<p>Here is a list of our mixed reflections on the recent news from Zwipe and its market:</p>
<ul>
<li>Most importantly, yesterday Zwipe demonstrated the Pay ONE card in public for the first time. In our view, unlike legacy cards we have seen in the past, the delay to perform the biometric authentication was unnoticeable for the user when comparing to a normal contactless card (1 second vs. 0.3 seconds). The whole transaction indeed looked exactly like one from a standard contactless EMV card.</li>
<li>Zwipe is expanding its reach in India where we suspected that the willingness to pay could be generally lower. However, one should note that the gigantic Indian market has a premium segment whose size is comparable to the total Nordic market. The interest from India also shows that the biometric payment card movement is global.</li>
<li>Zwipe’s card personalization partners have executed several webinars for banks. Strengthening this megaphone effect by growing the number of partnerships with personalization companies is crucial, considering their direct bank relations. Aside of personalization, we expect Zwipe to add payment processor companies as ecosystem partners as well, for similar megaphone effects.</li>
<li>Zwipe’s hundreds of direct bank dialogues are also growing quickly, which constantly adds data points on the confirmed interest, card value proposition and user willingness to pay etc.</li>
<li>We believe Zwipe’s card manufacturing partners together produce well over 700m cards per year, which is in line with one whole Idemia. Mighty oaks from little acorns grow.</li>
<li>While Zwipe’s value proposition is the strongest for smaller customers, we were positively surprised to hear the company say that the big players now also want to discuss with Zwipe, since they appreciate e.g. the agility, speed, service level, and expertise etc.</li>
<li>Zwipe, on <a href="https://www.redeye.se/video/event-presentation/809716/zwipe-ceo-andre-lovestam-presents-at-investor-forum-online">Redeye’s event on April 23</a>, said it sees no long-term issue in the Idemia partnership in terms of future next generation cards.</li>
<li>The CEO’s optimism is backed up by his recent purchase of shares for NOK 10m. While CEOs in general are always positive, such high conviction is indeed very rare.</li>
<li>Samsung’s recent decision to join the market by launching its own secure element might be a sign of how large the market could become. In relation to Samsung’s other lines of businesses, we think it would not be worth bothering for Samsung if it did not see future volumes in the billions.</li>
<li>In UK, the contactless limit has been raised by The Financial Conduct Authority (FCA) from £45 to £100, with a cumulative cap of £300 (up from £130). According to FCA, the reason is the rapid growth in contactless transactions related to the pandemic.</li>
<li>We note there are retrofit solutions for contactless terminals that allow the user to type the pin the air. While this solves the hygiene-related Covid-19 issues, the PIN code inconvenience and problems with forgotten or stolen pin codes are still there, not to mention the unsecure payments.</li>
<li>Zwipe continues to attract senior card professionals and industry experts. As previously discussed, there cannot be a co-incidence that this much talent is so eager to join Zwipe right now.</li>
<li>Last, Zwipe expects the global component shortage to not be an issued during the commercial ramp-up of 2022</li>
</ul>
<p>We revise our 2021 sales and operating loss estimates slightly to NOK 8m and -65m (14m &amp; -59m), but we see no reason to make any other changes. The higher burn rate of NOK 6.3m is due to higher activity. We do not view it as something negative. In our view, Zwipe has a window of opportunity and should not be cheap when it comes to adding cost to further strengthen its position.</p>
