Rêv Worldwide - WikiLeaks ww south africa.pdf · Telcel, Movistar Yap IPKO, Orange Telstra, Vodafone ... CMO Rêv Worldwide & President Rêv North America Co-founder NetSpend Corporation

Rêv WorldwideGeneral Overview

IntroductionRêv Worldwide (Rêv) is a US-headquartered company majority owned by MPOWER Ventures, LP, a socially committed venture fund that invests in innovative financial service companies benefitting the under-served. Comprised of four wholly owned regional subsidiaries, Rêv is dedicated to increasing both the diversity and reach of financial products and services for underserved consumers worldwide.

Market OpportunityMore than fifty percent of the world’s population lacks access to relevant, affordable financial prod-ucts and services. These individuals exist in a cash economy that not only leaves them vulnerable and unable to leverage their earnings but also has a much higher cost of doing business for simple payments and transactions. Historically it has been nearly impossible to reach much of this population, as the cost of expanding bank branches was prohibitively high relative to potential profits. But, two important global changes have created an opportunity to serve this market in ways that were impossible before.

The first is the exponential penetration of mobile phones. Currently, more than 4 billion individuals own a mobile phone, and of those more than 2.5 billion lack a basic banking account. These individuals are not the “poorest of the poor”; instead, they are in the “low and moderate income” categories and

generate a very small amount of disposable income that might be used, for example, for a mobile phone top-up. These consumers exist in the cash economy leveraging prepaid services, money orders, wire transfers, and remittances to conduct their financial lives.

Second, the global rise of “branchless banking” in which customers are able to conduct basic financial transactions through retail and other stores has opened up a network that makes it cost-effective to reach even the most remote consumers. Recognizing the limited scalability of traditional banking networks, governments have passed legislation allowing financial service providers to partner with existing retail networks, like grocery stores, mobile phone kiosks, and pharmacies, to provide basic financial services to the underserved. In addition, the worldwide penetration of ATMs has also decentral-ized electronic payments infrastructure.

Rêv is capitalizing on these two global trends to create a financial services network of unparalleled coverage at minimal cost.

Currently, Rêv is operating in four regions: Rêv Asia Pacific, Rêv Europe, Rêv Latin America, and Rêv North America. The table below summarizes the size of the opportunity in each region and highlights countries where Rêv is currently active:

Table 1: Worldwide Key Markets

Asia-Pacific Latin America Europe North America

Total Population 3.88 billion 560 million 730 million 330 million

Underserved Population

750 million 300 million 200 million 45 million

No. of mobile phone users

2.25 billion 400 million 600 million 290 million

Active countries India, Vietnam, Australia, NZ

México, Brazil Romania, Kosovo, Spain, France, UK

United States

Overview of Rêv WorldwideRêv powers an integrated branchless banking network that currently supports low-cost POS (point-of-sale) devices and business solutions to mobile merchants and SMEs, prepaid card payments, money transfers, mobile payments, bill payments, and remittances. This is the world’s first multi-currency, multi-lingual financial services processing platform linking banks, telecommunication companies, and retail stores to underserved consumers worldwide.

In addition, Rêv is also building a global network of retail partners through which it connects directly to consumers. In more developed countries, this network includes large grocery chains, mobile phone stores, government agencies, and other merchants. In less developed countries, Rêv partners with “mom and pop” grocery and convenience stores, distributor networks, vendor kiosks, and “micro merchants” to connect customers to the payment platform.

1 ©2011 RÊV WORLDWIDE, INC. CONFIDENTIAL INFORMATION, NOT FOR DISTRIBUTION

Table 3: Key Products by Region

Product RêvNorth America RêvLatin America RêvEurope RêvAsia Pacific

Prepaid Debit GPR, Gift, V-CardGPR, Gift, V-Card, Closed Loop

GPR, Gift, V-Card, Travel

GPR, Gift, V-Card, Closed Loop, Travel

Mobile Payments Yap, RÊV COIN Yap, RÊV COIN Yap, RÊV COIN Yap, RÊV COIN

International Remittances

Yap Yap Yap Yap

Mobile Top-Up YapYap Telcel, Movistar

Yap IPKO, Orange

Telstra, Vodafone

Direct Deposit Yes, into GPR, Savings Feature

Yes, into GPR Yes, into GPR Yes, into GPR

COIN Q4 2011 Q4 2011 Q1 2012 Q1 2012

Table 2: RêvUSA Product Pricing vs. National Average

Sources: Financial Service Centers of America, Inter American Development Bank, FDIC, MPOWER Labs.

