VerifySmart Signs MOU with One of Southeast Asia's Most Influential Business Leaders;
JV to Introduce Patent Pending Zero-Loss Credit/Debit Card Fraud Technology
2009-11-02 09:00 ET - News Release
TAGUIG, METRO MANILA, Philippines, Nov. 2 /PRNewswire-FirstCall/ - VerifySmart(TM) Inc. : ("VerifySmart" or the "Company"), a global leader in secure and fraud free credit/debit card payment processing and transfer services, has signed a Memorandum of Understanding (the "MOU") with Mr. Theodore 'Teddy' Permadi Rachmat of Indonesia. The MOU outlines the terms of an Agreement ("the Agreement") between Mr. Rachmat and VerifySmart to form a Joint Venture Company (the "JV Company") to introduce the Company's proprietary suite of fraud prevention and detection technologies to financial institutions, businesses, and economic development groups in Southeast Asia, with first right of refusal for Asia and the Middle East.
The signing is a timely and strategic move for VerifySmart as it partners the Company's intellectual property with one of Indonesia's wealthiest and most influential businessmen and founder of the multi billion dollar Triputra Group conglomerate. Under the terms of the MOU, the new JV Company will be based on a 50-50 revenue sharing model, and will, merging VerifySmart's in-place development and implementation team with Mr. Rachmat's legacy of influence, immediately access one of the most robust and highly-developed commercial transaction environments in the world.
The opportunity for the JV Company lies is the ever-expanding chasm between the unprecedented speed at which Southeast Asia's technological and economic environments develop, and the financial community's inability to harness or eliminate crippling credit/debit card and online transaction fraud loss. VerifySmart's patent pending technology reduced credit/debit card fraud loss numbers to zero in initial testing.
"I am extraordinarily optimistic about the opportunities afforded by VerifySmart's intellectual property and the patent pending protections on their IP," says Mr. Rachmat. "Southeast Asia is desperate for fraud loss solutions that can be implemented in the near term. I believe VerifySmart has the solutions and we are certainly well positioned to move quickly to implement them."
Southeast Asia - the vast and densely populated area of Asia including Singapore, Indonesia, the Philippines, Brunei, Thailand, Cambodia, Laos, Vietnam and Malaysia, is very evolved technologically and boasts some of the highest mobile phone subscription rates in the world. The mobile and online commercial transaction growth rates for many member countries therefore are extraordinarily high - up to 40 percent annually. This extraordinary growth is matched only by a tandem increase in crippling credit/debit card and online transaction fraud losses.
From his position at the very top of Indonesia's financial community, overlooking all of Southeast Asia, Mr. Rachmat is keenly aware of the risks at both ends of the transaction - for a) institutions and merchant groups issuing fraud-susceptible credit and debit cards, and transferring large volumes of in-bound expatriate cash, and b) for individuals holding 100% liability credit and debit/cash cards with no built-ins for effective fraud prevention or detection.
VerifySmart Honorary Chairman Adi Muljo, returned Saturday from Indonesia where he penned terms of the MOU with Mr. Rachmat, a former PT Astra colleague. Both gentlemen look forward to working together again. "It is an honor to be working again with Teddy, and on such a worthwhile project as improving the safety and security of Indonesia's people and her financial institutions," says Mr. Muljo.
About Theodore Permadi Rachmat
Mr. Rachmat, best known as 'Teddy', founded the Southeast Asian conglomerate Triputra Group (PT Triputra Investindo Arya), a private company with estimated revenues well in excess of $3b annually. Triputra grew to dominate the regional automotive landscape by addressing the industry supply chain at every level, from retail automotive and motorcycle parts and tire sales, to vehicle rentals, attire, logistics, financing, coal mining, and the raw materials used in the manufacture of automotive tires.
Mr. Rachmat is a former President Director and President Commissioner of PT Astra International and PT United Tractors. He was the President Commissioner of PT Adira Dinamika Multifinance Tbk, one of Indonesia's largest multi-brand consumer financing companies majority owned by private banks in Indonesia and Singapore. Mr. Rachmat sits on the board of directors for several of the country's largest banks, and is an active member of Indonesia's National Economics Board.
Understanding the Credit/Debit Card and Transaction Fraud Loss Opportunity
Addressing credit/debit card and online transaction fraud loss is one of the most important issues facing industrialized and developing nations today. The fraud loss numbers, threat to economic security, and acceleration of piracy sophistication are so great that, current and projected loss statistics are difficult to access. It is reported that identity theft and credit card fraud are the fastest-growing categories of US Federal Trade Commission complaints, and that the cost of credit card fraud in the United States is estimated to be US$50 million a day -- a staggering US$18.25 billion a year. In Canada, card fraud costs exceed CAD$8 million per day or $2.9 billion per year.
Currently, the accepted credit/debit card and online transaction fraud detection and prevention solution is the so-called 'Chip and PIN' ("C&P") which originated in the UK in 2004. C&P launched in parts of North America in 2008, but, in spite of high capital costs to implement and high expectations from financial institutions, merchants and consumers, the results have been disappointing at all levels. In 2008 APACS (Association of Payment Clearing Services) reported card-only fraud losses as a percentage of card turnover amounted to 0.12%. Prior to the introduction of C&P, this same statistic was 0.14% -- a mere 0.02% reduction in losses weighed against tens of millions in implementation costs.
VerifySmart's patent pending and PCT approved credit/debit card and online transaction fraud prevention and detection technologies meet the needs of a security challenged transaction processing industry. During alpha and beta testing, fraud loss costs were reduced to zero. At the centre of all VerifySmart solutions, and at the heart of their PCT approved pending patents, is the engagement of the mobile device. Of the more than 4.1 billion mobile devices in use globally, more than two-thirds of them are in Asia. Fraud loss numbers for Asia and Southeast Asia are not available, but based on population, mobile device adoption and transaction numbers alone, the credit/debit card loss prevention and detection opportunities in Asia and Southeast Asia are greater than anywhere else in the world.
VerifySmart(TM) Inc designed and developed a Proprietary Hardware/Software Solution that solves Credit/Debit Card fraud by using two Factor Authentication. The Company's Core Technology is designed to meet the needs of the Security challenged Trans action Processing Industry. Present day solutions, such as Verified by Visa, Chip and Pin and CVV Code (all which can be compromised) have not reduced payment card fraud by any significant factor. The VerifySmart solution has reduced fraud to zero in initial production pilots. The Company's proven and highly scalable solution is gaining worldwide attention and placing VerifySmart at the forefront of the fraud prevention revolution.
To provide better access and services to Southeast Asia's financial services sector, VerifySmart has plans to relocate its head office to Singapore. Details of the JV Company and other of VerifySmart's Southeast Asian business developments will be released as news develops.
Forward Looking Statements
This current report contains "forward-looking statements", as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements in this current report which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future.
Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainty of financial estimates and projections, the competitive and regulatory environment for start up software companies, stock market conditions, unforeseen technical difficulties and our ongoing ability to operate a business and obtain financing. These forward-looking statements are made as of the date of this current report, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements.
Although we believe that our beliefs, plans, expectations and intentions contained in this current report are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate. Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in our annual report on Form 10-K for the 2008 fiscal year, our quarterly reports on Form 10-Q and our other periodic reports filed from time-to-time with the Securities and Exchange Commission pursuant to the Securities Exchange Act.
CONTACT: Mr. Adi Muljo at 1-800-685-1584 or visit www.verifysmart.com