Rewards platform Pokitpal is raising capital as it seeks to grow by acquisition
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Loyalty payments platform Pokitpal — which offers cash-back rewards to shoppers at the point of purchase — is staying busy in the race to build market share in Australia.
After pursuing an organic growth strategy with local retailers, the company has turned to a partnership strategy via white-label agreements with the big payments companies and other key players.
And it’s also commenced raising capital from high net-worth and sophisticated investors to fund an acquisition.
Speaking with Stockhead, CEO Gary Cobain said the moves were part of efforts to reignite the growth of Pokitpal’s user-base from current levels of around 160,000.
The firm’s first major white-label partnership is with payments giant Visa, which will connect the Pokitpal platform with Visa customers in China. Tourists visiting the country will then be offered cash-back rewards deals at participating retailers.
“We know there’s around 1.5m Chinese tourists that visit Australia each year and spend around $11 billion, so if we could get a small percentage of that we’d be doing pretty well,” Cobain said.
He said Pokitpal had already seen more deals from Visa “in the first week than our own network in the first month”. The agreement is structured so Pokitpal’s product is offered to Visa customers via a network of 16 Chinese banks.
“It’s all about bringing in consumers; they started with Chinese banks but their intention is to open it up to the whole Asia Pacific,” Cobain said.
He added that Pokitpal had also just signed off on a deal with a new partner (wh0 can’t be named yet) that will give Pokitpal an additional network of 20,000 merchants.
Pokitpal’s platform is structured so shoppers get cash-back discounts of between 5 and 25 per cent at participating retailers.
Cobain said the company’s strategy differs from its competitors in that Pokitpal is focused on growing its in-store network.
“Online is a secondary strategy,” he said.
“It’s actually very easy to do, whereas building networks in-store is very difficult. So we’ve spent around 18 months developing a platform that just lets you tap and pay, and you get the reward immediately.”
The company has an app which allows users to look on a map and see which participating retailers are close by. For Australian consumers, the rewards are paid straight into the app’s mobile wallet, which users can then draw into their bank account.
Pokitpal makes revenue by taking a clip of each transaction, which varies depending on the retail environment it’s operating in.
Cobain is also in talks with private investors as Pokitpal looks to raise $2m for the purpose of funding an acquisition.
He said the company plans to acquire a similar transaction business which has a database of around 1,000 merchants and more than 5 million consumers.
“We’ve realised about 30 per cent of what we need already from sophisticated and [high net worth]investors,” Cobain said.
“The thing they like is we’re not speculating about the acquisition; we have an exclusivity agreement with agreed terms.”
“It’s profitable already with turnover north of $10m. If we can convert our yield per consumer to that user-base I think it will drive significant value.”
Ultimately, Pokitpal’s value proposition is derived from the expansion of its user-base.
“The more consumers you have the more retailers you can bring on and vice versa, so our goal is to drive that from both sides,” he said.
He pointed to the more mature US market, where competitors in the space are raising tens of millions of dollars to build market share.
“With the right partners and the right acquisitions, I think we could execute on that here for a fraction of the cost,” Cobain said.