Revolution in the payments and credit market – the capital market

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Discount
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opening:1,400

Tall:1,404

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Shufersal
+ 6.48%

Base:2,531

opening:2,580

Tall:2,815

low:2,580

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This morning on the establishment of a joint venture based on the Facebook payments app, is a major revolution in the payments and credit market. If until today the apps Facebook, Beat and the like were used mainly to transfer money between members – now this market is gaining momentum. The stock is up 5% as of the date of publication of the article.

Recognize that you are leaving home for an important purchase and suddenly remember that you forgot your wallet at home? Or you were in line for the checkout at the weekly shopping and suddenly – Ouch, where’s the ticket? Even if you can not leave your credit card at home tomorrow morning, Shufersal and Discount mark the way there.

The PayBox app that Discount purchased several years ago will offer a digital wallet and a financial supermarket, which will include products and services from various suppliers and fintech companies. The companies will adapt the Shufersal Club’s credit cards to the Facebook application, issue non-bank virtual credit cards, allow cash-back credits that accrue in the wallet when purchasing at the Shufersal and Be chains, and allow the public to redeem digital characters of the “Golden Note” brand.

Significant customer base for getting started
The basis of the new partnership already exists: Shufersal’s customer club has about 2 million customers and Facebook has more than 1.5 million users. With such a large number of users, and with the large deployment of Shufersal throughout the country, there is no doubt that the joint company will receive a lot of information about the Israeli public, its buying habits and what interests it – and give it a new connection between retail and consumer (although this is not necessarily true for the customer Even so, half of the public in Israel is in a permanent overdraft).

In other words – Shufersal goes deeper into the field of credit cards, and this is further into the field of its customer club, which is actually a kind of financial arm through which credit card holders of the club receive benefits, discounts and more. Even so, this area is a key anchor in Shufersal’s profitability and profits – over 20% of current profits and now it will be more significant. For companies, this is a very interesting source of income – and when it is possible to accept the consumption habits of the public, without doing so in a blatant way like WhatsApp and Facebook – the expected profit for Shufersal – probably justifies the jump in the share.

Although Shufersal will not be in control of the new venture, the ability to connect the world of finance and the app through which you can pay, receive offers with a club of 2 million people is already “a kind of bank”. A significant part of this public will connect to the app – both in purchases at Shufersal and in general.

An innovative company that brought Israel its own funds and leveraged the online
The entry into the field of finance is not only potential, there is of course also risk, but it should be remembered that so far the network has proven itself as an innovative network – successfully entered several areas – credit card club, the first to introduce independent cash register technology, entered the private label successfully, and perhaps most It’s important to leverage online and e-commerce shopping successfully.

In an interview about two months ago, Shufersal CEO Itzik Aberkhan referred to competition in the industry and estimated that high operating profitability will also be maintained going forward and will be between 4% -5%. He is also not worried about the prolongation of the corona crisis and the economic crisis.

Good results for the company
The Shufersal chain provided relatively good and exceptional results in the past year, including in the third quarter of 2020 when profit jumped by 76% to NIS 97 million compared to the corresponding quarter in 2019, which stood at NIS 55 million. The Corona did her and the other chains, well. People buy more, and when restaurants and hotels are closed, the public buys more in chains.

But keep in mind that this is an exceptional year. Last year, the profit in most quarters stabilized at about NIS 50 million, and in 2018 at about NIS 65 million.

Although it is too early to determine the scope of the new collaboration and there are details that will become clear over time, it seems that this connection will indeed make Shufersal a more significant factor in the world of finance, and increase its revenues – and perhaps even profits – by tens of shekels. In terms of revenues (which in recent years have hovered around NIS 3 billion per quarter), this is quite negligible, but if profits do increase significantly – Shufersal will celebrate.