PSI - WHITEPAPER

PAYMENT SOLUTIONS INTERNATIONAL LIMITEDFinTech powering the Future of Fair Lending in Emerging Market Economies

The greatest agent for change in emerging market economies is access to low cost credit for the consumer

1 EXECUTIVE SUMMARY 04

2 THE FINANCIAL INCLUSIVITY MYTH 09

3 GROUP STRUCTURE 11

4 HOW PSI EARNS REVENUE 14

5 WHY ICO 16

6 REASONS TO INVEST 18

7 PSI’S VISION FOR FINANCIAL INCLUSIVITY 20

8 PSI TECHNOLOGY 22

9 THE PSI ERC20 TOKEN 25

10 ROADMAP & MILESTONES 28

11 USE OF FUNDS 30

12 THE TEAM 32

13 FINANCIAL RESULTS & PROJECTIONS 36

14 BACKGROUND TO THE FOUNDING OF PSI 39

15 INDUSTRY OVERVIEW 42

16 GENERAL STATEMENT 48

CHAPTERS

PSI - WHITEPAPER

04

PAYMENT SOLUTIONS INTERNATIONAL LIMITED is a public company incorporated under the laws of the republic of South Africa with an issued share capital of 100 000 000 no par value ordinary shares and 1000 000 000 Preference Shares.

FINTECH FOR EMERGING MARKETSPSI has developed proprietary financial technology software-as-a-service funds that include the real-time PSI Affordability and Deduction Management Platform (ADMP), PSI Loan Administration Platform (LAP) and PSI Loan Investment product (PSII).

ADMP ensures that consumers cannot become overindebted as all loans and deductions are processed and updated in real-time on the ADMP software platform. ADMP’s rules engine protects consumers against becoming overextended and ensures the lenders risk is significantly reduced, as the ADMP manages the payroll deduction, the flow of funds & ensures compliance with credit extension rules & legislation for each employer and jurisdiction.

PSI contracts with government & large corporate employers to process payroll deductions in real-time, from the initial loan application to reserving the deduction on the payroll and eventual collection of the deduction from the employer. PSI provides technology, systems and services to streamline & manage the administration of millions of payroll deduction transactions monthly, ensuring seamless & ethically enforced payroll deductions for over 180,000 civil society and corporate employees in sub-Saharan emerging markets and in the process mitigating the collection risk associated with unsecured lending resulting in a reduction in the cost of lending and so advancing PSI’s vision and corporate philosophy of total financial inclusivity.

The ADMP system is proven, has been in-market for six years in countries including Uganda, Botswana, Malawi & South Africa and is earmarked for expansion to further developing markets around the globe. Financial Institutions such as Barclays, Old Mutual, Select Financial Services, Getbucks, Vanguard Life Assurance, Blue Financial Services, Letshego, Bayport, Centenary Bank, Equity Bank, KCB Bank, DFCU Bank, Standard Chartered Bank, Stanbic Bank, Global Trust Bank, Housing Finance Bank, Crane Bank, Sanlam Life Insurance etc have been making use of the ADMP with remarkable success.

CHAPTER ONEEXECUTIVE SUMMARY

ADMPRecurring revenue stream of 2.5% of deductions processed by financial services providers.

Revenue stream of 1% of approved loan value obtained through PSI systems.

LAP15% p.a. yield on funding provided to institutional lenders for exclusive on-lending to PSI customers.

PSII

05

ADMP acts as a trusted deduction management platform and facilitates compliance with legislated payroll deduction processing, while enabling employers to set and maintain protective rules and standards to ensure their employees are shielded from over indebtedness and ruthless lending practices. The deductions managed by the ADMP are collected prior to the consumer receiving his salary into his bank account and any other payments not managed by the ADMP is paid. The company earns revenue on each salary deduction it processes on behalf of financial services providers and the service does not cost the employer, the state or the consumer.

By utilizing its unique position as the administrator of the deduction platform the company has determined, with 6 years of operational experience, that customers within the ADMP platform are not able to default on loans and collections within this platform has yielded as high as a 99.6% repayment collection rate.

Despite this, Financial Services Providers have been slow to adopt new credit models & have not responded to the changing credit profile of these customers by lowering their credit risk and rerating their loans to account for this change.

This has led to a situation where ADMP customers are in effect cross-subsidising poor credit risk customers and due to lending limits imposed cannot access capital to improve their lives based on their individual repayment profiles, which are at the very top tier of the credit worthiness scale.

LAP provides technology to financial services providers that enables them to manage loan processing, loan book management and administration and earns revenue on every loan application processed by the financial services provider.

Leveraging this unique customer insight the company will through PSII invest in the loan books of approved lenders who will issue quasi-secured loans to PSI consumers, provided these loans are processed through the ADMP and LAP systems.

