• The Investing Place
  • Contact us
  • The Investing Place
  • Contact us
  • New Zealand
    • New Zealand
    • Australia
  • New Zealand
    • New Zealand
    • Australia
Account Login
  • What We Offer
    • What we offer
    • KiwiSaver
    • Investment Funds
    • Wealth Management
    • Wholesale
    • Private Markets
    • Digital Advice Tools
    • What we offer
    • KiwiSaver
    • Investment Funds
    • Wealth Management
    • Wholesale
    • Private Markets
    • Digital Advice Tools
  • Funds & Performance
    • View Performance
    • Our Funds
    • View Performance
    • Our Funds
    Kiwisaver
    • KiwiSaver Cash Fund
    • KiwiSaver Conservative Fund
    • KiwiSaver Moderate Fund
    • KiwiSaver Balanced Fund
    • KiwiSaver Active Growth Fund
    • KiwiSaver Aggressive Fund
    • KiwiSaver Cash Fund
    • KiwiSaver Conservative Fund
    • KiwiSaver Moderate Fund
    • KiwiSaver Balanced Fund
    • KiwiSaver Active Growth Fund
    • KiwiSaver Aggressive Fund
    Investment Funds
    • Cash Fund
    • Trans-Tasman Bond Fund
    • Global Corporate Bond Fund
    • Conservative Fund
    • Diversified Income Fund
    • Balanced Fund
    • Cash Fund
    • Trans-Tasman Bond Fund
    • Global Corporate Bond Fund
    • Conservative Fund
    • Diversified Income Fund
    • Balanced Fund
    Investment Funds
    • Active Growth Fund
    • Australian Absolute Growth Fund
    • Global Equity Fund
    • Trans-Tasman Equity Fund
    • Dynamic Fund
    • Aggressive Fund
    • Active Growth Fund
    • Australian Absolute Growth Fund
    • Global Equity Fund
    • Trans-Tasman Equity Fund
    • Dynamic Fund
    • Aggressive Fund
  • Information Hub
    • Intro
    • Investing 101
    • KiwiSaver Retirement Planning
    • KiwiSaver Hardship Withdrawals
    • Goals
    • Diversification
    • Compounding
    • Fees
    • Digital Advice
    • Your Rights
    • Our Approach
    • Financial Advice Provider Disclosure
    • Online Security
    • Intro
    • Investing 101
    • KiwiSaver Retirement Planning
    • KiwiSaver Hardship Withdrawals
    • Goals
    • Diversification
    • Compounding
    • Fees
    • Digital Advice
    • Your Rights
    • Our Approach
    • Financial Advice Provider Disclosure
    • Online Security
  • About us
    • About Us
    • Our Story
    • Team
    • Active Investing
    • Sustainable Investing
    • Awards
    • Financial Safeguards
    • Sponsorship
    • Careers
    • About Us
    • Our Story
    • Team
    • Active Investing
    • Sustainable Investing
    • Awards
    • Financial Safeguards
    • Sponsorship
    • Careers
  • Documents
    • Documents
    • Fund Reports
    • Forms
    • Documents
    • Fund Reports
    • Forms
  • Tools
    • Digital Advice
    • KiwiSaver Calculator
    • Online Security
    • Digital Advice
    • KiwiSaver Calculator
    • Online Security
Invest Now
  • Stock Story

Stock Story: Smartpay

  • February 8, 2023
Roland Houghton Roland Houghton Investment Analyst

There are many successful NZ businesses but only a handful manage to disrupt the Australian market. One of these rare few, Smartpay, is beginning to make waves over here in Australia and competitors are starting to take notice.

Smartpay is a merchant acquirer both in New Zealand and Australia. They have a significant presence in the NZ market where they lease card payment terminals to merchants for a fixed monthly fee. This is a very steady business, however the excitement is across the ditch in Australia.

Here they are a true merchant acquirer, sitting between the consumer, the bank and the card issuers such as Mastercard and Visa. They process the transaction and then pay all the related parties their fees, retaining some of the fee revenue for themselves. So they are now clipping the ticket on every transaction they process rather than just receiving a fixed fee per month.

They have also introduced a clever product called SmartCharge or Zero Cost EFTPOS where the merchant surcharges to the consumer all of the bank and card issuer fees and Smartpay share in that surcharge – the product effectively becomes free for merchants. In addition, although it is a highly competitive market, the vast majority of the Australian market share of merchant terminals is held by the big banks, which are slow to move with outdated pricing and customer service models.

 

 

 

 

 

This opportunity for Smartpay became possible due to an Australian regulatory change in 2015. This allowed non-banks such as Smartpay the ability to apply for a merchant acquiring license. Smartpay’s product went live in October 2017 and since then installed terminals in Australia have risen to 14,500 and quarterly revenue in Australia has reached $17m – they now generate more revenue in a quarter in Australia, than they do in a year in NZ.

