Equals Group launches FairFX B2C 'Linked Cards'

(EQLS ) has launched its new FairFX B2C 'Linked Cards' products, a new functionality that is expected to widen the use-case of the group’s FairFX B2C offering. 

Specifically, the technology-led international payments group said this new functionality will cover 'friends and family' wallet options and compete head on with 'pocket-money' cards.

Linked Cards represent ‘another step away’ from Equals’ origins as a travel money business with these capabilities forming part of the Group's technological roadmap outlined for 2021.

Equals said the development utilises functionality from its B2B applications to widen the features of its B2C products, highlighting the benefits of its established unified platform.

It said the new functionality, combined with the Group's Rewards programme, where customers can earn cash-back at many retailers, means that the FairFX B2C card programme is now “satisfying broader user requirements than simply a travel-money product.”

The latest Linked Card features allows a FairFX customer to share money with relatives or friends for use both in the UK and overseas. In addition, the FairFX card holder can also either opt in to using a shared balance Linked Card or a separate balance Linked Card. 

Equals has described the product as ‘ideal for teaching children basic money skills both in the UK and abroad’ given that the primary card holder can see transactions and balances of the Linked Cards and can pause their usage and reactivate at any time via the FairFX App.

It said the card’s features can be used for community support allowing family and friends to utilise a safe and secure method for helping those unable to purchase goods for themselves. In addition, and ‘as there is no monthly fee for the cards,’ the product significantly undercuts current leading cards in this space, the company told investors.

"The Linked Card features we have added to the B2C card product significantly widen the use-cases, accommodating our customers' needs in this era of travel difficulties.

The multi-currency nature of the cards also means that if a customer has bought currency for an overseas trip that has been cancelled, it is easy to switch it back into Sterling and then use these funds on a wider basis,” commented Ian Strafford Taylor, CEO of Equals Group.

The speed at which we have developed this functionality is testament to the platform we have assembled and showcases how we can utilise B2B developments for our B2C product lines and widen revenue streams from the same technology.

As we have also recently deployed a new customer facing B2B international payments platform (Equals Pay) and a new internal FX dealing system (Exchange) the tangible benefits of the technology investments we have made is now clear to see.  

Equals has utilised its strategic advantage of having already built a bank grade epayments platform - that being that it is easy and quick to add new services for SMEs and consumers.

Alongside recently deploying EqualsPay (B2B international payments) and a new internal FX dealing system (Exchange), Equals Money said today that it had also launched a simple “pocket money” type FairFX B2C ‘Linked Card” that allows ‘friends and family’ new wallet options and the ability to teach their children/colleagues how to spend and manage money. 

Shares in Equals Group have increased by nearly 20% since the start of 2021. The stock ticked up 4.30% this morning to 34.94p following the news of the launch. Looking ahead, Equals said it will continue to deploy new functionality across Equals ‘as the year unfolds.’ Equals Group expects to report its final results for FY2020 in early April 2021.

Reasons to Equals

EQUALS is an international payment services provider to the retail and corporate segments of the UK market, which combined is estimated to be worth £60bn a year. 

The cloud-based peer-to-peer payments platform is widely regarded in the industry as ‘best-in-class’ enabling personal and business customers to make low-cost multi-currency payments across a range of FX products, all via one integrated system. 

The FairFX platform facilitates payments either directly to Bank Accounts or at 30 million merchants and over 1 million ATM’s in a broad range of countries globally via Mobile apps, the Internet, SMS, wire transfer and Mastercard/VISA debit cards.  

Successful Acquisition Strategy

In recent weeks, Equals said it is ‘increasingly being approached by other international payments businesses’ and highlighted that it will continue to selectively acquire companies. 

Last month, Equals acquired certain assets from the international payments business of Effective FX (EFX) for a consideration of £1.6m, to be satisfied from existing cash resources.  

The ‘earnings enhancing acquisition’ primarily comprises the purchase of EFX's client book of more than 200 corporate clients, from a wide range of industries, which generated adjusted EBITDA of approximately £0.5 million for the 12-month period to 31 August 2020. 

Equals said the acquisition showed the continuing growth of the Group in B2B international payments via its three routes to market: ‘firstly, directly to its own customers; secondly, via its Equals connect B2B2B strategy; and thirdly, via the acquisition of compatible businesses.’

CEO, Ian Strafford-Taylor, said the acquisition highlighted Equals’ key strengths in the B2B international payments arena; its openness to M&A opportunities, its versatility in acquiring volumes and revenues, and the strength of its payment’s infrastructure and technology.

Positive Trading

In a trading statement released in January 2021, Equals said it had significantly reduced its cost base leading to both cash break-even and an increased cash position of £8 million. 

This comes in ‘comfortably ahead of market expectations’, it noted, with current market expectations for adjusted EBITDA averaging £0.55m with net cash averaging £6.75m FY20.

The figures stated in this previous announcement are unaudited and the Company told investors that it expects to report its audited financial statements in early April 2021.

Compelling Buy-Side Valuation

Recent research from PMH Capital has confirmed Equals is expected to grow at approximately 16% in FY21e, which is above the average growth rate of 12% for the Fintech and e-payments segment of the Technology sector.

Based on these assumptions, the current valuation for the company appears extremely compelling on a forward FY21e EV/Sales multiple of approximately 1.2x versus 6.9x for its peers.

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