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Yucheng Tech’s POS revenue

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I am always interested in recurring revenue business, debit/credit card transaction fee is one. Yucheng Tech (YTEC), the smaller rival of Longtop (LFT), is entering POS business this year. According to my friend Nawar Alsaadi’s analysis (quoted below):

“POS Revenue projections

The company mentioned in an investor presentation in February 2007 that the average business processed on a POS machine in China is 200,000 USD…Assuming an average transaction cost of 1.5% charged by the bank, the average revenue per machine will be $3000, and if we assume that Yucheng is awarded a 3rd of the transaction cost, this would net the company $1000 in transaction revenue per year. Thus, based on the company’s expected rate of merchant sign up, the company could generate as much as $50 million dollar in recurring transaction revenue by the end of 2009 as they sign up over 50000 merchants on their network…”

Today I read Yucheng’s news release: it says “Yucheng makes approximately RMB2 for each RMB1,000 spent at each of its POS terminals and benefits directly from the shift to credit/debit cards as the preferred form of payment.” So it’s about 0.2% instead of Nawar’s 0.5% assumption. In other words, the revenue contribution would be $20 m by the end of 2009. Not as big as $50 m, still good number for them.

1 reply on “Yucheng Tech’s POS revenue”

More from
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/05-16-2008/0004815324&EDATE=

The average monthly processed value (“APV”) per POS terminal with more than
three months of continuous operations in Q1 2008 surpassed US$7,000 (RMB49,
133 at 1 US dollar to 7.0190 RMB). This translates into roughly US$14 of
revenue per month per POS terminal,…

My take: huge discrepency between the Navar est. and Yucheng offical number.

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