Neovia has put a torrid time at the hands of US
authorities behind it, and with an award-winning new product to its
credit and an array of strong business units has repositioned
itself for future growth. Dan Starr, a senior Neovia executive,
discussed with EPI progress made and the company’s
Shrugging off a mauling by US authorities in 2007, Isle of
Man-based payments solutions specialist Neovia proved it remains a
force to be reckoned with when it walked off with the award for the
Best New Prepaid Card Product Launch at the 2009 Cards &
Payments Europe Awards ceremony held in Prague in June.
Neovia was honoured at the event organised by EPI and its
stable-mate publication Cards International for its Net+ Prepaid
MasterCard, which faced stiff competition from the PayPal Top-Up
Card and the M-Cube/Ryanair co-branded prepaid card programme. The
Net+ card was selected by an independent judging panel, comprising
representatives from the payment card organisations and payments
industry commentators and experts.
“The Net+ card has all the functionality of a normal debit card and
places Neovia at a considerable advantage over competitors offering
conventional prepaid cards,” Dan Starr, Neovia’s executive
vice-president, sales, marketing and product, told EPI.
He added that since its launch in October 2008 the Net+ card has
enjoyed a strong uptake, a welcome development after the grueling
ordeal Neovia went through in 2007.
In short, Neovia, then named Neteller, fell foul of the US Unlawful
Internet Gambling Enforcement Act, a highly controversial piece of
legislation outlawing with few exceptions online gambling by US
residents and effectively criminalising online gambling provided by
Neteller was taken to task by the US Attorney’s Office (USOA) for
allegedly having processed online gambling payments executed by
American users of its Neteller e-Wallet electronic money product.
To resolve the issue Neteller agreed to pay the USOA a settlement
of $136 million and took the decision to terminate all North
American operations which had generated about two-thirds of its
transaction volume. Neteller was renamed Neovia in October
“We have come through difficult times and still remain a strong and
resilient company,” Starr said. “We have had tremendous support
from our customers and merchants.”
Despite the significant drain on Neovia’s financial resources, it
reported that it had $82.3 million in cash on its balance sheet at
the end of 2008. Fee revenue excluding North America totalled $69.5
million in 2008, up 26 percent compared with 2007.
Neovia is clearly aiming to use the Net+ card as an important
driver of revenue which, given the card’s unique features, appears
to be well-founded optimism.
The card, which incorporates chip and PIN technology, is linked to
a Neteller e-wallet account and enables a cardholder to instantly
load funds from the e-wallet onto the card when required, explained
Starr. This real-time loading ability makes the card in all
respects the equivalent of a conventional debit card. Net+ has
another unique feature: it is also available in a virtual format
for use in online transactions.
Starr explained that in its virtual format the card, which is
downloaded by an online user, generates a unique, single-use 16
digit MasterCard number and the user’s identification when
executing an online purchase. Funds for the purchase are drawn from
the user’s Neteller e-wallet account.
The Net+ card represents the first solution in which an e-wallet
has been used to load both virtual and physical cards, said
Neovia’s ability to offer what is effectively a debit card is of
particular significance at a time when consumers are shying away
from credit cards.
In particular, Starr said, the card is attracting considerable
interest from German consumers who have traditionally shunned
credit but can experience difficulty in obtaining a suitable debit
card. Specifically, he explained, German consumers under the age of
25 are not eligible for a Visa or MasterCard card product.
Another competitive advantage enjoyed by Neovia is low cost to the
user. The Net+ card is free when used for POS or online payments
with fees only levied for foreign exchange and ATM
“We feel our fees are the best in the market,” said Starr. Neovia,
he added, derives its revenue from the e-wallet. Neovia reported
97,673 active-wallets at the end of 2008 and average fee revenue
for the year of $128 per e-wallet.
More strings to Neovia’s bow
Neovia’s reach in the payments market also extends to online
payments processing via its Netbanx gateway, which launched in 1996
to become the UK’s first card-not-present payments service
provider. Netbanx supports global online and offline payments with
real-time authorisation and offers an extensive range of payments
options including all major card brands and alternate payments such
as Neteller, PayPal, giropay, iDeal, Laser, Ukash and Poli.
Notably, Poli is a product of Australian-based Centricom, in which
Neovia acquired a 25 percent stake in 2007.
“Netbanx is a strong business and has a lot of great merchants,”
He added that Asia is “a huge market for us” with, in particular,
Netbanx being one of the few Western companies servicing Chinese
consumers foreign online purchases.
Being in the strong position of having its own alternate payments
product and a gateway a key part of Neovia’s strategy is also to
promote the use of Neteller cards and e-wallets and is being done
by means of marketing and loyalty programmes, said Starr. “We want
merchants to see the value of using our product combination.”
Strengthening Neovia’s value proposition for merchants, Starr
continued, is its fourth “low profile” security unit specialising
in know-your-customer and online consumer identification.
“We have a lot of skills is this area,” said Starr. He added that
the unit draws on major data bases and utilises techniques such as
geolocation and risk scoring of individual consumers.
Looking to enhance it capabilities Neovia will shortly begin fasing
in its new business platform Newteller, the product of a two-year
development programme and a considerable investment. Starr
explained that the decision to develop Newteller formed a key part
of Neovia’s refocusing strategy after exiting the North American
market and will facilitate rapid product enhancement and
development of more customised solutions.