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Although it takes years
to develop and bring a new payment system to the market, Dexit already has a proven
product on the market in Canada and has completed the first phase of its rollout with an
Electronic Payment System
1 Richmond St. West, Suite 800
Toronto, Ontario M5H 3W4
Janet C. Martin
Chief Executive Officer
Interview conducted by:
Lynn Fosse, Senior Editor
April 20, 2006
Janet C. Martin
President and Chief Executive Officer
Janet Martin was appointed CEO of Dexit Inc. in March 2006.
She joined Dexit in May 2005 as Chief Operating Officer, managing the day-to-day
operations of Dexit Inc., laying the foundation for domestic and international expansion,
and playing a key role in the design and execution of Dexit's strategies.
A graduate of University of Toronto and University of Waterloo, Ms. Martin has an
impressive track record of accomplishments in the financial services as well as the
packaged goods industry.
Ms. Martin previously served as an Executive Vice President for Retail Banking at the
Canadian Imperial Bank of Commerce. In that capacity she managed a retail network of more
than one thousand branches and 17,000 employees. Prior to that she held management
positions at National Trust as well as Nabisco Brands and Lever Detergents.
She plays an active leadership role in her community serving as President of the Smile
Theatre Company. She is also Vice Chair and Member of the Audit Committee of OTG Financial
Inc. (Formerly Ontario Teachers Group Financial Inc.).
Dexit Inc., based in Toronto, has pioneered an instead of cash®" electronic
payment facilitation service for small transactions (generally under $25). The
Dexit® Service enables consumers to pay for a variety of low-cost items quickly and
conveniently with the tap of a RFID (radio frequency identification) tag linked to a
pre-paid account. Founded in 2001, and funded in part by CANARIE Inc., Dexit launched its
service in September 2003. More than 50,000 consumers have registered for the Dexit
Service, which is currently available in more than 450 merchant locations.
CEOCFO: Ms. Martin, youve been with Dexit under a year
and just named chief executive officer; what attracted you and what is your vision as you
take over leadership?
Ms. Martin: The thing that attracted me was the
product. When I started looking at the opportunity of Dexit, I went out and got one of its
tags, started my own account and started to use it, which caused me to fall in love with
the product. It is great; it saves me time and is convenient. I am one of those people who
has a hard time keeping cash in my wallet because I have to go to the ATM to get it. I am
always frustrated when I cant buy a coffee or whatever, because I hate using my
debit card for 2 or $3.00. Therefore, I am constantly running out of cash. However, when I
have my Dexit tag with me, I will always have money on it, because mine is set up to
reload from my credit card and when it hits $20.00, it loads $100.00 on it so that I can
use it. Therefore, if I want a newspaper and a sandwich with my coffee, all I do is tap it
and go. It is amazingly fast; you tap it and in less than 2 seconds its done. Hence, what
attracted me first to Dexit was the great product and what I thought was, I love
this product, I know others will love this product and I want to be a part of this.
And that is why I came here.
CEOCFO: Why the change in leadership at Dexit?
Ms. Martin: The board obviously felt that our previous
CEO was a great woman, shes very accomplished, she is known as an entrepreneur and
she really got this company off the ground and started. However, the board felt that as we
go forward and build and grow the company, a different set of skills was needed at this
stage. They asked me to take over because I have a history of growing businesses and
taking them from one point to another over a growth path. I have strong managerial
experience; Ive run a lot of companies and businesses. I also have a lot of
experience within the financial services industry.
CEOCFO: How prevalent is Dexit today; what and where is the
Ms. Martin: What we did first was go into a controlled
rollout and we rolled out in what we call the PATH here, which is a connected underground
network of convenience stores and food courts. They are underground because in the winter,
here in Toronto, its too darn cold to be outside. Hence, we have a large and
extensive network there and weve rolled out into that. What that has allowed us to
do over the last 2 years is to make sure that the product works and that all of our
backend technology works for the merchant as well as the consumer. Weve done that
now, which is what we wanted to establish in that controlled launch and that has been very
successful for us in establishing all of those things. The product works beautifully, the
security works and it floats flawlessly from your account or from your credit card or by
cash and so we are excited about that. Weve also rolled out this past summer to a
chain of pizza restaurants across the greater Toronto area. There are over 160 outlets,
which we have rolled out to and that was our first rollout to a chain outside of the PATH.
We are now looking at rolling out to major merchants. Those are long sales cycles, but we
are in those sales cycles right now.
CEOCFO: There are a growing number of electronic payment
options available; why should potential customers go with Dexit?
Ms. Martin: I think that what we give the customers is
convenience, because we are fast and we are easy. It is easy to get money onto your Dexit
tag as you can set it up as an automatic load from your bank account or from your credit
card, so that you always have money on it. In addition, it is really secure as there is no
money on the tag and if you lose your tag, you would call us up and tell us that
youve lost your tag and we will put a stop on the account right away. The money is
in your account and we will issue you another tag; so you havent lost anything. The
tag is set-up so that you can only spend $100.00 per day, so that even if someone were to
get your tag and use it before you called us up to put a stop on your account; you are not
losing a lot of money. So, to sum it up, Dexit is safe, its secure and it is not an
open proxy to your credit card. That is important to customers.
CEOCFO: Why should the merchants offer Dexit?