 

 

 

1

Unlike many high growth companies, Smartpay is growing profitably with very attractive unit economics. They generally recoup the cost of acquiring a customer, including the cost of supplying the terminal, in about 6-7 months. This is an unusually fast payback period.

Milford has been invested in Smartpay since 2011. In 2019, Verifone bid $70m for Smartpay’s NZ division, and at the time of the announcement Smartpay had a market cap of $50m! We were always extremely positive on the underappreciated Australian business and this Verifone bid provided strong valuation support. The bid eventually fell away, largely due to Covid, but we used the ensuing weakness in the company’s shareprice to continue building our position. Over this time, Smartpay’s management team executed extremely well and continues to do so today. The market is finally taking notice as the share price has rallied 75% over the past 12 months despite volatile market conditions.

The future remains bright for Smartpay and we believe management will continue to take market share off the incumbent banks. We do, however, remain cognisant of the uncertain economic outlook which could mean a bumpy ride over the next 12 months for small disrupters like Smartpay.

1 Source: Australian Securities Exchange (ASX)

PrevPreviousStock Story: Neuren Pharmaceuticals
NextStock Story: RWE – a Leader in the European Energy TransitionNext
Latest Insights

Milford on Newstalk ZB: 14 May 2025

Read More
Murray Harris, talks to Bree and Clint from ZM about why ups and downs ...

Milford on ZM: 14 May 2025

Read More

EP32: Is the trade war over?

Read More

Disclaimer: Milford is an active manager with views and portfolio positions subject to change. This blog is intended to provide general information only. It does not take into account your investment needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to a Financial Adviser. Past performance is not a guarantee of future performance.

What We Offer
  • KiwiSaver
  • Investment Funds
  • Wealth Management
  • Wholesale
  • Private Markets
  • KiwiSaver
  • Investment Funds
  • Wealth Management
  • Wholesale
  • Private Markets
Resources
  • Documents
  • Fund Performance
  • Fund Reports
  • Forms
  • Financial Advice Provider Disclosure
  • Retirement Calculator
  • The Investing Place
  • Documents
  • Fund Performance
  • Fund Reports
  • Forms
  • Financial Advice Provider Disclosure
  • Retirement Calculator
  • The Investing Place
Team
  • Careers
  • Feedback & Complaints
  • Contact us
  • Careers
  • Feedback & Complaints
  • Contact us
Invest Now
Account Login
Facebook Instagram Youtube Linkedin Tiktok

2025 © Milford Asset Management Limited Privacy Policy Terms & Conditions Disclosure Statement

Replacement Product Disclosure Statements are available here or on the relevant scheme’s offer register entry at the NZ Companies Office
Milford Funds Limited is the Manager and Issuer of the Milford KiwiSaver Plan and the Milford Investment Funds

  • New Zealand
    • New Zealand
    • Australia
  • New Zealand
    • New Zealand
    • Australia
  • What We Offer
    • What we offer
    • KiwiSaver
    • Investment Funds
    • Wealth Management
    • Wholesale
    • Private Markets
  • Funds & Performance
    • View Performance
    • Our Funds
    • Kiwisaver
      • KiwiSaver Cash Fund
      • KiwiSaver Conservative Fund
      • KiwiSaver Moderate Fund
      • KiwiSaver Balanced Fund
      • KiwiSaver Active Growth Fund
      • KiwiSaver Aggressive Fund
    • Investment Funds
      • Cash Fund
      • Trans-Tasman Bond Fund
      • Global Corporate Bond Fund
      • Conservative Fund
      • Diversified Income Fund
      • Balanced Fund
      • Active Growth Fund
      • Australian Absolute Growth Fund
      • Global Equity Fund
      • Trans-Tasman Equity Fund
      • Dynamic Fund
      • Aggressive Fund
  • Information Hub
    • Intro
    • Investing 101
    • KiwiSaver Retirement Planning
    • KiwiSaver Hardship Withdrawals
    • Goals
    • Diversification
    • Compounding
    • Fees
    • Digital Advice
    • Your Rights
    • Our Approach
    • Financial Advice Provider Disclosure
    • Online Security
  • About Us
    • About Us
    • Our Story
    • Team
    • Active Investing
    • Sustainable Investing
    • Awards
    • Financial Safeguards
    • Sponsorship
    • Careers
  • Documents
    • Documents
    • Fund Reports
    • Forms
  • Tools
    • Digital Advice
    • KiwiSaver Calculator
    • Online Security
  • The Investing Place
  • Contact us
Account Login
Invest now