This is not investment advice and does not consider your financial situation. Do your research before taking any positions in the securities listed below.
A recent IPO with a long history of helping Credit Unions etc
Simplistically, $CCL specialises in payment solutions and regulated data services to Australian Credit Unions and Neobanks
If you want to understand the business better, I recommend listening to the following podcasts with Bianca Bates (COO of Cuscal) to get an overview of the business
Whilst she is generally optimistic about the business, she explains simplistically the B2B nature of this Cuscal to those unaware of the business
I would also encourage you to read over the article by Harley Grosser on Livewire where he dives into the business and why Capital H has bought a stake
Below is a brief history of what they have got up to
From a brand perspective, the company is only 20 years old - with RediAtm, 86400 and Basiq being the major milestones since then
A quick rant about Credit Unions & Neobanks
There are certain loan types where non-Big 4 banks are stealing genuine market share (e.g. CRE & SME Lending) at an alarming rate.
$CCL's niche is to provide non-Big 4 banks with certain payment infrastructure (cards, ATMs, payment rails) where their economics is more driven off transaction volumes, than values
Overall, the market expects these customers will probably grow between LSD and HSD rates (e.g. 4% for Credit Unions and 7% for NeoBanks)
$CCL's biggest earnings will be:
Payment Facilitation - Facilitating payments on the 'rails' (e.g. via Visa/ApplePay etc) for non-Big 4 banks
ATM Management - Assisting in the ATM business but not directly owning the ATM infrastructure
Cards - They help non-Big 4 banks launch their credit/debit cards
Breakdown of 2025 Revenue
What about the financials
Making Debit Transactions: $CCL captures the highest economics through “making” of transactions (e.g. switching, clearing, reporting and settlement) and their strongest niche here is on the credit side as opposed to credit/pre-paid
Non-card Payments: Whilst a smaller contributor a decent growth engine is non-card payments. Whilst management focus on theThe main driver for higher economics is the movement to real-time payments for multiple users
Transition from Batch Payments to NPP in
Paytech flow: Whilst this is a smaller driver, they generate some revenue from taking core payments from SmartPay, Zeller and Square. It is worth noting that some changes in Square and Tyro have adversely impacted this part of the business
Is this worth buying?
Recent Stock Trading: The share price has increased slightly since IPO (and Harley's post) mainly due to strong transactional volumes and good cost management (e.g. normalising FTE count)
PayTech is a small but riskier income source: Whilst it is not a dealbreaker, I consider it hard to place too much emphasis on their future flow from Paytech players (e.g. SmartPay/Zeller) given the consolidation in this space
Reg Data turnaround: A turnaround in losses in the Regulatory Data would grow earnings by 20%. Whilst I consider this turnaround likely, I think there is a cap on how quickly they can increase revenue on datafeeds to their major customer without being
This is a service whereby $CCL provide safe and secure savings/lending data history to a potential loan provider (i.e. this cost is not borne by the end-customer)
Interest Income on Cash Float: The business generally benefits from the $1bn of Investment Portfolio they must hold as cash float. Whilst rate cuts will have a small impact, it is fair to say this business benefits from sustained higher rates
Expenses: For $CCL to produce a >10% ROE it needs to do the following:
Spending on consultants and external tech providers is structurally part of their expenses Salary/FTE Expenses: As set out in the prospectus, Employee-related expenses have reduced by 6% due to a forecast cut in employees. This is likely a one-off sugar hit, as $CCL forecast they will re-hire over the coming years.
Tech Expenses: There are significant costs in the maintenance, development and resilience $CCL's IT systems. Outsourced services are a large expense, along with repairs & maintenance and software license and access fees.
Most of this is a fixed amortisation of capitalised project costs
A smaller element is volume-related business growth for transaction-related license fees.
Of the consulting costs, they are looking at moving certain items in-house
This yields a c.10% annualized ROE
Conclusion - $CCL has near-term potential, but I'm not convinced its a long term winner
As you can see, $CCL operates in an interesting niche and they are prudently managed:
27% Capital Adequacy
6% reduction in FTE
Proactive in writing down intangibles
Whilst I do think the P/E at 14x is low, I believe that the 10% ROE for this business means it should not be trading on a high multiple (even once the Reg Data business becomes profitable)
I consider this more of a short-term play where it appreciates following its inclusion in the ASX 300 Index. However, it is not a long-term holder where it will continue to get oversized returns over time
A BUY catalyst for me would come if they could achieve a higher recurring ROE through:
Meaningful profitability from the Reg Data business
Lower on-going Technology costs
Evidence of stronger margins (i.e. Average Expenses/NOI = <75%)
In general, I do not believe $CCL is overvalued or a bad business. However, I think a significant portion of their expenses will always be technology and employee costs, as managing payment systems is complex and challenging. As such, there is base-level CODB which $CCL must pay, and they cannot transfer these costs to customers due to the competitive nature of the payment industry. I continue to monitor this business as it has certain advantages (i.e. operating history with Credit Unions etc)
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