Euronet Worldwide, Inc. (EEFT) Earnings Call Transcript & Summary

Welcome, everyone. Thanks for coming. By now, you most likely read our press release announcing the launch of our latest product called, Dandelion, a one-stop shop with the largest and most strategic real-time cross-border payment network in the world, and it's available today. This is a big deal, and I can't wait to tell you more about it. I'm extremely excited because we are launching something really useful that solves a big problem for a lot of the people in the world. We are bringing to market a global real-time cross-border payments network serving more than 4 billion accounts across the globe. And by next quarter, we expect to deliver real-time payments to countries representing more than 80% of the global GDP. We are connecting a market that covers $155 trillion, yes trillion, in cross-border payment flows. That's why this is huge. Sometimes, you see fintechs that have solutions in search of a problem. We have a solution that solves for a big global problem for businesses and consumers. Now before I get into more of this excitement, I'm obligated to mention that this presentation and the following question-and-answer session may include forward-looking statements. Please refer to the forward-looking statement disclaimer on Slide #20 included in this presentation and the Investor Relations section of our website. Now that we have that out of the way, let me start by first sharing with you a perspective. Some people view Euronet as a cash dispensing company. When the reality is, we are a fintech company with some of the most cutting-edge technology inside us. Technology is in our blood. When I was fresh out of college, I started my first technology company, innovative software and later informix, which I brought public when I was 26 years old. By the time I left a decade later, it had become one of the largest technology companies in the world. Following that sale, I went to Eastern Europe to look for opportunities. And I noticed that there was a lack of technology for financial solutions. So we brought ATMs to Eastern Europe, which, by the way, at the time, were pretty cutting edge. Why is this relevant? Because at Euronet, it's in our DNA to innovate and disrupt with a problem-solving mentality, but we always start with the problem and then solve for it, not with a solution and then look for a problem. Just as we did with ATMs, when we acquired epay, we used technology to shift mobile top-up from scratch off cards to digital pens, and now we have disrupted further to sell mobile top-up and other leading global content through digital distribution methods. And the same things we noticed in those instances, we see in cross-border payments. a lack of technology and a lack of financial convenience for consumers, banks, fintechs and small- to medium-sized businesses. When Euronet first acquired Ria in 2007, Ria was a distant third in the money transfer market with 42,000 cash points, mostly in LATAM and with about 1% market share. And back then, the global money transfer industry wasn't famous for innovation or competitiveness. So we crafted a strategy for Ria to become the #1 money transfer company in the world. This strategy hinged on innovation, technology and leveraging our global assets. We recognize that the cash customer was happy and in no rush really to stop dealing in cash, but costs were high and things took too long. So by leveraging our REN technology, we lowered our cost of integration and cut down the time it took to integrate or connect with new partners by 80%. We also focused on cash to account and account-to-account payments, some of it based on demand. And some of it, it was the only way we found to compete in markets that had been locked up with cash exclusives. Today, we have a network of more than 4 billion accounts of banks, neobanks, mobile wallets and more than 507,000 cash payout points across 162 countries. 14 years after our Ria acquisition, we have built the second largest money transfer company in the world. with the best and most strategic global cross-border payments network that serves consumers and business with multiple different use cases. This network powers and will continue to power our own growth. But we also realized that this asset has a lot to offer to the broader cross-border payments ecosystem. So we are making it available as a full end-to-end solution with 1 fast and simple API integration under the dandelion brand. In today's discussion, I will share with you more information about the size of the market, a better understanding of the cross-border payment problems and how Dandelion solves the problems with some details for the techies and what makes us different. So now let's get into the real detail, starting with the market. Let's go to the first slide. As I said, this market is huge. As many of you know from following us over the years, we seize opportunities. Since we acquired Ria, the company has thrived by growing revenue at a compounded annualized rate of more than 14% in a market that now sends over $700 billion a year in which cost consumer is about $46 billion. Dandelion plays in a market that in 2022 is projected to process $150 trillion in cross-border B2B payments, and another $5 trillion in consumer cross-border payments ranging from remittances to wage salaries totaling a TAM of $155 trillion. In 2020, cross-border payments resulted in a cost to centers of over $200 billion, expected to grow to approximately $300 billion by 2025, according to a study by McKinsey. That is the revenue pool we're going after, and it's expected to increase almost 50% just 3 years from now. I am sure you will agree this is a huge market to go after, and we are ready to go after it. We have a global team with local operations all over the world, supported by a best-in-class technology platform with modern architecture. We connect to a diverse set of alternative payment channels like wallets, neobanks and more traditional and established players like banks and accounting and ERP platforms. Essentially, we are positioned to enable 2 global commerce. Further playing into the significant market opportunity is the fact that