EML Payments (ASX: EML) has finalised a major multi-year agreement to provide new salary packaging prepaid cards to Melbourne's McMillan Shakespeare Limited (ASX: MMS) and its clients.
EML managing director Tom Cregan says the deal is a landmark, with his company set to replace McMillan Shakespeare's existing prepaid cards by July this year.
"This agreement is one of the most important agreements we have signed," says Cregan.
"It opens up a significant new long term vertical for our Australian business and follows extensive due diligence by McMillan Shakespeare Limited, the market leader in the provision of salary packaging services in Australia."
According to Cregan, EML seized the McMillan Shakespeare opportunity amid a period of market transformation which was chiefly influenced by the Reserve Bank.
"This is an example of where regulatory change can create opportunities for EML," he says.
"Following changes to interchange rates by the Reserve Bank of Australia, two banks which had formerly provided salary packaging cards in Australia elected not to continue providing these cards."
While the commercial details of the transaction remain confidential, Cregan says the partnership will drive significant revenue growth in the year ahead.
"We expect from July 2017 our number of re-loadable accounts and debit loads on re-loadable products will increase by approximately 40-50 per cent versus our FY16 full year result," says Cregan.
The new card program is expected to be implemented from mid-February onwards.
EML ended yesterday's ASX trading up 4.37 per cent at $1.91 per share.
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