Safecharge Share Discussion Threads

[johnv] 11/9/2018 11:12

No idea. A few nervous sellers before the results on Thursday. The update was only 8 weeks ago!

[trentendboy] 10/9/2018 13:09

So, knowledgeable readers on this board. What are the SCH implications of this post?

Now, it could well be positive as more people have to use wallets but does this increase chargeback risks?


Germany: law and payments – landed in it…
A court ruling in Munich last week regarding online gaming has perhaps not got the attention it deserves. Landesbank Berlin attempted to claim against a customer who refused to pay a gambling debt incurred through his Visa card, claiming he did not owe the money since the underlying activity was illegal under German law. It was clear that Landesbank Berlin was aware that the transaction was gambling related as it was 7995 coded and incurred a sector-specific premium charge (significantly, lumping betting, gaming and lottery together). The court found in favour of the customer and Landesbank Berlin is not appealing, meaning this decision enters German case law.

This is potentially a very significant ruling on three levels, in our view. First, is the fairly obvious and immediate risk of other German customers jumping on the bandwagon and starting a potentially huge chargeback cost (which could easily run into high single digit % sales). Second, banks will be very wary of this ruling and even more are likely now to block ‘visible’; German gaming (or all gambling) customers: negatively impacting customer experience (and hitting successful transaction rates); driving up the cost of processing with alternative methods (eg, wallets); and/or increasing the use (fully known or otherwise) of higher risk ‘workarounds’ (such as the old favourite of “miss-coding” - effectively lying to Visa-Mastercard about the nature of the transaction). Both of these impacts could substantially increase the costs and risks of servicing German customers (with betting and even lottery transactions potentially caught in the confusion), while also materially reducing customer appeal - especially to the mass market. However, they are both localised to Germany exposure.

The third impact is perhaps the most serious. The first two are standard risks of grey market operations and any operators or suppliers caught up in the issues should not be all that surprised (if they are it arguably raises governance / competence questions). The broader risk is that the decision almost certainly causes another reason (or excuse) for banks to examine their online gambling risk exposure more generally; typically not splitting hairs about “grey” or “regulatedR21; (especially if the entity is offshore): the fewer mainstream banking / processing options available to operators and customers, the less developed a mass market can be; the higher the risks within the supply chain (legal and commercial), and; self-fulfilling, the less remunerative a focus on compliance becomes. Critically, this risk is global and contagious, not localised (online gambling related payments issues are likely to be a key problem in the US, for example).

While grey market banking and processing issues continue to plague the online sector, and especially while a critical mass of questionable “workarounds” are commonplace, the sector’s ability to safely transition into a mainstream consumer activity is significantly impaired, in our view. We believe that this is one of the most significant strategic risks facing the online gambling sector - especially as it transitions from .com to domestically licensed.

[davr0s] 06/9/2018 19:04

I've trailed out now as chart weakened and I don't want gap risk next week especially in current market conditions

[johnv] 06/9/2018 12:46

Interim results out next Thursday

[trentendboy] 31/8/2018 13:43

I suspect it will get PTEC to sort itself out better and hence grow more quickly and hence funnel volumes through SCH

Market seems to think otherwise though.

Might be that they decide to bring SCH in house or sell of the remaining share...

[noujay] 31/8/2018 11:45

Trent why do you see that as positive for here? The activist will likely push to make disposals - therefore the less companies playtech owns the less easy plug ins this one has?Or you think playtech will simply be better run and more volume will go through safecharge?

[trentendboy] 31/8/2018 08:39

The activist investor action over at PTEC will have implicationsPositively imoHmmm, looking tempting at this price

[runthejoules] 29/8/2018 22:01

Certainly that's what Naked Trader thinks. I had hoped it'd happen by now though - could have had this in vrs, sos, opti, any number of things I also hold!

[trentendboy] 21/8/2018 21:50

Yes, SCH is on the market I suspect. Would be a large premium imo

[vegpatch] 21/8/2018 15:10

Agreed re margins on “interesting” lines. WorldPay have made £££; mixing low margin (low chargeback) high volume business eg Tesco’s with say “dating” where it’s v high margin but high chargebacks

[trentendboy] 21/8/2018 14:20

Good post - thanks and yes, does link to reshaping the business.

Still, margins to less salubrious business can still be very high and allow them to use the profits to make purchases elsewhere.

Going totally white is good but profits are profits after all and is got them where they are today

[vegpatch] 21/8/2018 11:13

I have met management a few times and they dont process Chinese business. They have been focusing on improving the quality of the revenues and ditching more dodgy revenue streams (specifically those markets where gaming is illegal and other "interesting" online payment businesses). Yes PTEC is a client but i dont think they process much for PTEC, its more an IT support role. Thats why there was a mini profit warning 18 months ago as management made the decision to forego higher margin (less salubrious) business and concentrate on regulated markets. see this presentation, pg14. Its decribed as "reshape of customer base"

hxxp://investors.safecharge.com/~/media/Files/S/Safecharge-IR/reports-and-presentations/2017-interim-results-presentation.pdf?pdfdata=1

[rivaldo] 08/8/2018 10:07

There was a brief update as follows in this week's SCSW which read rather nicely:

"As anticipated in my May update, the shares did break sharply higher supported by the strong trading momentum, which has continued into H1 driven by new customer wins. Meanwhile, Safecharge said it continues to invest in new sales people. Berenberg’s eps forecast for this year is 21.4 cents. Written about at 247.5p in April ‘15; keep holding."