Ms. Martin: Cash is very expensive for merchants to
handle; it is time consuming, you have to count it, you have to get it from the bank and
get it back to the bank, further, it tends to disappear on you at times. Dexit meanwhile
is faster and easier for the merchants, as it makes the line move faster for you because
people wont have to dig into their pockets and purses for change and cash and
this can result in higher revenues for merchants. The last thing you want at the counter
of a busy convenience store or food court is someone digging for and counting change where
people are spending low amounts of money. Therefore, it moves the line faster and if your
customers like it, you will save lots of time in cash handling and the costs of cash
handling. It saves you money as well as speeds the line. You and I both know that when the
line is long, some customers will not wait for their coffee, so it also increases your
business, because there are less walk-always when the line moves fast. People have a
tendency to spend more as well with electronic payment devices compared to cash.
CEOCFO: What is your revenue model?
Ms. Martin: We derive revenues from a number of places.
They include revenues from the merchant as we charge them for each transaction and we make
money for selling equipment; the readers and the terminals. We also make money from the
customer, because right now there is a refill fee, which is about the same refill fee as
an ATM transaction. In addition, we earn fees from organizations that license certain
rights to market and sell the Dexit Service.
CEOCFO: What is the current financial picture of the company?
Ms. Martin: On March 23, we released our financial
results for year ended December 31, 2005 and were very pleased with our results. We
increased revenues by 172% to $4.8 million in 2005 from $1.8 million in 2004. We also
reduced our net loss by 40% to $6.7 million in 2005 from $11.2 million in 2004, and we had
$8.9 million in cash and short term investments at year-end.
CEOCFO: What types of business are you considering rolling
Ms. Martin: What we really believe is that Dexit is
ideally geared specifically towards small purchases; those things that you wouldnt
normally pull your debit or credit card out for. In our literature we refer to them as
purchases for under $25.00, but in practice they tend to be under $10.00. Therefore, that
puts us into the fast food market, coffee and donut market, convenience stores and drug
stores where there is a high proportion of people that buy magazines and other everyday
items. Those are the types of outlets that we believe we will have the most relevance in
for the customer and thats where we believe the customer will use it. It is also
useful in parking lots; anywhere that you still use cash. We also believe that we will
grow out chain, by chain, by chain, which is our model and we are working with our partner
Bell Canada on talking to major national merchants which fit in that under $25 average
CEOCFO: Tell us about your partnership with Bell Canada.
Ms. Martin: Bell Canada is our exclusive merchant
distributor for Canada, which means that they are the ones who work with the merchants and
sell the Dexit products into the merchants for us. They are also a consumer distributor,
which means that they also issue payment tags or cards, because our product can go in a
number of forms. However, they are not exclusive on the customer side, but they are on the
merchant side in Canada.
CEOCFO: Will you be doing any advertising and promotions?
Ms. Martin: We will be doing some advertising and
promotions, however, our primary business model is to establish relationships with telcos
and financial institutions who have existing trusted relationships with consumers and
merchants. We would then look to those business partners to market the service directly to
consumers and merchants and they would then participate by way of revenue sharing
arrangements for those efforts. Bell Canada is an great example of a business partner we
have in this regard. We also issue payment tags ourselves. We have a website and customers
can get Dexit payment tags through our website. We also have a store in downtown Toronto,
where customers can walk in and get Dexit tags.
CEOCFO: Do you have any plan for going outside of Toronto?
Ms. Martin: We would like to be national in Canada over
time and we are also looking at a number of selected international opportunities and when
we can announce them we will.
CEOCFO: What is the barrier to entry for someone to come-up
and fight you for the space?
Ms. Martin: First of all, for someone to compete in our
space, they would have to develop a secure financial product and one of the advantages
that we have is that we have a number of people who have been in financial services and
banking for a number of years. As examples, I was an EVP at a major bank for a number of
years and our chairman was a Vice-Chairman at a major bank. We have a lot of financial
services experience and we know how to construct this product safely and securely and
anyone looking to come into this space would need this expertise in payments. That is the
first thing; secondly they would need the time to develop and refine the software and they
would also need a partner such as Bell Canada, like we have, who could get them into the
major merchants. Hence, there are a number of barriers for entry.
CEOCFO: Why should potential investors be interested and what
should they realize about Dexit that doesnt jump off the page?
Ms. Martin: I think that the reason they should be
interested and excited in it is because it is a great product with great potential. We are
a well-managed and well-governed company, which is something that investors should look
at. We also know that there is huge potential in this market and we are well set up to
capitalize on it, but nothing happens overnight. What investors need to look at is how new
payment systems historically roll out and how the markets for products such as Dexit
develop. New payment systems arent invented in one day and in wide use the next; it
is a process and it takes time to rollout. There are several key developments that have to
happen around that and one, which weve already done is to prove the product works.
Then you have to roll it out to some chains and that is when it will really get momentum.
Therefore, I think what they need to understand is that it is not an overnight sensation,
it is something that will take some time to establish in the marketplace.
CEOCFO: Finally, what would you like readers to remember
Ms. Martin: When we talk to people who use it, as we
have a number of loyal users and weve done the research, we find that people love
this product. It makes their lives easier and what they tell us is that it helps them get
on with their lives. It means that they dont have to go to the ATM as often and they
dont have to worry about having the right cash in their pocket or purse. You
dont have to worry about not being able to buy a coffee because you dont have
a dollar and change in your pocket. If youre out at lunchtime, you would have to
look in your purse and if dont have change, without Dexit, you would have to wait on
an ATM line. When I have my Dexit tag, I can go and purchase what I want, because I know
that I have money on it. Its fast and easy, so there is a lot of appeal to our
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