Loomis continues to execute on its strategy and now takes a major step in the ambition to expand its presence across the value chain by launching Loomis Pay.
Loomis Pay is a complete end-to-end payment platform for merchants and manages all types of payments, including cash, card and other digital alternatives, both in store and online. The core of Loomis current operations, cash in transit (CIT) and cash management services (CMS) will continue to be core business and Loomis Pay will complement the existing business and increase the addressable market for Loomis.
Loomis Pay will initially be marketed to small and midsize merchants, leveraging Loomis existing market leading position and long-term relationships. Loomis has presently CIT and CMS service agreements with approximately 85,000 merchants in the Nordic markets alone. The ambition, in the first initial stage, is to achieve revenue, within 5 years, exceeding SEK 3 billion generating an attractive operating margin. Loomis Pay is expected to generate a positive operating result (EBITA1)) during 2023.
During 2020-2022, investments will be made in product development and other activities for Loomis Pay. Loomis expects approximately SEK 100 million per year will be recorded as net costs in the income statement. Loomis Pay is currently reported in segment "other".
The solution will bring numerous benefits for Loomis's customers by reducing the number of required payment suppliers and improve simplicity. For example, improved cash flow as the customers will have the opportunity to have the value deposited on the bank account the business day following the transaction. These lead-times can currently be long and expensive. Additionally the merchant today needs to sign agreements with several suppliers to execute different types of payments, which Loomis Pay aims to solve with one contract for all payments. The merchant will also have better access to data, which increases visibility and will enable further growth opportunities for the merchant.
Loomis intends to launch Loomis Pay to merchant customers in Denmark during the autumn of this year. The service will be offered to customers in the Swedish market at the beginning of 2021 followed by rollouts in additional markets. Considering the total costs a merchant today pays for digital payments, payment systems, CIT and CMS, Loomis Pay will be a cost efficient alternative.
Loomis has evaluated the ideal technical solutions for Loomis Pay and as a complement to in-house developments, Loomis has acquired the Danish technology company GoAppified. GoAppified provides complete software and hardware for a merchant's payment applications. The purchase price for GoAppified was approximately SEK 60 million.
Kristoffer Labuc will be Managing Director for Loomis Pay. More information about Kristoffer Labuc can be found in Loomis' press release dated June 12, 2020.
"The launch of new digital payment solutions is a big and important step for Loomis. We will expand our service offerings to our customers and become a comprehensive supplier of all forms of payments. The market, which now opens up, is significant and we will have great use of the large network we already have when it comes to reaching out to our existing and future customers to launch Loomis Pay", says Patrik Andersson, President and CEO of Loomis.