Peppermint Innovation looking sweet with recent MASS-SPECC agreement and new Philippine finance certification

The share price of specialist fintech provider Peppermint Innovation (ASX: PIL) has continued to trend upwards on the back of its recent confirmation of a significantly expanded agreement with MASS-SPECC Cooperative Development Centre and the subsequent receipt of key Philippine financing certification.

Peppermint signed an original 5-year partnership agreement with MASS-SPECC, the oldest and largest regional co-operative federation in the Philippines, in October 2022.

Under Phase 1 of the strategic partnership agreement, Peppermint will allow MASS-SPECC’s Pinoy Coop Mobile App users to complete ‘cash-in’ and ‘cash-out’ transactions, transfer funds directly between the Pinoy Coop Mobile wallet and Pinoy Coop ATM accounts, as well as access other financial services such as bill payment, eLoad for mobile phones or transfer of funds to another bank account, or electronic money issuer (EMI) wallet via InstaPay and PESONet.

A Phase 2 agreement will see an increased collaboration between Peppermint and MASS-SPECC to potentially further integrate other Bizmoto services including loan application, monitoring of loan application, co-op service logistics/appointment, QR code PH functionality, domestic and international remittance, and e-wallet service connection for other co-operative federations.

It also provides for both parties to discuss possible collaboration around other proprietary Bizmoto services such as BizmoLoan, BizmoTinda and BizmoGo.

Back and front-end service offering

Peppermint’s managing director and chief executive officer Chris Kain told Small Caps that the recent upgraded 5-year strategic partnership agreement with MASS-SPECC will see Peppermint help deliver services for both the back and front-end development of the Pinoy Coop Mobile App.

“In 2022 we signed an agreement to deliver the back end of the App. Peppermint had the EMI license, we had the license platform, we have been progressing our service delivery.”

“At the same time, MASS-SPECC had engaged with a third-party technical provider to build the front end of the App.”

“Unfortunately, that firm, after a number of years, did not deliver and in the end MASS-SPECC was forced to terminate the contract. We stepped in and offered to take over the whole delivery, both back end and front end, which they saw made sense.”

End-to-end service provision

Under the new agreement Peppermint will deliver MASS-SPECC’s Pinoy Coop Mobile App by providing end-to-end services.

The ‘Pinoy Coop Mobile’ will be tagged “Built on Bizmoto I Powered by Peppermint.”

Mr Kain said the economics of the MASS-SPECC partnership are very compelling for Peppermint, with the company set to earn on average $0.10 for every completed transaction via the Pinoy Coop Mobile App.

“This is in addition to revenue the company will earn from delivering the app under licence, its full deployment and ongoing service and maintenance for up to five years.”

Massive local membership

A major contributor to the Philippines economy, the highly influential MASS-SPECC continues to grow its services to 1.6 million co-operative and individual members.

Up until August of this year, it had processed cash withdrawals, bills payment and fund transfer transactions of around $390 million in value.

The agreement between the two parties will not only benefit MASS-SPECC members and Peppermint, it will also assist the Philippines government in progressing its plans to modernise the country’s day-to-day financial activities.

With the country still predominantly operating as a cash society, the central bank of the Philippines and the government are aiming to accelerate a move to significantly increase the number of daily digital transactions.

Growing move to digital transactions

“MASS-SPECC has received some directives and funding from the central bank and the government to help its large membership to gravitate towards digital transactions.”

“I believe digital transactions currently make up close to 30% of all transactions and the central bank’s target is to see that grow to 70% or more and MASS-SPECC and our App will play a role in that.”

Mr Kain said Peppermint and MASS-SPECC are continuing discussions about their vision and strategic plan for the co-ops and their members, and to jointly investigate how his company can collaborate to deliver their vision utilising its EMI licence and established mobile app fintech platform.

“Peppermint’s strategy is sharply focused on revenue generation from two key ‘silos’ – our bizmoLoan operations, as well as licence and transaction fees earned from our EMI wallet services and mobile app platform ‘white-label’ solution for third parties.”

“The MASS-SPECC agreement represents a significant milestone and is a key component in Peppermint’s strategic, dual revenue generating model, in terms of revenue generation from EMI Wallet services and a mobile app white label solution.”

Central Bank certification

In late September Peppermint achieved another milestone when its 100% owned subsidiary, Peppermint Bizmoto Inc. (PBI), was issued two important bank certifications by the central bank of the Philippines.

PBI now holds a certificate of registration (COR) as operator of payment system (OPS) and a certificate of eligibility (COE) for membership in the Philippines Payments Management Inc (PPMI) allowing it to have direct connection to the PESONet and InstaPay Automated Clearing Houses (ACH) as a sending and receiving participant under the National Retail Payment System (NRPS) of the Philippines.

The critical certification provides for PBI to be listed as an ‘approved and supervised’ operator payment systems throughout the Philippines, providing a safe, efficient and reliable payment and settlement system for its bizmoto users.

It also allows PBI to operate its payments platform outside of its closed loop of bizmoto users and ensures that its role as a payment service provider to small banks, organisations, transportation services and any other community group delivers quality payment services via bizmoto.

Getting full value from EMI licence

Mr Kain said the certification of Peppermint’s operations is an important milestone in the company’s strategy to fully leverage its EMI licence and use it to drive revenue growth via increased transactions across the bizmoto platform.

“While we have previously offered PESONet and InstaPay via bizmoto, this has been through a third- party relationship,” he said.

“We will now improve our margins and revenue profile for these types of transaction by having direct membership to the PPMI and therefore direct connection to the ACH for PESONet and InstaPay.”

“Peppermint has a commercially proven, deployed and growing mobile-App based ecosystem in the Philippines which is underpinned by a finance company licence and an EMI licence.”