The Reinvention of NETellerBy: Adam Baker, Thursday October 16th 2008
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NETeller is an e-wallet service launched in 1999 by the British company Neteller Plc. NETeller operates from the Isle of Man. It allowed consumers from anywhere in the world to pay merchants through a secure online mechanism. Though NETeller can be used to pay any merchant its focus in the past had been on the online gambling industry, where it was the leader in providing financial services.
Problems started for NETeller when the United States prohibited the transfer of funds to online casinos through the UIGEA in the later part of 2006. Two founders of NETeller John Lefebvre and Steve Lawrence were arrested in January 2007 while they were in the United States. Both were Canadian citizens and apparently both were no longer actively involved with NETeller. Despite the timing of the arrest, the charges did not have anything to do with the UIGEA, but alleged money laundering conducted by Lawrence and Lefebvre for several years in the past. Subsequently Lawrence pleaded guilty to the charges and is cooperating with the United States authorities.
NETeller was separately acted on by the U.S. Department of Justice for providing advertising and payment services to offshore gambling companies. In order to avoid prosecution NETeller entered into a Deferred Prosecution Agreement with the U.S. authorities. As per this agreement the charges against NETeller would be dropped after two years subject to NETeller fulfilling certain conditions. These included making a payment of $136 million.
As a result of these two incidents NETeller completely withdrew from the United States and Canadian markets, which at that time contributed to two-thirds of its revenue. NETeller's pretax loss for 2007 was $185.7 million. In order to distance itself from the past NETeller decided to focus on the European and Asian markets, change its identity and reduce the share of online gambling business in its portfolio. CEO Ron Martin has targeted that the non-gaming revenues will reach 30% by 2010. The company currently has 18.5% in non-gaming revenues.
NETeller proposes to change its name to NEOVIA Financial Plc. The name means "New Way" and significantly indicates that the company has put its past behind and is now looking ahead. The formalities in this connection are expected to be completed next month. NEOVIA will market three of NETeller's most popular products. These are NETeller, NETBANX and Net+.
NETBANX was the first product launched in 1996. It enabled online merchants to accept payments through credit and debit cards from a secure portal. In 1999 NETeller e-wallet was launched. It was a stored online account that could be used to make payments for online purchases or for transmitting funds to friends and family. It eliminated the risk associated with entering credit cards details at every online merchant's web site. The latest product is Net+, which is a prepaid card program that enables customers to make purchases over 24 million locations.
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