it is undergoing seismic shifts. Over the last 5 years, there's been a fundamental shift in cross-border payments. According to McKinsey, as a result of the pandemic, digitization of offerings across business areas has accelerated by as many as 10 years. In the last 2 years, we witnessed the largest growth in adoption of digital payments we've ever seen. Regulatory reform is rightfully driving interoperability and transparency. And we believe this is a good thing because it is driving innovation. Globalization of commerce is accelerating at lightning speed as economies come closer together. People and businesses are becoming more and more dependent on international supply chains and distributed labor from all over the world, especially from emerging markets. There is so much opportunity in global expansion, and it is driving significant growth in cross-border payments. but it is also driving a dramatic change in customer needs. This is leaving consumers as well as small and medium-sized businesses underbanked and unprepared to keep up with fundamental shifts in global economic dynamics. There is a real need to drive global financial inclusion to ensure that those who are underbanked both consumers and businesses, can access the global digital economy. Payments need to move away from legacy systems and they need new technology to scale to market demands. Simply put, the industry requires new strategies, new technologies and new solutions. But this shift is not so easy. Why you ask? Let's go to Slide #3 to see where the value chain is broken. Now it's no big secret that there are a lot of new entrants in our industry, and it makes sense. It's a huge opportunity, and it's ripe for disruption. But if you take a step back and give the industry a bird's eye view, you realize that the value chain is fragmented with glaring gaps causing friction and the user experience. When you dissect the payment you'll find several components supported by different industry verticals. I'm talking about registering and onboarding customers, accepting money, packaging and processing, payment instructions including foreign exchange conversion, fraud, AML and accuracy. And then there's the fulfillment in the delivery of funds. This description is quite high level, and it doesn't do justice to the real anatomy of a payment, but it helps paint a picture to appreciate where Dandelion plays in the marketplace. Most of the new entrants in the payment space focus on onboarding customers. We sometimes refer to them as mousetraps that attract customers. And they do a very good job of it. Then you have the new entrants at the destination or fulfillment side of the payment. In other words, local, in-country, real-time payment or RTP schemes or wallets also doing a good job of focused on the local rather than the global. But no one has really focused on effectively connecting both sides of the transaction, the mouse traps and the local rails with a real-time experience. Moreover, there is no global central bank or banking regulator that might serve as a natural party to connect the pieces around the world. That leaves a huge gap in the payment space. which is a big pain point for anybody who wants to move money around the world at scale, in real time and in a modern and secure way. That's where dandelion fills the gap in the cross-border payments world. Because of this gap, cross-border payments continue to be slow, clunky and they certainly lack transparency. And in emerging markets, underbanked communities are often very difficult to access leaving a lot of untapped opportunity there. A perfect example is demonstrated in a recent article by Ernst & Young, where they illustrate a transaction from a local bank account in Germany to a bank account in Senegal, that usually cost more than EUR 100 and can take up to 7 days to settle. Even then, the center would often not receive a confirmation of delivery. So while several players have brought improvements to the process, it is still very disjointed. Now imagine that a bank business person needs to send a payment to a wallet because their beneficiary, say, an app developer in Senegal didn't have access to a bank account. As open banking materializes and more alternative payment methods appear, speed, transparency and interoperability will become must-haves for banks or they will be at a massive disadvantage against their potential disruptors, the fintechs. At the same time, we all know that banks still struggle to modernize their systems, let alone go build their own alternative payments networks. Banks are busy being good at what they are good at. but they have a clear need to offer alternative payment methods to their customers, especially the younger ones, where do they turn for this solution? And fintechs many struggle to achieve scale. They are good at the mousetrap game, and each day, they face more competition for this NEO opportunity. Their big focus is customer acquisition through elegant UIs and customer retention with flawless UX. But let's face it. At the end of the day, no matter how great your interface looks, the customer experience can only be as good as the payment rails a product rides upon. People and businesses need money to flow between any 2 points in the world, and they want it to be as fast and as easy as a text message, legal and secure and at a reasonable price. So while it is fair to say that the industry has done a reasonably good job at solving for these challenges domestically in each individual country. Dandelion is the only platform that has connected all of these rails into a common cross-border platform that brings the whole ecosystem in the world together for international payments. And now we are making it available to banks, fintechs and other platforms for all of them to better serve their customers. And you might ask, if you can do it, why can't others do it? So why is it so hard? Let me tell you about today's infrastructure for cross-border payments for banks and fintechs to build a global cross-border network. They must sign individual contracts with hundreds, if not thousands of correspondent partners and banks. And they rely on a system that has not been modernized in over