The EML Payments Ltd (ASX: EML) share price is charging higher on Wednesday afternoon.
At the time of writing, the payments company's shares are up 4% to $2.39.
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Why is the EML share price charging higher?
Investors have been bidding the EML share price higher on Wednesday following the release of a positive announcement.
According to the release, the company has entered the Employee Benefits Market (EBM) in Europe, covering meal vouchers and employee benefit solutions, initially through a multi-year agreement with Up Spain.
The release notes that the EBM market is worth over A$88 billion globally and is expected to grow by A$20 billion between 2021 to 2025.
The good news for EML is that the European market represents a sizeable 35% slice of this market, which equates to in excess of A$30 billion per annum. This makes it one of the largest prepaid verticals in Europe.
Up Spain is one of the three biggest providers in Spain with over 1 million users across approximately 4,700 corporate clients and a network of over 30,000 restaurants in Spain.
What's next?
Management believes the deal with Up Spain provides EML with a platform to showcase its proprietary technology enabling real-time benefit and payment with just one transaction, accessing multiple accounts and data in the background to orchestrate a seamless user experience.
EML will be working to have this contract act as the basis for potential future growth in this segment within Spain and in time, countries outside of Spain. And given that Up Spain is part of the much wider Up Group, which offers employee benefits and incentive programs in 28 countries, EML will be well-placed to deliver on this target if this contract is a success.
'Milestone agreement'
EML's Managing Director & Group CEO, Tom Cregan, believes the deal is a milestone for the company.
He said: "This contract with Up Spain is a milestone agreement for us given the size of the EBM and the continued transition of meal voucher programs transitioning from physical vouchers to digital payment solutions. Up Spain is a proven market leader and we look forward to launching this program with them and continuing to build out our presence in the EBM industry, following on from the success we have had with Salary Packaging solutions in Australia and opportunities that we are targeting in the evolving Earned Wage Access industry."
And while management doesn't expect this deal to make a material contribution to its revenue or earnings in FY 2022 or FY 2023, it "provides an opportunity for material future growth."
