NET1 Technologies is a leading provider of affordable and secure financial transaction channels, with a special focus on serving the under-banked and un-banked, the company’s financial technology is widely used throughout much of the developing world today. NET1 Technologies’ position today, however, is the legacy of more than three decades of foresight and innovation. The founder of the company has long been Serge Belamant.
NET1 Technologies Was Founded on FTS Innovation
Serge Belamant left his post at Saswitch to found NET1 Technologies in 1989. At the outset, the company’s unique capability was its universal electronic payment system (UEPS). UEPS was an end application that could integrate with the existing funds transfer system (FTS) framework, but at the time banks were slow to implement NET1 Technologies’ UEPS feature. The company found success with an initial core group of customers, but growth was slow for the first six years of the company’s history.
VISA Contracted With NET1 Technologies for COPAC
NET1 Technologies’ breakthrough came in 1995 when Serge Belamant landed a contract with Visa to develop a new feature for VISA cards. The contract was based on NET1 Technologies’ intellectual property and on Belamant’s track record as a financial technology innovator. This opportunity finally made it possible for NET1 Technologies to merge Elements’ UEPS and FTS solutions and Visa hired NET1 Technologies to develop a Chip Offline Pre-Authorized Card (COPAC).
In order to work on this project, Belamant relocated himself and his company to the United States, where greater resources were available. The COPAC technology that Belamant and NET1 Technologies developed at the time has had lasting impacts:
Firstly, COPAC technology is still integrated into Visa cards as a primary measure against the misuse of credit and fraud and to verify personal identification numbers (PINs).
Secondly, the contract and successful project enhanced NET1 Technologies’ growth and capabilities – the company was successfully listed on the Johannesburg Stock Exchange (JSE). To this day, NET1 Technologies still maintains a secondary listing on the JSE in addition to its primary listing on the NASDAQ.
NET1 Technologies Updated South Africa’s Social Security Payment System
After completion of the Visa Project, NET1 Technologies relocated to South Africa and purchased Cash Payment Services from the First National Bank of South Africa in 1999. Cash Payment Services was used to distribute social security payments throughout much of South Africa, and Serge Belamant saw an opportunity to further develop the payment system.
At the time, Cash Payments Services needed to be modernized. The system had to reliably distribute social security and other welfare grants to more than one million South African residents, and many of these people lived in rural regions which made the distribution even more challenging.
NET1 Technologies updated Cash Payments Services by integrating the company’s UEPS technology into the system. With UEPS in place, the payment system became more secure, faster and had increased interoperability capabilities. In short, it was finally able to reliably distribute the appropriate grants to the one million-plus South Africans who needed them.
What the modernization of the Cash Payments Services did for South Africa’s citizens can be seen in a nickname that Belamant picked up after this project’s completion. Journalist Stafford Thomas called Belamant the Henry Ford of Information Technologies, recognizing both his and NET1’s vision and impact on the country at large.
International Growth Led to Listing on the NASDAQ
After successfully updating South Africa’s Cash Payments System, NET1 Technologies steadily grew to become an international leader in IT solutions.
During this time, NET1 Technologies took on projects in other African countries such as Ghana, Botswana, Namibia and Burundi. The company also completed projects in non-African countries, including Iraq and Russia.
By 2003, NET1 Technologies had firmly established itself in the international community and had grown substantially. Serge Belamant turned his focus on meeting the requirements for being publicly listed on a U.S. stock exchange. These requirements were met by 2005 when NET1 Technologies debuted with an initial public offering on the NASDAQ.
Today, NET1 Technologies continues to trade on the NASDAQ under the ticker symbol UEPS — a clear nod to the intellectual property that has enabled the company to accomplish many of its major projects. As mentioned, a secondary listing on the JSE is also maintained. The ticker symbol on the South African exchange is simply NT1 (without an “e”). Serge Belamant became Chairman and Chief Executive Officer of NET1 Technologies upon the company’s listing on the NASDAQ.
South Africa Social Security Administration Contracted With NET1 Technologies
NET1 Technologies continued to be a major player in the IT space, reaching a market cap of $2 billion on the NASDAQ at the company’s peak. While the company’s work wasn’t limited to South Africa, Serge Belamant ensured that he maintained strong connections with the country throughout this period.
In 2012, the South Africa Social Security Administration (SASSA) contracted with NET1 Technologies to distribute all of the social security grants paid within South Africa. This increased NET1 Technologies’ distribution of grants about ten-fold, from the previous one million-plus to over 10 million.
To efficiently and reliably distribute 10 million-plus grants on a monthly basis, NET1 Technologies had to once again modernize the payment system. Serge Belamant led the company through the development of several new solutions, including morphing, variable PIN usage and a 1:N Biometric Comparison Engine.
Morphing afforded greater security for the SASSA’s grant payments. The advancement made it possible for EuroPay, MasterCard and Visa cards to function within UEPS when used on electronic devices such as POS systems and ATMs. Cards could now be used offline without sacrificing verification or access to financial products (i.e. loans, debit orders, credit interest accumulation, etc.), and multiple audit trails were created. This was an advanced form of blockchain technology for the time, and something Serge Belamant had been working toward throughout his career with NET1 Technologies.
Variable PIN was a sort of two-factor authentication, in which a card user would verify their voice over phone before using an ATM. They received a one-time PIN upon voice verification, which could then be entered into the ATM to ensure a secure and non-fraudulent transaction with the machine. In South Africa at the time, this type of verification was absolutely necessary in order to prevent fraud at older ATMs that had outdated security measures and weren’t being replaced with newer machines.
The 1:N Biometric Comparison Engine was a high-speed system connected via superfast bus. The engine could check up to 200 million verification requests per second, and it ultimately saved the SASSA billions by eliminating numerous duplicate and ghost requests that were fraudulent.
Additionally, the reliability of the system was improved by creating redundancy among the many interconnected computers. Whenever any of the connected PCs went down, the system automatically reconfigured data sharing to ensure that the chain of information was maintained. A computer failure didn’t require any downtime to repair. In total, the SASSA grant payment system ran on NET1 Technologies’ new features for seven consecutive years without incident.
The
company was without equal at the time in using technology to
alleviate social inequality and in bringing financial services to the
un-banked and under-banked through disruptive innovation.