half a century where payments flow through a myriad of antiquated banking infrastructure networks that sit on old legacy systems and touch an average of 5 banks per cross-border payment. Each step of the way, there is an opportunity for something to go wrong where payments accumulate mysterious fees and suffer delays. And when you need to solve a payment issue, it often requires a series of phone calls and e-mails before you can have a clear status on it. This is an expensive and time consuming and burdensome process where people are kept in the dark until the money appears back on either side of the transaction. It's about as unfriendly to customers and businesses as you can get. I mean people and businesses send money for critical reasons. This is important to them. We like to say that there is a story behind every payment, whether it be a wedding or a business shipment speed and transparency matter. And when it's your money, it likely matters more. Now we all recognize that cross-border payments are slow. And central banks around the world are making a push to make real-time payments a reality, but at a local level. There is no current catalyst to make cross-border real-time payments happen. Every domestic RTP scheme has a different framework and regulatory requirements, making the industry extremely fragmented and disjointed. For example, in the U.S. the target for FedNow to enable domestic real-time payments is 2023, and there is speculation that it may not be delivered until 2025, and the ability for FedNow to even receive international payments in that scheme would then get pushed 4 or 5 years after that. Until now, there hasn't been a central party that is connecting global real-time cross-border payment schemes. In these conditions, such a network wouldn't be within reach of most financial institutions unless someone does what we have done. We connect into all of these domestic payment schemes, which worked really well, and we stitch them into a global virtual network that connects all of them into a single platform. Now you may be asking about how crypto fits into all of this. So let's talk about that. The rise of crypto is expanding into global markets and some are attempting to leverage it to solve some payment challenges. It's evolving quickly because theoretically, it brings speed, low cost and innovation that the market is demanding. The problem with crypto is that while it solves for speed, it does come at a cost to other critical elements that must be present in a payment. We are talking about transparency security, stability and usability. Since 9/11, the global financial system has made an effort and achieved tremendous progress towards the tracking and reporting of monies, individuals and businesses that could be connected with illicit activities. The absence of these key components in crypto-based payments prevents them from circulating as a true currency, creating liquidity and stability problems. So while today, crypto might be a good vehicle for speculation or for what we call illicit use cases, Its current form does not solve for the global need of securely connecting and enabling the cross-border payments that fuel the global economy. And by the way, we're not saying that we don't believe in crypto currencies -- What we are saying is that speed is only 1 part, but security, transparency and stability are harder to deliver and are mission critical for any currency that wants to be useful to the world. So if cryptos become mainstream, we will be ready to trade those currencies too. It's not rocket science. So it's hard and the cryptos don't answer the mail -- Where does that leave everyone in the financial world. In a nutshell, banks want to innovate, but they are prisoners of their own legacy platforms. fintechs want to disrupt -- But this is a global game where they struggle to navigate complex regulation and build global connections. That is a mission that requires scale at a global level and that is not built overnight. To date, no single entity has solved for the full end-to-end experience, which includes navigating global regulatory frameworks, which are complex and ever-changing, administering the high stakes risk of foreign exchange management, integrating settlement, removing the need to sign thousands of contracts with partners and correspondent banks, delivering payments in real-time to countries all over the world for consumers and businesses, including hard-to-reach emerging markets with exotic currencies and bridging the gap between legacy banking rails and new alternative payments with a diverse set of delivery channels like banks, neobanks, wallets and cash. If anyone were to start this endeavor today, it could easily take more than a decade to achieve and it would require significant investment in resources. Fortunately, we started the journey to build this for ourselves decades ago. All these changes have driven us to focus our approach and the time is now because innovation isn't about avoiding complexity. It's about facing it head on and transforming it into something simple. Moments like this highlight the necessity for us to innovate and cut through the complexity to deliver foreign exchange payments in an efficient, secure and cost-effective way. Over the last few years, we've cut our teeth on real-time payments. It started with our delivery of the UPI switch in India 5 or 6 years ago, which is now the most advanced RTP system on the planet, handling billions of payments every day. We also built a real-time payment switch for the Central Bank of Mozambique. And today, our REN Connect enables many, many banks all over the world to connect to their own domestic RTP schemes. We see this as an opportunity not just to navigate change, but to be the change, to be the disruptor, to bridge the legacy banking systems and modern fintech to bridge those who are banked and those who are underbanked and of course, to bridge businesses and opportunity. This is why today, I am very proud to talk to you about Dandelion, -- It's how we're making the world's money work better for everyone. And because a picture is worth a thousand words, I'd like to share with you this short video. [Presentation]

