In a move that Stargroup has described as financially significant for the rapidly growing financial payments company, Goldfields Money, who have a banking license, will place up to $15m of their excess cash into Stargroup’s 350 ATM machines across the country for at least the next 3 years.
Stargroup will discontinue their current arrangements with a non-bank third party who were providing cash for the company’s ATM machines in favour of Goldfields Money who have offered a considerably better deal that is expected to impact Stargroup’s bottom line.
Mr Todd Zani, Stargroup’s CEO and Executive Chairman said “This is a sizeable transaction for Stargroup that helps us significantly reduce our cost of funds. This is an excellent example of win : win business in that it represents a significant cost saving over our present cash bailment arrangement and is also a diversification of income for Goldfields Money in relation to its present activities.”
The deal will also enhance Goldfields Money’s regional reputation after Stargroup agreed to provide their unique “bank in a box” recycler ATM machines for Goldfields Money branches, many of which are in country areas that major banks have pulled out of.
The company will install its first recycler ATM machine at Goldfields Money’s Norseman branch within weeks ahead of a wider rollout to other branches, many of which are in regional areas.
Stargroup’s recycler ATM is a unique device that can both dispense and accept cash creating an almost perfect, fee generating money loop where some people deposit money and others withdraw it from the same machine.
The machine is smart enough to recognize each currency unit deposited before sorting it into the correct cassette tray ready to be dispensed to the next customer with Stargroup taking a clip of the ticket for each transaction.
The recycler ATM is manufactured by NeoICP, a Korean ATM manufacturer that is part owned by Stargroup, thus ensuring they keep a close hold on exclusivity for the machines in Australia at least.
Goldfields Money is run by savvy financial markets expert and former Head of Macquarie Financial Services in Asia, Simon Lyons.
Commenting on the deal Lyons said ““This is a fantastic opportunity for Goldfields Money. We recently announced that we were investing in digitising our back office and developing a banking platform to enable more effective third party distribution to existing and new distribution partners and we are excited to partner with Stargroup and roll out the Recycler ATM in our branches.”
“This branch automation technology which can be fully customised for our customers as a result of being able to directly work with Stargroup in our own backyard is truly a unique opportunity for Goldfield’s customers.”
The marriage of a quasi bank and an ATM machine business makes sense on a lot of levels with both parties providing something the other doesn’t have.
Goldfields Money can provide much needed cash for Stargroup’s aggressive growth plans and Stargroup can help Goldfields Money compete with the bigger banks with the provision of their unique ATM hardware and market reach.
In a statement to the ASX this week, Stargroup, who recently dual listed on The Frankfurt stock exchange, also alluded to a possible roll out of “Star labeled” financial products that no doubt will be provided courtesy of the new partnership arrangements.
Whilst Stargroup didn’t provide details about the possible new financial products, partnering up with an organization with a banking license opens up a raft of possibilities for the company that probably weren’t previously factored in by the market.
By Matt Birney