ProductAnnual US Industry Volume

Monthly Fee – National Average Monthly Fee - Rev % Savings

Prepaid Debit $15+ billion $12 $5 60%

Check Cashing $80 billion $16 $3 80%

International Remittances

$50+ billion $15 $5 - $7.50 50%

Bill payment $5-10 billion $1 $0.50 50%

COIN $200 billion 3.75%+ fees <2.75% >30%

The combination of an integrated technology platform with a diverse retail network allows Rêv to provide a port-folio of products to a large consumer base for a fraction of current costs. For example, in the United States where the payments industry is the most competitive, Rêv is able to undercut existing prices by more than 50% (see below):

Prepaid and Mobile Wallet ServicesAt the core of the Rêv product offering is the interna-tional payments platform. This multi-language, multi-currency platform will be connected to all the major regional payment networks. To date, Rêv has already secured global connections with MasterCard and Visa International and regional connections with PROSA, E-Global, Tarjetas del Noreste, and Green Dot.

Though the technology allows for all products to be offered in all regions, market and regulatory conditions affect the variety and timing of when products can be made available.

RÊV COIN / Acquiring Services In an effort to support micro-merchants and mobile SMEs, RÊV has developed the RÊV COIN, a mobile POS device that can be used to accept card present

payments via a merchant’s mobile device. Targeted merchants include taxi drivers, landscapers, house-keepers, contractors, and other merchants that typi-cally do not have access to card payment processing due to the high costs of POS devices, or cumbersome merchant registration protocols.

In addition to the front-end processing services, RÊV provides program management to its sponsor issuing and acquiring banks. These services include merchant registration, underwriting, risk management, marketing, fulfillment, customer service and regula-tory compliance with all applicable laws.

For its initial COIN launch, RÊV will pilot programs in the United States and Mexico, followed by Vietnam and India. A second generation device with EMV chip and PIN functionality will be deployed early in 2012.


In addition to its core financial products and services, Rêv has also vertically integrated other key auxiliary services, such as regulatory review and compliance, risk, data analysis, marketing, and customer service.

Progress to Date and Immediate GrowthRêv was launched in 2009 and currently has products in market in each region. The company continues to add financial and retail distribution partners in existing markets and to identify and secure new relationships for future markets.

The table below summarizes the current markets for each of the regional Rêv companies:

Table 4: Select Card Programs by Region

Country Market Size Bank Partners Distribution

Rêv North America

USA Target Pop.:Annual GDV:Revenue Opp.:

40 M$80 B$2 B

INB Online, Retail Financial Service Stores

Rêv Latin America

Mexico Target Pop.:Annual GDV:Revenue Opp.:

20 M$10 B$200 M

Banorte, Banco Interacciones

Convenience Stores, Grocery, Paint Stores, Pharmacies, Micro-retail-ers, Utility Companies, State and Federal Gov’t.

RêvEurope Romania Target Pop.:Annual GDV:Revenue Opp.:

2.5 M$2 B$50 M

Raiffeisen Bank Bank Branches, Discount Stores, Telecom Stores

Kosovo Target Pop.:Annual GDV:Revenue Opp.:

500,000$250 M$10 M

Raiffeisen Bank Telecom Stores

Rêv Asia Pacific

Australia Target Pop.:Annual GDV:Revenue Opp.:

250,000$250 M$25 M

Heritage Bank Post Office, Grocery Convenience Stores

Following a detailed expansion program based on market opportunity, regulatory environment, and quality of partnerships, Rêv is also aggressively pursuing growth through the following new programs:

Table 5: 2011 Card and COIN Programs

Country Planned Rollout Bank Partners Distribution / Reload Network

Rêv Latin America

Brazil Currently rolling out

Banco Panamericano

Consumer Finance Stores, Telecom Stores

Rêv Asia Pacific

Vietnam

India

NZ

Currently rolling out

Techcom Bank

Ratnakar Bank

BNZ

Post Office, Grocery, Convenience Stores

Shopping Malls

Travel Industry

RêvEurope Spain Currently rolling out

Caja Cantabria Telecom / Mobile Top Up Network

France Q3 2011 AFL Telecom / Mobile Top Up Network

UK Currently rolling out

Invik Bank Telecom / Mobile Top Up Network


In addition to expanding the geographic footprint, the company continues to make infrastructure enhancements that reduce the overall operating costs and increase the speed and efficiency of execution. Rêv s lead time for entering into new countries has been consistently reduced as efficiencies are gained and existing infrastructure is leveraged. For example, whereas it once took approxi-mately nine to twelve months to roll out a new country, Rêv is now able to do so in as little as eight weeks. Similarly, as transaction volume increases, unit costs become smaller. The table to the right illustrates the significant reduction in transaction costs for Rêv over the past 24 months.