So what did we just learn about Dandelion? It's a first of its kind cross-border payments platform that modernizes how fintechs, banks and tech platforms can integrate cross-border payments into their own products. Dandelion delivers real-time global connectivity to enable access to new markets as a turnkey solution eliminating the need for a massive investment of resources and accelerating the time to revenue for its customers. Dandelion offers built-in settlement and enables compliance capabilities in a single, easy-to-use technology integration, leveraging its technology advanced platform, the Dandelion transforms how banks, fintechs and tech platforms can better serve their customers. For example, tech platforms like ERPs such as Microsoft Dynamics, can deliver embedded cross-border payments right into their accounting platform to offer an integrated experience for their customers. So we've established that the world of cross-border payments is really complicated. And you might be wondering how complicated is this dandelion platform. That might be the best part yet. While building the foundation was very complex, we designed Dandelion to be very simple for us and our customers. Our platform offers a single customizable API for easy integration. It is fully compliant with ISO 20022, which is a global open payment standard for payment messaging. It's important to highlight, however, that there are still a lot of systems around the world that are not compliant with that standard. The good news is that the Dandelion framework is so flexible, we are able to integrate with those systems quickly and easily too. Our developer portal and Sandbox enable state-of-the-art monitoring during development and in production as well as real-time support before and after go live. We make it easy for companies to deploy natively from their own platform or into their back office systems so that they can embed cross-border payments into their own services for a seamless customer experience. All those phone calls and e-mails eliminated. Our real-time dandelion API is able to return transaction processing status, lists and reconciliation information on demand, providing live updates for cross-border transactions for full visibility. And because we're cutting out the middleman, customers can avoid hidden transfer fees and access improved exchange rates, which drive down the overall cost of cross-border payments. But again, this isn't just about great new technology. It's about the whole package. It took us decades to build a regulatory framework, licenses, global connections, banking relationships, local infrastructure with skilled teams which through great technology can now be consumed as a service. And we know it works because we use it ourselves as to a number of existing customers. But sometimes, seeing is believing. So let's run this brief video to let you see firsthand Dandelion in action. [Presentation]

