Mint Corp. is taking advantage of the UAE government’s ambitious plans to develop a digital, cashless society.
Mint began life as a provider of Mastercard-branded prepaid cards for Canadian retail brands. Because of Canada’s very high banking penetration, it chose to withdraw from the Canadian market in favor of targeting unbanked migrant workers in the UAE. The Toronto-based company is building on its existing UAE prepaid cards program to develop a set of products for the Middle Eastern country including domestic debit cards, mobile wallets and a remittance platform.
Estimates indicate that around 80 percent of retail spending in the UAE is cash-based, as local consumers see cash as a quicker, safer alternative to cards. The UAE government and its central bank have initiatives underway to transform the country into a digital economy and a fintech hub, and also migrate consumers to digital payments.
To fund development of its processing platform, Mint has invested an estimated C$50 million and incurred significant debt. Mint Corp’s majority shareholder is Canadian investment firm Gravitas Financial, a director of which, Vishy Karamadam, is Mint’s CEO. In May 2018, Gravitas Financial executed a debt restructuring agreement with Mint, under which the debt owed by Mint to its debenture-holders fell to C$20 million from C$59 million.
The key driver for growth in the UAE prepaid card market is the government’s push to increase financial inclusion and adoption of electronic payments in the country.
In 2009, the government introduced the Wage Protection System (WPS), which mandated electronic salary payments for all migrant workers in the UAE through a bank, foreign exchange house or other authorized financial institution. Foreign exchange houses provide international remittance services to migrant workers in the UAE.
In 2009, Mint launched a prepaid card program for migrant workers in the UAE to receive their salaries in conformity with the WPS. Its prepaid cards, which are either branded with a Mastercard or China UnionPay logo, compete with WPS prepaid cards from other program managers such as Network International, the UAE’s largest acquirer.
Mint provides employers with automated payroll services and a proprietary ATM network in the UAE for their unbanked employees, whose prepaid accounts are held at Mint’s partner banks. In addition to a personalized prepaid card, Mint cardholders get a linked mobile account app, where they can manage their Mint accounts.
Karamadam says Mint has over 400,000 prepaid cards in issue in the UAE across all employment sectors including construction and service industries. Mint processes over U$1 billion in payroll annually for 800 corporate clients and 15 financial institutions.
“Construction is a major employer in the UAE, and in the run-up to Expo 2020 in the UAE in 2020, there will be massive expansion in building,” Karamadam says. “This will bring in more migrant workers needing prepaid accounts.”
In 2017, the World Bank estimated the number of unbanked salaried expats at 5 million in the UAE plus an additional 20 million across the Gulf Cooperation Council (GCC), including Saudi Arabia, Kuwait, Bahrain, Qatar and Oman, Mint said in an investor presentation.
“Now we’ve built our platform, we’re looking for additional value-added services to offer with our partners,” says Karamadam. “We’re in the process of getting approval for a mobile wallet in the UAE from the central bank, and are going through our partners, the exchange houses, to get this approval.”
Mint intends to offer a range of financial services through its mobile wallet, including remittances, overdrafts, mobile phone top-up, rewards, insurance and mobile payments
Mint also plans to acquire Visa certification to complement its existing global certifications from UnionPay and Mastercard, Karamadam says.
“Our business model is to always partner with exchange houses and banks in the UAE,” Karamadam says. “We want to use our platform to improve the lives of the underbanked in the UAE and then extend the platform to other markets. We’re not licensed to do cross-border remittances ourselves, so we’ll provide our remittance platform to our exchange house partners.”
Mint has a presence in Saudi Arabia through a local bank partner and is looking at other areas of the Middle East as well as at Africa, where it has identified possible opportunities.
In April, Mint was granted exclusive rights to use Interac’s contactless debit card specifications and payments software in the UAE. Interac, Canada’s domestic debit network, has a policy of licensing its contactless card, mobile and P2P payments technology to debit schemes in other countries.
“The purpose of our partnership with Interac is to help build a UAE domestic debit scheme,” Karamadam says. “Interac has assembled a full set of protocols for contactless debit cards, which is available for foreign licensees. It would be a major project for Mint to build a domestic debit scheme, so we’ll incorporate Interac technology in our own platform. We’ll eventually launch a domestic debit scheme in the UAE with our partner banks there.”
Mint’s proposed domestic debit scheme would face competition from two sources — Visa- and Mastercard-branded debit cards issued by UAE banks, and an incumbent domestic debit scheme from Network International. The acquirer offers its Mercury domestic debit cards across the GCC countries through its bank partners.
Network International, in which the region’s largest bank, Emirates NBD Bank, has a 51 percent stake, says Mercury debit cards are accepted internationally on the Discover, Diners and Pulse networks. As an indication of the interest investment firms are taking in the UAE payments market, New York-based Warburg Pincus and Atlantic General jointly bought a 49 percent stake in Network International in 2015.
In April 2018, Mint obtained an option to acquire a 75 percent stake in vPay, an Indian mobile wallet provider and mobile payment platform. vPay provides a mobile commerce payment gateway for around 400 Indian corporate clients, which is integrated with the major credit card networks, 55 Internet banking interfaces, and major wallets such as Paytm and Airtel Money.
“In India, we’re entering the domestic digital payments market, not cross-border remittances to India, through our acquisition of vPay,” says Karamadam. “India has a fast-growing mobile payments market with staggering forecasts for growth of trillions of dollars in a few years.”
Last month, Mint launched UnionPay-branded gift cards in the UAE that are designed to act as general-purpose reloadable prepaid cards. Initially, Mint is targeting the gift cards at corporate clients and exchange houses, followed later by marketing to consumers through retail and online channels.
In addition, Mint plans to launch digital e-gift cards after obtaining the necessary regulatory approvals.
“Our gift card platform is live and getting transactions, but it’s early days,” says Karamadam. “We’re looking at offering Mastercard-branded gift cards as the next step.”