Up Spain partnership a ray of hope for EML

Up Spain partnership a ray of hope for EML

EML Payments (ASX: EML) is kicking on with confidence in Europe where an amenable approach to regulators has given the Brisbane-based reloadable payments card provider some leg room, announcing a new partnership with employee benefits solutions provider Up Spain.

The deal will give EML a foothold in the employee benefits market in Europe, covering meal vouchers and other employee benefits solutions, and potentially access to a global network if things go well in the Iberian country.

Though the initial multi-year deal will grant EML access to more than one million users across 4,700 corporate clients in Spain, as a subsidiary of Up Group the new partner is part of a group that operates in 28 countries.

With a global total addressable value worth more than $88 billion, EML managing director and CEO Tom Cregan was understandably upbeat about the company’s entrance into the employee benefits market (EBM).

“This contract with Up Spain is a milestone agreement for us given the size of the EBM and the continued transition of meal voucher programs transitioning from physical vouchers to digital payment solutions,” Cregan said.

“Up Spain is a proven market leader and we look forward to launching this program with them and continuing to build out our presence in the EBM industry, following on from the success we have had with Salary Packaging solutions in Australia and opportunities that we are targeting in the evolving Earned Wage Access industry.”

EML says the program will go live in the first quarter of the 2023 financial year, but is unlikely to make a “material contribution” to the group’s revenue or EBITDA in FY23.

“However, the win validates EML's strategy of focusing on this segment and it provides an opportunity for material future growth,” EML said.

The signing of the deal comes as EML remains under the microscope of the Central Bank of Ireland (CBI), which in May last year revealed it was investigating subsidiary PFS Card Services (Ireland) Limited (PCSIL) over anti-money laundering and counter-terrorism financing matters.

That announcement sent the parent’s share price tumbling as any determination from the regulator would not just affect the Irish business but a large chunk of operations across Europe. The downturn was then amplified by the news that Shine Lawyers launched a class action over the company’s alleged delay in announcing the investigation.

EML was granted some reprieve from the bank in November last year, with regulators giving PCSIL a green light to “sign new customers and launch new programs whilst staying within the material growth restrictions”.

"PCSIL is confident that it can meet these obligations,” EML said at the time.

Whilst the latest announcement pertaining to Up Spain does not indicate whether its European arm is involved in the partnership, the Bank of Ireland giving the leash on PCSIL some slack has undoubtedly bestowed some confidence on EML.

Shareholders are reflecting that today, with EML trading up 7.02 per cent to $2.52 per share.

Whilst an improvement, the company’s share price is still less than half that recorded before EML revealed the Bank of Ireland’s investigation.

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