Dandelion is the largest, most comprehensive and strategic cross-border network in the world. Did you see how quickly this transaction happened? That was a payment from the U.S. to a wallet in India in 1 minute and 16 seconds. And you can also see how Dandelion integrates seamlessly into Microsoft dynamics to enable business payments. Dandelion truly goes beyond the limited reach of traditional payment rails to support consumers and businesses who have been historically underbanked. It enables real-time payments to over 4 billion bank accounts and mobile wallets and 507,000 cash locations across an unprecedented 162 countries around the world. Hopefully, you saw in this video how Dandelion puts us in a winning position. In that regard, why is Dandelion positioned to win? Well, over the years, Euronet has built amazing local teams around the world. We've established a network that encompasses a suite of technologies, licenses and solutions to support our own financial products across global markets, just like Amazon, who reinvented e-commerce with an innovative platform and then productize their capabilities to sell others as AWS. We are similarly leveraging the capabilities we built for ourselves and making them available to banks, neobanks, fintechs and tech platforms. To augment their products with seamless cross-border payments. With decades of experience, we've streamlined our processes to optimize the entire cross-border payments experience, eliminating the friction inherent in today's payments environment. Dandelion is uniquely responsive, transparent and cost-effective giving businesses access to 1 country or the whole world. It's their choice. In offering dandelion to the broader marketplace, we are not just changing the landscape for legacy banking systems -- We have reimagined how to access difficult-to-reach emerging markets and payout channels while bridging the gap between the bank and the underbanked and empowering companies to reach new markets quickly and easily. Euronet's global reach, world-class compliance and real-time settlement paired with Dandelion's network, modern technology and ease of integration offer a powerful vision for the future. And the best part is that Dandelion is currently used by and available 2 customers today. Look at the companies on this page. These are just a few of our fintech and tech platform customers using dandelion today. There is no other way than to say that this is an impressive group with more to come. Among many, we are proud to serve companies such as PayPal Zoom, Remitly and Microsoft Dynamics. As a leading global financial technology solutions and payments provider, Euronet leverages decades of cross-border payments experience, including our world-class compliance program, to serve as a foundation for dandelion to offer payment processing solutions to financial institutions to retailers, to service providers and to consumers. To further demonstrate how easy it was for these and other customers to connect to dandelion, I'd like to take you through a few examples. What truly differentiates Dandelion from others is the largest and most strategic network in the world. Our list of correspondent banks and partners is incredible, thanks to our correspondent and wallet integration framework, which reduces code complexity and enables us to shorten the time to market from months to weeks. Let me share with you a few examples. PIX is the new domestic instant payment ecosystem in Brazil. Our framework makes it so easy to integrate, that it took us just 1 single day of development and 13 days of user acceptance testing to launch -- That's a total integration time of 2 weeks from start to finish. We also delivered integrations in the Philippines with our 2 partners, PayMaya and with GCash, each took just 2 days of development in 1 day of testing. That's just 3 short days from start to launch. So how do we do it? We take a micro service-based approach, where each new endpoint is encapsulated in 1 microservice and our state-of-the-art protocols only require configuration. For example, we use standards such as ISO 20022, RESTful Web services or SOAP web services. Thanks to our private cloud environment and deployment -- We can deliver quick rollouts as part of a CICD pipeline for testing, staging and production. As a result, we have been able to deliver a significant network expansion over the last few years, and we intend to continue further expansion moving forward. Our framework is designed to enable integrations, not just with banks, but with new alternative payment opportunities as well. so we can expand and evolve the dandelion network as quickly as the market demands. I'm sure you see in these examples, the real difference Dandelion brings to market. But let's explore our difference in more depth. Hopefully, by now, you can appreciate that we have an incredibly exciting opportunity. But some of you might be asking, how is Dandelion different from other networks. We do recognize that there are others trying to solve for the same problem, but our solution clearly stands apart and puts us in the pole position. Let me explain. Currently, there's a global system that interconnects banks, but it's just a means of communication. It's slow and lacks transparency. It doesn't touch money. -- or have licenses to move money or hold funds and it doesn't offer value-added compliance. New entrants struggled to scale and it is not nimble enough for card users such as banks to plug into the fintech world. Once you connect, you still have to build your own global network of correspondent -- There are also large card scheme players that offer similar solutions, but they're mostly focused on consumers sending payments to beneficiaries with the same brand cards. They don't send the wallets or alternative payment channels. They are making smart investments, so we don't discount them. But we also recognize that our cross-border payments network is better positioned for all consumers and businesses more developed and is far more strategic. In the money transfer world, leading brands are also trying to position themselves in this space. But under the hood, they're still cash dominant, and their bank network is limited and not productized enough. They used to be nearly 25x our size 14 years ago, but we have leveraged our superior technology to focus on the hyper growth segment of bank accounts and wallets while they were busy defending their cash network. Finally, traditional software competitors focus on banking solutions and payment schemes for governments and banks. But they don't have a licensed payments network or foreign exchange and compliance capabilities in 1 global real-time cross-border payments network. We do, which gives us the ability to offer the technical solution with a plug-and-play global payments network with integrated settlement. More and more, we view these players as potential partners for cooperation, where they have impressive customers that could benefit from our payment solutions without the need to rip and replace legacy systems. Having said all this, I want to be clear. that by no means are we claiming that we have already won the race. But I'm highlighting the fact that we are the front runner. And as we all know, once you understand and digest everything that is involved here. This will be a distance race, not just the Sprint. And these are the kind of races we like at Euronet, disrupting at a global level. Now that we've covered a lot of details, Let me conclude with some summary comments. For decades, the international payments industry has neglected to innovate. Customers have endured inefficiency, limited access and lack of transparency. Look at any other disrupted industry, and you can see that consumers flock to innovation. Today, consumers and businesses alike are demanding change in the cross-border payment space, and Euronet is here to deliver. Dandelion offers a one-stop shop with the largest, most strategic cross-border payments network in the world. It works seamlessly across consumer and business payments, empowering any company from banks to fintechs to ERP and accounting platforms and beyond. One contract enables full network access to a global network of 4 billion accounts of banks, neobanks and wallet as well as 507,000 cash locations across 162 countries, including difficult-to-reach emerging markets and alternative payment channels. Integration is a breeze. With 1 single customizable API, including our developer portal and Sandbox to enable state-of-the-art monitoring during development and in production as well as real-time support before and after GoLive. We enabled integrated compliance capabilities and direct settlement eliminating the need to establish thousands of correspondent banking relationships and cash locations. And finally, by leveraging our existing unparalleled global infrastructure and our end-to-end connections, we expect to send real-time payments in 113 currencies to countries representing more than 80% of the world's GDP by next quarter. Dandelion offers customers the confidence that they are leveraging a platform that works to lower their overall cost of global expansion by reducing complexity, resource requirements and time to market. so they can focus on what matters most, their customers. Today, Dandelion processes tens of billions of dollars for ourselves and our partners, demonstrating that this product is ready now. Behind me, you can see the cityscape of Budapest, Hungary, where I started Euronet with a single ATM. I can't help but be as very excited about this, about the launch of our dandelion, just like I did when we launched our very first ATM. We delivered on giving people access to ATMs over the years. And now we are embarking on delivering to businesses and to consumers access to real-time cross-border payments. We've taken the inefficient process of international payments work through the many, many complexities and applied technology to solve a big problem through delivering a one-stop shop solution day in the line. As I previously said, we already process billions of dollars, but those of you who know me know that our sites are set on the trillions. And by the way, we're doing it in a profitable way. Yes, fintechs can be profitable. I'm sure you are as excited as we are to go after these trillions. We anticipate that many of you are as intrigued by this product as we are, and we'd love to answer questions from the audience. If you like to ask a question, please dial 833-989-2970. We are excited to share how Dandelion through a single connection delivers cross-border transactions faster, more accessible and best of all, safe and transparent. Now I would like to invite Rick and Juan to join me for our Q&A. Rick Weller, as many of you know, is our CFO; and Juan Bianchi, here to my left, is the CEO of our Money Transfer segment. Jerome, the operator, will you please connect us to our first question.