[trentendboy] 19/7/2018 15:00

True but ptec didn't mention it either and then warnedIt is more factual on whether SCH process the Chinese paymentsMight need to ask SCH themselves Should be public info or results should have a breakdown by territory

[starpukka] 19/7/2018 12:37

This is one of my core holdings. There is no mention of problematic Chinese exposure in the trading update of the 13th. In fact, no negativity at all. I expect this to rise further when the summer malaise is over.

[trentendboy] 19/7/2018 11:29

This is massive news not hit radarsGetting these top class clients gives SCH a large credibility boostStill cheap with big dividendsHmmmmPtec have their problems. Question is what is SCH exposure to China. Anyone know?

[rivaldo] 18/7/2018 14:49

Great news today - PTC acquired Snaitech, and now.....



"Snaitech, one of Italy’s largest Gaming Operators, chooses SafeCharge
July 18, 2018

Leading payment technology firm selected in order to improve players’ gaming experience

SafeCharge, a leading payment technology company, today announced that Snaitech, one of the largest Italian gaming operators, has migrated its entire end-to-end payment processing infrastructure to the SafeCharge Payments Engine. Snaitech has selected SafeCharge to improve the user experience for millions of its players.

Snaitech is leader in betting retail and among the main operators of gaming machines in the Italian market, offering a vast range of gaming and entertaining services online and at the point of sale, including online and mobile sports and horse racing betting, poker cash and poker tournament, bingo, lotteries and number games. By migrating to the SafeCharge Payments Engine, the gaming operator will also benefit from the SafeCharge Cashier, a fully-optimised payment pages enabling secure deposit and withdrawal of funds in a fully-compliant manner. This new technology allows players to seamlessly place bets and collect winnings to their bank accounts using the payment method of their choice across mobile and web devices.

“We identified SafeCharge as the ideal payment partner to meet the expectations of players demanding a seamless deposit and withdrawal journey for their online and mobile gaming experience,” said Fabio Schiavolin, Snaitech CEO. “We can now cater for a very diverse player base with a variety of preferred payment methods. SafeCharge is a leading payments technology company. The reliability and safety guarantee in payment processing will allow us to offer our customers an increasingly safe and simple user experience”.

Using SafeCharge, Snaitech benefits from a direct connection to VISA and Mastercard schemes and a variety of Italy’s most popular e-Wallets including PayPal, Skrill and Neteller.

“We are excited to be working with Snaitech to enhance the gaming experience for players in Italy,” stated Yuval Ziv, COO, SafeCharge. “The fact that Snaitech has selected us continues to demonstrate how SafeCharge is the best fit for merchants operating in demanding industries with complex regulatory requirements. We are confident that leveraging our smart payments technology and expertise will greatly contribute to Snaitech’s continued success.”

[rivaldo] 18/7/2018 10:21

Excellent H1 trading update whilst I was on hols - and the "strong sales pipeline" and confidence for the full year suggests no issues deriving from PTC/China:

"Trading in the first half of the year has been strong with good momentum in revenues and transaction processing volumes in H1, driven by new customer wins.

The Group continues to invest in new sales people and additional marketing to bring in new customers and generate a greater awareness of SafeCharge's capabilities outside our traditional markets and verticals.

With robust current trading and strong sales pipeline, the Board remains confident that the outcome for the year will be in line with market expectations.

The Company expects to announce its interim results for the period ending 30 June 2018 on 13 September 2018."

[trentendboy] 16/7/2018 08:10

Possible - if revenues decline in China all go through the SCH books

Hard to pinpoint

[nod] 16/7/2018 07:54

Trent, I thought SCH would be impacted by the loss of business at PTEC.

[quant_investor] 13/7/2018 20:35

Hi Igoe I’m not sure your observations are consistent with the market as a whole.

The median P/E for the FTSE 100 is 16.3 compared to a whopping 26.1 for the Aim 100

Likewise the P/E for the FTSE all share index is 15.2 vs 19.3 for the Aim All Share Index.

If you look at the charts most of the major UK indicids are close to all time highs.

However I don’t doubt there are will be some low P/E stocks that are falling and that some value based strategies are under-performing the market.

Given the overall state of play I think I’ll leave the shutters where they are for now

[trentendboy] 13/7/2018 20:17

If in-line it means divi is covered and is generous remember.Impressive yield on this share remember

[igoe104] 13/7/2018 14:16

Yep, sold at a nice premium. with the cash-pot divi out.

[runthejoules] 13/7/2018 12:47

Igoe you mean sold rather than taken
Private I presume?