Mar 17, 2015

Net Element to Acquire Leading Payment Innovator PayOnline

Proprietary integrated platform strengthens Net Element's global service offering

Current Investor Presentation

MIAMI, March 17, 2015 /PRNewswire/ -- Net Element, Inc. (NASDAQ: NETE) ("Net Element" or the "Company"), a global technology leader in mobile payments and value-added transactional services today announced the entry into a binding term sheet by its wholly owned subsidiary TOT Group Europe, Ltd. to acquire and operate PayOnline, a regional industry leader in online transaction processing services and payment-enabling technology.

Net Element, Inc., a global technology leader in mobile payments and value-added transactional services.

PayOnline enables online payment for more than 10 million active consumers and thousands of merchants in Commonwealth of Independent States ("CIS"), Europe and Asia.

PayOnline's proprietary integrated platform of payment solutions provides innovations such as card2card transfer and payment split that will be incorporated into the Company's global service offering to enhance competitiveness and capture market share in the U.S. and internationally. 

PayOnline's status as a Validated Level 1 PCI Data Security Service Provider means that customers using PayOnline's platform have access to a flexible payment-as-a-service platform that has been independently verified to conform to the highest PCI standards.

PayOnline is an online payment industry leader in Russia where according to McKinsey & Company; ecommerce is growing at an annual rate of greater than 22%. PayOnline also serves the broader CIS, Europe and Asia markets.

Extrapolating from a market size assessment based on the 2014 McKinsey Global Payments Map, we believe PayOnline accounts for 30% of the online payments segment and 5% of the overall payments market. In addition, according to The Paypers "2014 Cross Border e-Commerce Country Report", Payonline ranks as a top payment service provider in Russia. Payonline is certified and accredited by Visa and MasterCard, and is a MasterPass (MasterCard's e-wallet) partner in Russia.

According to McKinsey & Company, Russia is the 6th largest payments market globally, accounting for $50 billion in payments with a growing online population.  McKinsey also noted that card issuance is growing at 30% per year and 43% of the Russian population use the Internet.

Net Element's business is expected to benefit from PayOnline direct agreements with seven acquiring banks in Europe and five banks in CIS that allow electronic transactions on behalf of foreign merchants.

The acquisition will allow the Company to cross-sell and monetize PayOnline's merchant and reseller relationships, deploy technologies and services in selected emerging markets, and integrate PayOnline's proprietary technologies into Unified Payments offering in the United States.

"Our market position and user base allows Net Element to accelerate growth in the region and gives our payment innovations greater global reach," commented Marat Abasaliev, PayOnline chief executive officer. "We expect to contribute greatly to the success of Net Elements business plan."

"Our vision in CIS is to become a leader in transactional services, which includes all technological aspects of the payments ecosystem including all value-added offerings," states Konstantin Zaripov, General Director of Emerging Markets for Net Element "TOT Money is already recognized as a leader in mobile payments and commerce. By acquiring PayOnline we are creating synergy between PayOnline, TOT Money and Unified Payments businesses to create a customer solution that covers all methods of online and mobile payments in Russia. Moving forward we plan to build on this synergy and pursue other additions to complete the ecosystem."

"PayOnline's market-leading services, partnerships and technologies are an ideal fit for Net Element's expansion initiatives and to its existing portfolio of subsidiaries," added Oleg Firer, Chief Executive Officer of Net Element. "With this acquisition, we expect to grow business faster by catering to a broader range of users in the United States, Russia and other markets."

Post acquisition, Social Discovery Ventures ("SD Ventures"), whose holdings include Shocase, Shazam and Anastasia Date, will become a Net Element shareholder and the companies intend to pursue further strategic collaboration.

Terms of the proposed acquisition are disclosed in Net Element's Form 8-K filed with the SEC today.

Closing of the acquisition is subject to Net Element's satisfactory completion of due diligence, definitive documentation and other customary closing conditions.

About Net Element  

Net Element (NASDAQ: NETE) is a global payments-as-a-service, technology leader with an integrated mobile and transactional services platform serving millions of emerging market clients. Wholly owned subsidiary, TOT Group operates Unified Payments and Aptito, a next generation, cloud-based point of sale payments platform and TOT Money, a leading mobile payments service provider, which captures a growing share of the mobile payments market in Russia and ranked as a Top 3 mobile payments provider for two consecutive years, by Beeline, Russia's second largest telecommunications operator.  Further information is available at

About PayOnline

PayOnline provides flexible high-tech payment solutions to companies doing business on the Internet. They  have wide experience in integration and customization of payment solutions for websites and mobile apps. They are able to arrange payments on the website of any commercial organization that increases convenience with highest possible level of successful transactions. Thousands of companies in CIS, Europe and Asia use PayOnline to accept payments online.PayOnline offices are located in Russia and in the Republic of Cyprus. For more information, please visit:

About SD Ventures (Social Discovery Ventures)

Social Discovery Ventures is the international umbrella brand for group of technology and software engineering companies, which provide platforms for social discovery, personal development, and online entertainment. SDV invests into, develops and supports a range of B2C Internet projects and brands under the framework of social discovery. For more information, please visit:

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained in this press release that are not statements of historical fact may be deemed forward-looking statements. Words such as "continue," "will," "may," "could," "should," "expect," "expected," "plans," "intend," "anticipate," "believe," "estimate," "predict," "potential," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, whether Net Element or its business continues to grow, whether the proposed acquisition of PayOnline will materialize, and if so, whether the acquisition will have any positive financial impact on the Company's business, whether the Payonline acquisition will provide any synergies with the products and services currently offered by the Company or whether post acquisition the Company will be able to cross- sell any of the PayOnline offerings, whether the Company will derive growth, competitive advantage  or other benefit from the acquisition, whether the company will pursue further strategic collaboration with SD Ventures, whether Net Element can secure any additional financing and if such additional financing will be adequate to meet the Company's objectives.  All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, many of which are generally outside the control of Net Element and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to: (i) Net Element's ability (or inability) to obtain additional financing in sufficient amounts or on acceptable terms when needed; (ii) Net Element's ability to maintain existing, and secure additional, contracts with users of its payment processing services; (iii) Net Element's ability to successfully expand in existing markets and enter new markets; (iv) Net Element's ability to successfully manage and integrate any acquisitions of businesses, solutions or technologies; (v) unanticipated operating costs, transaction costs and actual or contingent liabilities; (vi) the ability to attract and retain qualified employees and key personnel; (vii) adverse effects of increased competition on Net Element's business; (viii) changes in government licensing and regulation that may adversely affect Net Element's business; (ix) the risk that changes in consumer behavior could adversely affect Net Element's business; (x) Net Element's ability to protect its intellectual property; (xi) local, industry and general business and economic conditions; (xii) adverse effects of potentially deteriorating U.S.-Russia relations, including, without limitation, over a conflict related to Ukraine, including a risk of further U.S. government sanctions or other legal restrictions on U.S. businesses doing business in Russia. Additional factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements can be found in the most recent annual report on Form 10-K and the subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K filed by Net Element with the Securities and Exchange Commission. Net Element anticipates that subsequent events and developments may cause its plans, intentions and expectations to change. Net Element assumes no obligation, and it specifically disclaims any intention or obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.


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SOURCE Net Element, Inc.

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