[Operator Instructions]. Your first question comes from Mike Grondahl with Northland Securities.

Congrats on Dandelion. 2 questions. One, -- Could you talk a little bit about the sales force and your kind of go-to-market strategy for Dandelion? And maybe secondly, -- Just help us understand the revenue model a little bit? Are you paid per transaction or dollar volume? Those 2 would be great.

Okay. Well, first, I'm going to pass the 2 parts of your question to Juan and to Rick. But as a beginning, you know that we have salespeople in our 3 divisions all over the world. Many in the Money Transfer division who are talking to people all the time. We have many people in our EFT division whose main customers are banks who would be great customers as well. Epay, we have lot of Fintechs and mobile wallets as customers. So all these can be -- will be leads for us to go after. But with that, maybe I'll pass it to Juan because they'll be responsible.

Yes. So -- So as Mike said, we have a global team already set up and talking to customers globally. And that's an amalgamation of the colleagues that we have on Epay -- And on the EFT side, plus all of our country managers and regional managers that we have around the world in the money transfer segment. So I think when you do like a quick head count of the boots on the ground that we have today, talking to customers and with ongoing live conversations and supporting the customers that we have live, you would get about 75 to 100 headcount already plus where, of course, this is a big opportunity for us. And as the pipeline gets more robust, we are working on putting the resources to process that pipeline and bring the leads in as fast as we can. As far as the revenue model goes, it's a traditional cross-border payments revenue model, where it is you have 2 drivers for revenue. One being a transaction fee and the other one being a foreign exchange gain.

Your next question comes from Darrin Peller with Wolfe Research.

Listen, I'm trying to understand the dynamic here between the technologies of what you had in C2C before and how you're really layering in the epay business capabilities, which, to me, seems like it's the real value. One of your major differentiators is your connectivity on epay. And so again, I mean, looking at the digital wallet differentiation that you gave us as an example of PTM. I thought that was a really valuable differentiator as an example. And so if you could just expand on who else can do anything like that, cross-border into digital wallets and maybe also the B2B aspect of this and how that's going to be added on to the platform.

Darrin, well, that's a good question. So -- the reality is we're agnostic. We really don't care how the money lands in an account. It could be into a bank account. It could be actually paid out in cash or like you suggested, it could be utilizing some of the connections that we have with epay to these mobile wallets. I mean, we have connections to 4 billion accounts, either through mobile wallets or bank accounts right now. And of course, our 507,000 locations for cash payouts. So we're kind of agnostic on how it lands there. But this REN technology that we have that underlies all of our segments is really the key to this. It allows us to talk wallet, I might say, to be very beneficial to fintechs to be a quick connection to them and to give them more value that they can offer to their customers. Juan, would you have anything to add?

What I would add is that what we're leveraging here also, it's our global infrastructure. We have built this infrastructure that now we're making available as a service. We have built it over the years. This is something that we have been consuming on our own. And now same as when you think about this, like what Amazon did with their AWS product, it's the same. We realize that we have this global infrastructure that is really useful for customers beyond our own use -- So we've enabled it with technology, with the rent technology that Mike referenced, we have made that available for the rest of the world to consume it. And really, what that enables is truly global interoperability, connecting several different types of financial systems and financial services into 1 single platform. Wallets, neobanks, traditional banks, cash, businesses, consumers, alternative payment methods. All of those are stitched up by our platform and then brought on to a single place where they can be consumed as a service, and most importantly, interact among them for global commerce. So that's really the real disruption that we're bringing to the market today.

And let's not overlook the need for compliance here. We're talking about moving money, just like banks, moving money has a responsibility to know who's sending the money, who's receiving the money. And so as Juan said, it's the interoperability of stitching all of this together -- It's not just being agnostic as to what the payout for may be or the receipt form, but it's also all the other aspects, whether it's a QR code or whether it's a barcode or whether it's an account, it's all of those pieces being brought together in a single interoperable technology platform that allows us to deliver that payment.

Yes, that makes sense. I mean just to be clear, though, competitively, when we think about moving money for, let's say, in the U.S. into a wallet like a Paytm or an Alipay or any other for that matter, I imagine your technology allows for your relationships through epay and REN obviously help. Do you know of other competitors that are doing that right now? Or is that -- or maybe only on a one-off basis, not as more not as ubiquitously I guess?

We -- there are competitors who do part of this. I mean, I think our game is we're a one-stop shop. We're an end-to-end solution, so we can do everything from moving the money to the compliance the whole and actually dropping the money in somebody's account rather than just being like a message set given instructions from 1 bank to get to another bank to give to another bank. I think that's our differentiator. And definitely understand that consumer payments, which might be $300 or $500 or $1,000 require a whole different level of compliance as Rick said, than if you're sending $50,000 or $1 million in a payment. So we've got that all stitched together. And that's why -- We have been repurposing our assets over the last 1.5 years to make sure that we could do this on a very large scale.

And I would just add to that is that while there is a -- we'll see competitors in different segments of the market out there, and that's always going to be the case. But the significance here is that we're covering 80-plus percent of the GDP around the world, going to more than 4 billion accounts. And as Mike said, it's agnostic as to whether it's a bank account, it's a wallet. It's any form that you want to land the money in. You can pick it up at an ATM. You can pick it up across the counter in cash. It really is catering to the preference of the customer in terms of what they're demanding. And because we can hit such wide global reach, we can really service almost everyone.

And just lastly, the go-to-market approach and sort of building awareness among the various partners around this capability. Has it been -- have you already started that with the wallet? Or are the banks for that matter? Or what is the strategy there?

Well, absolutely, you saw on a slide earlier that we have customers today. And we've been selling this kind of quietly on the side before our announcement, but with more to come and many in the pipeline, Juan, would you like to add anything to that?

