positioning the company to take a pivotal role in the Australian digital economy,” he told the company’s shareholders in the financial report.
“Eftpos is evolving to become a leader in the delivery of digital services, beyond payments and extending into commerce experiences.
“Importantly, the company continued to achieve transaction and revenue growth for the second consecutive year, despite difficult market conditions and ongoing COVID-19 lockdowns.”
Benton expects the revenue mix of the group to shift substantially in coming years as the new businesses grow and as Eftpos took advantage of innovation opportunities as a member of Australian Payments Plus.
While the merger of Eftpos with BPay and NPP to form Australian Payments Plus was approved by the ACCC in early September, the integration could be delayed for some time due to a legal appeal mounted by Sydney fintech, Controlabill.
Benton also highlighted Eftpos’ new QR code platform, which is expected to be leveraged by the NPP and a swathe of banks, merchants, payments gateway providers and fintechs.
The Beem It platform is being refashioned by Eftpos into two ecosystems – one will provide new services to local merchants and the other focuses on new offers to consumers.
In notes to the financial accounts, Eftpos’ board revealed that the company paid Beem It’s former owners – CBA, Westpac and NAB – upfront cash of $2 million to acquire the business.
However, the three banks will be eligible for contingent earnouts of up to $49 million if Beem It is able to grow revenue and meet market share targets in future years.Beem It now accounts for $42 million of goodwill on the Eftpos balance sheet.