Friday, July 31, 2009

Bancnet, Megalink and the Point-of-Sale System

I met with Bancnet people this morning and got the answers to my question on exactly how many cardholders they have with the transfer of PNB. Prior to the transfer, both Bancnet and Megalink have roughly the same number of cardholders -- 8 million each. But with PNB transferring its 2 million customers, that will tip the scale into Bancnet's favor with it now having 10 million and Megalink being left with 6 million. Ouch!

During the same meeting, I met with the representative of GHL, which provides the point-of-sale (POS) terminals for Megalink. I learned that these guys (Bancnet, Megalink, credit card companies) do not really own the POS-es out in retails establishments. They are owned and operated by third party companies who just share in the bank commission for such electronic payments.

So if Bancnet, for example, were to charge 2% from the retail establishment, that amount will be shared among the 3rd party operator, Bancnet, and the depository bank of the retail establishment. Interesting business model. I always thought the devices and the network was owned by the banks themselves. Looks like they outsource it as well.

In a stroke of coincidence, I had a meeting with another company called Merchant Express in the afternoon. While the topic of the meeting was PayEasy, I found out that these guys also operate a POS network similar to GHL. In fact, they claim to be the bigger player (with about 14,000 POS terminals) in this market which is cornered by these two companies. And they also operate their own switch which is interconnected already to Bancnet, BPI and RCBC Bankard (but not Megalink). They also acquire merchant accounts in behalf of the card companies and provide the terminal and switching. Each POS terminal costs about P20k.

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