So we have those customers that you saw in the deck like today. and we have a very robust pipeline. And that go-to-market is global, and it focuses on different verticals of potential customers. So you have the banks, the banks are -- today, they process lots of payments for small, medium-sized enterprises. So we're talking to them, and we're developing a pipeline with them to augment their value proposition for their own customers. Then you have ERPs, accounting systems, where lots of little businesses use them to process their accounts payable and to move money and to keep their accounting. So through them, we view them as marketplaces. And we also have developed conversations with them. We're live with Microsoft Dynamics 365, as you saw. So that's another great way for us to insert our products into marketplaces. And then again, we go directly to fintechs where fintechs are today, they're building front end, and they're doing a really good job at building really nice front end but then they need the scale for them to really be able to deliver the world and also for them to have the effect of more same-store sales. So that's a very good product for us as well. So we have conversations around all of them. And of course, don't forget that we also have our own direct-to-customer strategy with our XE brand.

Your next question comes from Peter Heckmann with D.A. Davidson.

Exciting development here. I had a couple of questions. On the software integrations like the Microsoft and Sage, you mentioned, are those typically exclusive with those ERP software vendors for cross-border payments. And I assume they would be getting a revenue share there.

They're probably not -- I mean, right now, we might be the only one, but I would imagine over the long term, we won't be exclusive because everybody -- that's the whole idea of being agnostic if people can use whatever the best services at the best price. We believe we've got the scale to be able to deliver both of them. When you do an international payment right now, so you want to send $50,000 to England or to India or whatever it might be, it might cost you by the time your bank and all other banks in the process -- processes, it might cost you 4% to 5% to 6% to do that. That's just crazy. That's just friction of money. It's just money going out the door to the customers. And this would be the perfect thing that a fintech would want to lock into to differentiate themselves from their competitors that I can give you this money transfer of large amounts at a very reasonable price, same thing with ERP systems.

Okay. Okay. And then just on -- in terms of thinking about partnering with other money trans providers, like PayPal, Remitly, what determines that routing? Are they particularly -- primarily partnering with you for a cash payout? Or is there also like a size of transaction criteria that might lead to them routing a transaction to Dandelion.

Well, I would say not so much around the transaction size, it's more around the value that we bring to them in terms of augmenting their value proposition. So when we partner with a Remitly, for example, we play a silent role. We sit behind the curtain for them. It's Remitly going directly to their customers, offering their payment services and their value proposition. And they have a certain payment catalog today that's augmented by us. That could be in the form of giving them service for cash payout in country where they don't have it, giving them access to wallets where they don't have it or bank accounts. So basically, we augment what they offer behind the scenes. When it comes to a PayPal, you have that same effect with their brand that they have assumed, which is a straight up money transfer company, but at the same time, PayPal have has their ecosystem, their wallet ecosystem if you will, where they move money intra PayPal, but then at some point, people need to move money into that ecosystem or get it off that ecosystem into other systems. And that again, it can be through bank account, wallets, cash. So we also augment them that way.

And Peter, bear in mind that as Juan said, this is augmenting their offering to their customers. This takes years and significant amounts of money and resources to build a network like this. So many of these new players, emerging players, they focused their time on the front end of capturing the customer, if you will, of giving them an easy entry into a process for them then to try to build a network that has 4 billion accounts that you can take money to, that's time-consuming, hard, complicated, put a lot of other adjectives in there. That's what we've built. And so that's the attraction that those types of entities will have to this network.

And a lot of people are kind of your question kind of focuses on the consumer kinds of remittances, okay? We're open -- we're not going after the $700 billion market for consumer-to-consumer payments like family remittance. We're going after the $155 trillion market. That's the B2B payment. So it's a whole different game here, lots of different compliance, lots of different nuances to be able to accomplish that. And so that's what we're going after a whole new market here really.

I understand. I understand. Just 1 last question that feeds into that then. So Dandelion is not a new consumer-focused brand that you'll be marketing, Dandelion line is a solution that you'll be offering on a white label basis to partners. And in terms of high-value money transfers will Euronet still be marketing that through the XE or HiFX brand?

Yes, absolutely through the XE brand and then -- and you saw in the list of people that we have as customers now, some of them are banks and neo banks. -- they want to offer -- they want to be competitive with the traditional bricks and mortar banks. We can give them the ability to do this at a much better rate and with better service than they can get using the standard methodologies of today.

So Pete, a great way to think about it is Ria and XE are powered by Dandelion and now Dandelion is available to power other players that go direct to customers such as banks, fintechs, wallets, et cetera.

And Pete, I'd add is, as Mike said, focusing on that business market is really significant for us because -- And I even heard in your comment, you called it a transfer. Well, it truly is a transfer. But I think we need to think more broadly. This is a payment like an invoice payment. This is like an importer/exporter that needs to pay bill in another country, et cetera. He needs to have the confidence and the assurance that, that bill gets paid and meets that vendor's expectations. So this is more than just a transfer, if you will. This is facilitating businesses to do everyday commerce, that's their lifeblood. So it's a much bigger market than going after kind of like money transfers. This is going after the bigger payments world out there.