Industry PlayerGeographic Coverage

Mobile/Prepaid Integrated Platform

Focus on Underserved markets

Focus on Branch-less Banking / Retail Reload Networks

Rêv Worldwide Pure Processors

Fidelity

First Data

TSYS

Program Managers

Posta Italiana NetSpend NovoPayments APS AccountNow Mobile Payments Processors

G-Cash Fundamo/Visa

M-PESA

Obopay PayPal

Retail Networks

Euronet Blackhawk Green Dot Incomm

Table 6: Global Competitive Landscape

Key: Limited or not available Partial Extensive

Table 6: Certified Countries and Operating Efficiency

Competitive landscapeThe global payments industry has very diverse players. While there are large multi-national corporations that have been in business for decades, there also are many new entrants that have devel-oped innovative technology or business models.

There are four main differentiators in this space: geographic coverage, integra-tion of mobile payments, utilization of branchless banking, and/or a focus on under-served markets. Rêv is the first global company that has successfully combined all four differentiators into one payments solution. See a detailed list of Rev’s primary competitors and their key strengths, right:


Key: # of countries certified Cost per transaction

Distribution / Strategic Partnership

OpportunitiesRêv is currently seeking strategic distribution partners to increase the reach of its global branchless network. The primary role of our distribution partners is the sale of RÊV COINs, prepaid debit cards, and the acceptance of reloads from our end consumers.

Leadership TeamRêv Worldwide is supported by a staff of over 175 employees distributed across the geographies currently served by the company. This team is led by an international team of payments experts serving as senior executives or in a board advisory role. Together, the executive team has launched Rêv from the ground up, including the securing of all major banking and retail agree-ments, successful navigation of the regional regulatory land-scape, assembling of high-performing operational teams, and ongoing development of global strategy. Each of the regional CEO’s possesses in-depth local knowledge, leading to a strong competitive advantage for the company.

Executive ManagementRoy SosaChairman and CEO Rêv WorldwideCo-founder NetSpend Corporation. Pioneered prepaid debit card industry. Co-Chair of Council for Financial Empowerment at the World Economic Forum. Board Member, ACCION International.

Bertrand SosaCMO Rêv Worldwide & President Rêv North AmericaCo-founder NetSpend Corporation. Pioneered prepaid debit card industry.

John MitchellEVP Global Business Development Rêv WW & CEO RêvEuropeMore than 12 years in the prepaid industry. Senior executive roles at NetSpend Corporation, Dell, Gateway.

Jesse WeissEVP, General CounselPartner at Akin, Gump, Strauss, Hauer & Feld, LLPPartner at Greenberg Traurig, LLP

Rene GonzalezCOO Rêv North AmericaMore than 20 years in payments experience, including senior executive positions at NetSpend Corporation, Dell, Inc., Continental Airlines, and Household Financial.

Simon HiltonGM Rêv Australia / NZMore than 10 years payments experience. Founded SCX(Australia), now wholly owned by Rev WorldWide.

Daniel ResendizCEO Rêv MexicoMore than 20 years payments experience. Senior Partner, McKinsey & Co.

Frances PinedoVP Risk ManagementMore than 17 years in payments experience. Senior executive roles at Household Financial, USAA, NetSpend Corporation.

Board Directors & Full-Time AdvisorsJohn Mack (Director), Chairman, Morgan StanleyAnne Cobb (Director), Former President of Visa CEMEA regionEmilio Lozoya (Director), Fmr. Director, World Economic ForumRad Weaver (Director), CEO McCombs EnterprisesMike Maples (Advisor), General Partner, Floodgate Ventures



Expansion of Regional Rêv programs

Rêv Worldwide proposes to STRATFOR an alliance for the expansion of its payments platform into countries where STRATFOR can act as an agent that would catalyze the sourcing of and participation of local partners that will assist in the development and deployment of RÊV Card and RÊV COIN offerings under a Regional Rêv umbrella focused on the target country. Together, both entities would develop the corresponding market with the vision of financial inclusion. This partnership represents very attractive complementary elements. At the target country level, STRATFOR and its Local Partners will contribute extensive business knowledge, access to key retail partners and relevant experience in the region. On the other hand, Rêv would offer a turn-key technology solution for prepaid markets, access to a global pay-ments network, relevant industry experience and a proven track record.

