After being halted at the open, shares of Selectcore (TSXV:SCG) are up today. The company provided details on a contract that was described in vagaries when announced mid-March.
Selectcore says it has signed a multiyear contract with the City of Toronto for prepaid payment cards. The cards will be offered to residents on social assistance program Ontario Works so they can instantly receive their benefits through an EMV chip and PIN prepaid MasterCard card that offers ATM access.
Selectcore president Ryan Deslippe says the Toronto contract can be replicated elsewhere: “Under this contract, we have completed one of the most complex and sophisticated implementations of its kind,” he said, adding: “We successfully tailored our technology to meet the specific needs of Canada’s largest city. We now have the unique capabilities to provide turnkey cheque replacement card programs to other municipal, provincial and federal government agencies across Canada.”
SelectCore describes the contract as “high-margin” and expects it to be worth between $15-million and $18-million for the initial period.
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Vaughan, Ontario’s Selectcore, which was established in 1999, got its start selling prepaid telecom to an established network of retail convenience and grocery store locations. The company has since grown its revenue from $37 million in fiscal 2006 to over $82-million in 2011. Last year, the company received approval for its Iridium brand MasterCard from the United States Patent and Trademark Office. The move enabled Selectcore to enter the prepaid credit card market, a space that an independent research report commissioned by MasterCard estimates will surpass $440 billion by 2017, which is more than four times its estimated 2009 value of $120.2 billion.
Mastercard Canada’s Senior VP of Market Development, David E. Orzel, says the Selectcore deal with the City of Toronto is innovative. “More and more, governments, businesses and consumers are moving to a world beyond cash and cheques,” he noted. “As a leader in payments innovation, we are proud to partner with SelectCore to help bring safe, simple and smart solutions like the City Services Benefit Card to clients of Ontario Works.”
At press time, shares of Selectcore were up 13.9% to $.205 cents.