Planet Payment Takes a Hit to Bulk up on Technology

Planet Payment’s financial performance declined in the past year due in part to investments in new technology, which the company expects will improve acquirers’ ability to add services directly to point of sale systems, says CEO Philip Beck.

“In the future it’s going to be more and more important for acquirers to have access to additional value-added services at the point of sale. The trick is getting those applications to the point of sale,” Beck said in an interview March 19. 

Planet Payment’s net revenue in the fourth quarter decreased about 4% to $11.9 million, compared to $12.3 million in the fourth quarter of 2011. Net loss for the period was $0.1 million, compared to net income of $1.8 million in the fourth quarter of 2011. For the full year, the company’s net loss was $4.5 million, compared to net income of $2.4 million for fiscal 2011.

The company attributed the declining numbers to deferred IPO costs of $2.6 million and the $1.4 million expense of acquiring Branded Payment Solutions.

Planet Payment paid about $4 million for Branded Payment Systems (BPS), a five-year old  Dublin-based company that  provides services such as mobile top-up, bill-pay, vouchers and support of open and closed loop card programs capable of being distributed via POS devices, kiosks, terminals and mobile devices. BPS also operated a prepaid debit card program in Europe that targets shopping malls, and has developed Near Field Communication technology that can be installed without merchant hardware upgrades.

Prior to the acquisition, Planet Payment did not provide applications on the point of sale. The addition of BPS allows Planet Payment to develop technology that can sit alongside and communicate with the existing point of sale hardware.

“We can added value at the point of sale, not just integrating tech with the point of sale,” Beck says of the BPS acquisition, one of a number of tech enhancements the company has made during the past year.

Planet Payment is under pressure from larger processors and card networks that are also enhancing POS capabilities, says Richard Crone, a payments consultant.

“They have to move rapidly,” Crone says. “The payments industry is complex. There are a lot of mouths to feed along the path of serving merchants, so many companies vertically integrate over time.”

During 2012 and early 2013, Planet Payments entered into multi-currency processing agreements with Taishin Bank in Taiwan, Masreq in UAE and with Payment Alliance International for ATMs in the U.S. It also signed a strategic processing relationship with Visa and launched ATM services with two banks in Myanmar.

“There’s a tremendous amount of growth in developing countries. It’s not about Brazil, Indonesia and Southeast Asia,” Beck says.

Planet Payment also recently partnered with Union Pay to expand online card acceptance in the U.S. and Canada, as well as online access to in UPOP, Union Pay’s processing and authentication service. 

For 2013, Planet Payment projects net revenue of $52.2 million to $55 million; and net income of $2.6 million to $4.8 million.  The company also reports adding 11 customers in nine countries and increasing its merchant base by 50% during 2012.