Rêv South Africa: Competitive AdvantageThe proposed alliance, bundled under Rêv South Africa would be in a strong position vis-à-vis its direct competitors for the following reasons:• Only player in the market offering end-to-end turn-key payments solution for government that can address both end consumers and SMEs.• Only specialized prepaid processor with a global presence, particularly in key remittance countries: UK, US, Australia.• Only prepaid player with both an issuing and acquiring solution.• Team of highly experienced executives, with a profound knowledge of the financial and prepaid ecosystems in the target country.• Strong ties to high-level staff at national government, executives in financial institutions and retailers across South Africa.

Prepaid cards • Reloadable/non-reloadable (included, but not limited to Gift, General Purpose and Payroll, and Government Programs)• Open/closed loop• Instant issue/permanent

Mobile payments and services• Mobile notifications: Real time text-message notifications for transaction and balance updates • Purchases: Catalogue-based purchases through mobile phones• Transfers: Transfer of funds between cardholders using mobile phones• Remittances: Transfer of funds across borders using mobile phones, leveraging Rêv programs in North America, Europe and Australia.• Credit acceptance: Use of mobile phones as a POS terminal• Branchless Banking: Use COIN for the sale and reload of prepaid cards• Bill Payment: Ability to pay services directly from the phone

Remittances Rêv has alliances with financial institutions and other organizations in order to support low cost and multi-functional remittance programs. The distribution network in India would include high traffic retail and bank branches locations targeted to the natural customer base for this offering. Our person-to-person (P2P) model that relies on the use of mo-bile technology creates a great advantage for end users and poses an important threat for “traditional” players such as Western Union that employ the “agent to agent” model.

Bill payment The integrated and flexible electronic billing and payment solution enables customers to pay their household bills online or directly at some of our distributions and reload centers, using their prepaid debit card.

Savings Programs Cardholders will have the option to transfer part of the funds loaded on the prepaid card to a separate interest earning account. Rêv currently runs similar savings programs in other geographies, often completely free to the customer, with no minimum initial or maintenance balance--funds can be transferred to and from the debit card account via website or phone.

Person-to -Person transfers Account-to-account transfers are instant and can be done online, via the phone or through live customer service support or IVR.

Payroll and Government ProgramsThe Rêv platform can power payroll, government benefits, and cash transfers related to development programs.


Rêv South Africa: Main Elements of the Business

Based on Rêv´s experience, the following elements are the most relevant ones as we create a partnership for the development of the South African market.

Value Proposition The prepaid debit card is, for the customer, an empowering tool, and for companies, a profitable product. Beyond that, it is the “point of entry” to more sophisticated financial tools that can lead to long-term financial stability and, thus, em-powerment of the customer; additionally, our service offering provides up and cross sell opportunities for partner banks as well as incremental, recurring and profitable revenue streams for our distribution network partners.

Rêv South Africa would offer simple, affordable products that offer underserved South Africans the security and conve-nience they need in order to carry out their financial transactions more efficiently. For the South African government, our programs will deliver a reduced cost structure for its cash transfers and related development programs, increased transparency and the opportunity to bring millions into the formal economy.

Network Capabilities Rêv´s processing platform has direct connections with the main payments networks Visa and MasterCard. Further, we currently support the following network functionality: magstripe, EMV (chip and PIN), NFC and virtual cards.

Card Production and Fulfillment Rêv has secured contracts with the major providers of card production and fulfillment services. Relying on our technology we have the capacity to manage all aspects of card production and fulfillment, including inventory management and tracking of plastics.

Customer Service Rêv´s customer service platform offers the following customer service interfaces:• Live agent call center• IVR system• Mobile notifications: SMS text messaging through mobile phones• Web based applications• In-store support

Marketing, Data Strategy and CRM With the support of Rêv Worldwide, Rêv India would have an internal marketing department, responsible for the design and creation of complete marketing strategies that include the definition of our value proposition, the identification of our target segment´s needs and the use of advanced tools and systems to analyze customer data and transaction infor-mation in order to tailor products and services to better meet our customer´s needs. We use an insight based, fact driven approach in order to design our marketing strategies.

Quality Assurance Rêv’s quality management system complies with all applicable laws, including rules and by-laws of the bank card asso-ciations. Further review would be required to adapt to the local requirements.

