Australia is accelerating towards becoming a cashless society. The Reserve Bank of Australia (RBA), national banks and financial experts have collectively foreshadowed that the country will be rid of cash in the next couple of years. However, this transition demands the preparedness of a robust digital payments infrastructure which is just one reason investors are backing fintech company Novatti Group (ASX: NOV) which processes billions of dollars worth of payments each year.
Novatti’s recent strategic initiatives, including portfolio optimisation and identification of external funding opportunities, are crucial steps towards its mid-2024 target of positive operating cash flow.
The Company is in the process of a strategic review to simplify its operations and identify external funding opportunities for the International Bank of Australia (IBOA) and AUDD Stablecoin.
Early outcomes of this strategic review have already manifested in tangible benefits. The divestment of Novatti’s stake in software company Reckon realised major savings of $4 million in future interest payments, while the investment also gained a net profit of $1.5 million over years.
Novatti CEO Mark Healy’s sights are now firmly set on cashing in on Australia’s acceleration away from cash usage through Novatti’s suite of digital payment solutions that enable businesses to accept digital payments, and customers to make them.
RMIT University finance expert Dr Angel Zhong expects that come 2025, Australia will effectively be a cashless society.
Novatti’s digital payment solutions cater to the evolving needs of consumers and businesses. The Company foresees its operations and processes to make it simpler for merchants and partners to engage multiple Novatti payment services, increasing opportunities for cross-selling and deeper customer engagement in FY24 and beyond.
Through Novatti, Australian and New Zealand businesses can send and collect funds globally without opening a foreign bank account with customers able to convert and pay in 35 currencies and receive more than 20 currencies globally.
Investors are closely monitoring Novatti’s financial trajectory, eagerly anticipating its move towards its positive operating cash flow target by mid-2024 after years of building and scaling their digital payments ecosystem.
In FY23, the Melbourne-based Company yielded its highest-ever recorded revenue of $39 million, a 20% increase from the previous year while Healy’s appointment brought substantial experience in upscaling international payments businesses.
The timing of Novatti’s positive operating cash flow aligns with the global surge in digital payments, driven by changing consumer preferences and the acceleration of cashless transactions.
As per the Reserve Bank of Australia, in 2022, cash payments accounted for a mere 13% of all payments as digital payments took charge. Novatti’s diversified product offerings – merchant services, cards, digital wallets, international payments, alternative payments and more are primed to facilitate Australia’s impending transition to a cashless society.
Alinda is a Business Reporter for The Sentiment
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