And if it's 1 thing we've learned over the last several months, is supply chain counts. What does supply chain means? It means where you get all the different parts to manufacture your product -- Some of them are going to come from overseas, some of them domestically. If they come from overseas, you want to get the payment there so that you get the product so that you can complete your own manufacturing process. So it's -- this is the big kahuna out there.

And your final question comes from Ken Suchoski with Autonomous Research.

And congrats on the rollout. I think you highlighted in your presentation, I think it's Slide 1. Revenue pulled $200 billion, total flows, $155 trillion. And if I just do the kind of the math on that, it looks like a 13 kind of basis point take rate if you divide revenue by volume I guess, is that kind of the right way to think about some of this new volume coming on to your business? Because I think your traditional money transfer business has a much higher take rate. And then any comments on how you actually came up with the $200 billion and $155 trillion opportunity, that would be great as well.

Yes. Well, the math or the numbers on the market size is simply from third-party resources. So it could be McKinsey, it could be E&Y. There's a number of parties out there, and we've tried to triangulate that to make sure that their consistent numbers. So that's from published sources. But -- and I think that your math is absolutely on target. That's about 13 basis points. But what you have to keep in mind is that there's a very wide range in that category. That's made up of anywhere from family remittance money as well as large multinational companies. And as you could fully expect, if you're someone that's a large multinational company, let's call it, for example, us. When we move money, we can get very good execution on the pricing of that because we've got very big volumes that we're getting that on. And so we might be able to get that money moved for a few basis points. And so when you look at that number, and this isn't perfect math, but it's directionally the case, is that 80% of the volume in there is driving about 20% of the revenue opportunity. the small- to medium-sized business customers are driving the larger share of the revenue opportunity there. And as Mike said, you've got a lot of customers that are paying 4 and 5 or better percent to do a transaction. So you've got numbers that. I think if I remember right, it was about 6.5% on the overall family remittance marketplace that's included in those numbers. I would say that's kind of the top end of that to where if you go down to the bottom, the big multinationals, they're going to have a couple of basis points, it all averages to that 13. But what we see in the small- to medium-sized business market out there is going to be a number that's probably closer to a sweet spot of 50 to 75 bps, okay? So I think you're looking at those numbers correctly, but the market that we're going after, that has the biggest part of opportunity in there is going to be pushing us up the scale to where we get the better part of that upper end average.

In that small to medium-sized business, they're the ones who can certainly use our product through another party, and they're the ones who can get the most benefit of it.

Right. That's extremely helpful. And just a follow-up question. You guys have talked about some internal targets on some of your newer initiatives like a REN. I guess as you guys think about your internal planning, can you share some of your internal targets as it relates to product rollouts and just any other financial targets that you're thinking about?

Well, obviously, this is an enormous market. I mean we're talking about $155 trillion. I mean that's kind of so big. It's hard to get your arms around it. But just like we did with REN, we set goals for ourselves. And that doesn't mean we'll get there, but we've got the goals. And here, we're looking at $0.25 billion in revenues for maybe 4 to 5 years from now.

Okay. Great. That's exciting. And then maybe just last question, Mike or Rick, I think Visa or MasterCard are targeting some of the newer flows as well. So how do you guys expect to compete with them since -- I mean they are much bigger players, and they're already working with a lot of different entities around the world.

Well, first of all, Mastercard and Visa traditionally have been consumer-to-consumer kind of brands. They're trying to get now and a little bit into the B2B, but we think that we've got something that is agnostic, can talk to wallets, can talk to bank accounts, can talk to cash which is quite a bit different than what they're focusing on. If you want to get down to the real competitive dynamics, maybe we'll let Juan answer that.

Sure. So first of all, I would say that you're right. Visa and Mastercard are big companies, and they're great brands, and we have...

And they have done a good job.

And we have a great deal of respect for them. That's the first thing I would say. But they're big at what they're really good at, but we are really good at cross-border payments. We have built this thing over 30 years. So we have an infrastructure. We have teams we have legal entities. We have licenses, country managers, compliance all over the world, and then we have wrapped that around with great technology, with great service, and we care with customer care that's available to service other entities. And then you have the diversity of payment methods that, that network brings together. Basically, I go back to the concept of interoperability, where we bring all of these things together for the broader ecosystem that sells payments to consume it. And I think that, that's the big differentiator that we have. We are not focused on a single trick. We are cross-border payments experts, and that's what we bring to the table today. So we are agnostic. We don't care who consumes this. We're just payment rails, a payment is a payment, it's a payment, as we say. So we grab it, we convert it, we screen it and we fulfill it. and we do it for any type of payment that is out there in the world. And when we look around payment method, I mean, alternative payment method, traditional ones. And when we look around to host our true competition there. We don't see anybody that is as well positioned as us to deliver this, but we certainly recognize that there's other very meaningful players trying to do this as well. So we don't discount them.

Okay. Well, with that, I think we'll end today's presentation. I want to thank everyone who has joined us today. We'll be talking to you more about Dandelion in the coming weeks and months on our earnings calls and elsewhere. Thank you very much for your time.