Compliance Rêv South Africa would have a full-time dedicated team in charge of legal and regulatory compliance management. This team would report to the local and global CEOs and the corresponding board(s) of directors. The compliance department is organized in a manner consistent with banking and other relevant standards and regulations. Rêv Worldwide would support Rêv South Africa in the establishment of this department.

Risk Management Solutions As opposed to traditional financial institutions, Rêv’s platform does not have legacy systems or policies and it has been designed specifically for prepaid debit and mobile payments, while being totally focused on serving the unbanked and underserved markets. Further, we provide full indemnification to our issuing partners for all fraud losses related to our card programs.


Partnership Description

We propose the following framework for materializing this partnership. The first component addresses the short and mid-term contributions by STRATFOR, and the second considers the long-term relationship with the corresponding equity participation. Both components are described further below.

Development Phase

This phase is defined as the period commencing with the current exploratory conversation, covering the market analysis, feasibility study, product localization and key partner development. The phase will end with introduction of the Card and/or COIN products into the South African market.

Roles- STRATFOR, acts as an Introductory Agent, delivering to the partnership a detailed market readiness assessment, introduction to key decision makers at each of the following: government, distribution partners, mobile network operators, and issuing bank candidates. - Rêv Worldwide acts as the Program Manager and Strategic Processor of the project:

Rêv provides general management for the project, EFT/card transaction processing, and mobile payments, international remittance and support for bill payment, savings, overdraft and credit products, as well as mobile acquiring and merchant marketing platform.

Costs and STRATFOR Each of the Parties--STRATFOR and RÊV Worldwide will absorb their own costs until a definitive agreement is reached and a go/no-go decision is agreed upon for the various market opportunities. Once the RÊV and STRATFOR have agreed to pursue the partnership, RÊV shall incorporate RÊV South Africa, a wholly owned subsidiary, which will bear the costs of deployment. For the purposes of this document, we propose the initial number of outstanding shares in the company to be set at 50M.

STRATFOR CompensationDuring this phase, STRATFOR shall submit a budget of expenses associated with this endeavor for approval by RÊV South Africa. Once approved, these expenses will either be paid in cash, or converted into a loan, or equity contribution to RÊV South Africa.

Opportunity for Joint Investment Relationship:It is envisioned that the expansion into South Africa may require an investment of up to $5M to cover the operations costs of the venture from inception to a point of positive cash flow. Said investment would come from either RÊV Worldwide, MPOWER Ventures, STRATFOR or ideally local investors, who in turn would end up acquiring a significant minority stake (with a preliminary target range of 20-30%).

Growth Phase

This phase shall commence the moment the first card or COIN is sold to a 3rd party in South Africa.

Roles - STRATFOR, leveraging its long-term relationships with the key stakeholders, will continue to act as a liaison partner and support the growth phase of the company.- Rêv Worldwide and MPOWER Ventures will continue to act as the Program Manager, Strategic Processor and financial sponsor(s) of the project.

Costs100% of the costs are absorbed by RÊV South Africa. As before, STRATFOR shall submit for approval a budget outlining the services provided along with corresponding service fees.

Performance Compensation- Market Introduction Revenue Share: As part of the compensation for the services rendered during the first year of operations, STRATFOR shall be paid a performance driven revenue share based on the number of active cardholders and/or active COIN merchants.

The exact amount shall be determined as the Parties evaluate the final consumer pricing and related cost structure of the corresponding product offerings, anticipating, however, that the expected revenue share shall have an approximate target of 5% of the Y1 gross profit of the card and COIN programs. Revenue Share payments shall be made on a quarterly basis.

- Equity: STRATFOR shall be issued a warrant for up to 5M shares in RÊV South Africa common stock at a price that corresponds to the startup financing of the company. The expiration of this warrants shall be set at 10 years. The number of shares granted shall vary depending on achievements by the company of the following milestones (each of which could be influenced by support from STRATFOR):

1M for every 100,000 active customers (CARD or COIN) at the end of each calendar year, 1M for every $100 million loaded into the system.

Next steps Rêv, based on its practices and policies, proposes the next steps towards formalizing this transaction:- Joint review and discussion of this proposal- High level assessment of the market conditions and level of interest by our local partners.- Agree on product offering and develop a business plan for the South African subsidiary- Customary due diligence (as applicable)- Draft agreements


Documents

Rêv Worldwide - WikiLeaks ww south africa.pdf · Telcel, Movistar Yap IPKO, Orange Telstra, Vodafone ... CMO Rêv Worldwide & President Rêv North America Co-founder NetSpend Corporation