* eChinaCash plans acquisitions in next 18 months to take
revenue to $100 million
* Company has focused on gasoline station cards,
considering travel industry
* Company considering cell-phone payment investments
By Anupreeta Das
SAN FRANCISCO, March 26 EChinaCash, a
Beijing-based cardholder services company backed by wealthy
U.S. investors, plans to make a handful of acquisitions in
China in the next 18 months to increase revenue four-fold to
$100 million, its chief executive said on Wednesday.
Technology entrepreneur Ron Posner, a former CEO of Peter
Norton Computing who led the anti-virus software company's 1990
sale to Symantec Corp (SYMC.O), said in an interview he wants
to expand eChinaCash's offerings in China as more and more
people begin using credit and debit cards.
"China is a cash economy and it's going to need credit," he
The market for electronic payments in China is growing at
about 32 percent annually and is expected to cross $22 billion
by next year, he said.
EChinaCash currently has a deal with China's largest gas
company, Sinopec (600028.SS), to provide prepaid cards to car
owners. Some 18 million of the nearly 40 million car owners in
China use these cards to fill gas at more than 35,000 Sinopec
Last year, eChinaCash had $24 million in revenue, mostly
from transaction fees and loyalty programs attached to these
prepaid cards, Posner said.
The company next plans to tie up with China's travel,
retail and other industries to offer similar prepaid cards, he
said. Customer data harvested from these prepaid card owners
will be another potential source of revenue, Posner said.
The company is in preliminary talks with a number of
Chinese start-ups that offer prepaid payment methods to
different markets, Posner said.
It hopes to buy five or six such companies at an average
acquisition price of between $5 million and $10 million in the
next few months, he said.
Posner, 65, has spent several weeks in China scouting for
potential deals since taking on the CEO job in December. He
speaks very little Mandarin, but says he gets by in the "wild,
wild West" with the help of interpreters and a solid knowledge
"We need about $30 million to do this right," Posner said.
Founded in 2000, eChinaCash has $28 million in funding from
investors, including Peter Norton, who created the popular
Norton anti-virus software; Leonard Lauder, chairman of
cosmetics giant Estee Lauder Companies Inc (EL.N); and venture
capitalist Harry Edelson, an early foreign investor in China.
Norton owns 40 percent of the company, which has 200 employees
EChinaCash is also exploring the mobile payments market, to
allow payments with cell phones.
Posner said this is a lucrative opportunity given that
China has one of the world's fastest growing cell phone
markets, with nearly 600 million users.
Companies like Nokia NOK1V.HE and Qualcomm (QCOM.O) are
investing in this new mobile technology. Last year, Qualcomm
bought Firethorn, a start-up that makes a mobile banking
product for the U.S. market, for $210 million. Nokia and Visa
Inc (V.N) also signed an agreement last year to develop a
system that lets people pay by waving their cell phones at a
Posner said he has approached these companies about using
EChinaCash hopes to eventually sell itself to a credit card
or electronic payment company, Posner said, as banking sector
regulations in China ease up and consumers get hooked on the
convenience of paying without cash.
(Editing by Gary Hill)