This will secure the loans, ensure an unprecedented 99.6% collection rate, keeping in mind average default rates for unsecured lending of up to 45%, while ensuring profitability and ethically sustained growth for the company, drive down the cost of borrowing for the consumers and introduce robust competition into the market, forcing entrenched financial services companies to re-evaluate their lending criteria and adjust their rates downward to match the new marketplace.

THE OBJECTIVE OF THE INITIAL COIN OFFERINGDisruption of the status quo in the lending market is key to creating fairness and transparency. PSI is not a lender, but is primarily a Fintech company that enables transparency and accountability in markets though it’s platforms that enable payroll deduction administration and real-time loan affordability scoring.

The company believes that we have an obligation to steer the course of history and drive change in the marketplace. There also exists a significant market opportunity to earn a high return while influencing the market for the good of the consumer.

If lenders will not adjust their model to account for the virtually guaranteed collectability of the obligations of the consumers then PSI will align itself with lenders who are willing to lower their rates, in return for guaranteed payment, provided they adhere to the ADMP and LAP systems and rules.

The company has proven it can earn a guaranteed above market yield on its income and will demonstrate this in the white paper and associated registered company prospectus.

Through this initial coin offering we are intending to complete the first round of fundraising to launch PSII Loan Investment Fund 1 for a total of US$ 25 mil through the issue of 25,000,000 PSI ERC20 Tokens valued at US$1 each which represent 1 Preference Share in the share capital of PSI Limited.

Investors in the fund will receive 1 PSI ERC20 token or part thereof for each equivalent value in US$ paid during the token sale window through the token sale site at ico.psi.limited. All investors in the fund will receive a username and password to allow them access to the ADMP where they will be able to follow the traffic flowing through the ADMP as well as the values being collected by the ADMP on behalf of the various financial services providers for as long as they remain valid holders of PSI ERC20 tokens.

Payments will be accepted in major denominated currencies and cryptocurrencies and shapeshift will be utilized to swap cryptocurrencies for PSI ERC20 Tokens at time of purchase using US$ as the conversion benchmark.

The PSI ERC20 Token will commence trading on exchanges within 30 days after conclusion of the token sale event.

HIGH LEVEL FINANCIAL SUMMARYThe below financial summary (denominated in US$ assuming an exchange rate of ZAR12:US$1) shows the impact of continued growth in the business driven by the three pillars ADMP, LAP & PSII.

PSI will adopt a dividend policy in terms whereof at least 40% of the declared dividends are distributed to the PSI ERC20 Token holders

SUMMARY OF COMBINED AUDITED & UNAUDITED HISTORICAL & FORECAST INCOME (US$)

YEAR 1 YEAR 3 YEAR 5YEAR 2 YEAR 4

REVENUE

CONSOLIDATED ACTUALS

CONSOLIDATED FORECAST

6 336 673 4 093 468 20 293 979 52 750 808 110 440 783 197 807 777

EXPENSES -2 080 297 -2 054 679 -5 016 998 -7 812 914 -11 626 618 -16 009 901

NETT PROFIT 4 256 376 2 038 789 15 276 981 44 937 894 98 814 165 181 797 876

TAXATION -1 276 715 -544 214 -3 978 742 -12 001 314 -26 903 919 -50 052 286

DIVIDENDS - -1 195 659 -5 649 121 -9 880 974 -21 573 074 -39 523 678

RETAINED INCOME 2 979 661 298 915 5 649 119 23 055 606 50 337 172 92 221 912

06

CONSOLIDATED REVENUE BY PRODUCT (US$)

REVE

NU

EM

illio

ns

450

350

150

250

50

LAP 175 419 994 223 2 853 592 6 281 709 11 639 912 21 944 855

1 012 971 5 530 550 12 598 311 24 332 271 40 460 792 83 934 895

2 905 079 13 769 207 37 298 905 79 826 802 145 707 073 279 507 065

PSII

ADMP

400

300

100

200

0YEAR 1 YEAR 3 YEAR 5YEAR 2 YEAR 4 TOTAL

DEBTORS BOOK VALUATIONSEach Preference Share backed PSI ERC20 Token is valued at US$1 during the ICO token sale period and the proceeds of the sale are invested into our PSII Fund. The PSII Fund invests our capital into financial services providers such as Tru Finance, who in turn provide low cost loans to employees that are registered and paid though the ADMP system.

PSI’s invested capital gets repaid from year six in the event of PSI not requiring reinvestment thereof with the specific financial services provider. The debtors book value of the financial service providers can increase four fold over the initial 5 year period by virtue of them adding interest, administration charges and life cover. PSI’s interest and capital are secured by way of a security session over to total value of the debtors book with such financial services provider.

07

MARKET

PSI ERC20 TOKEN

PSII FUND TRU FINANCE

PSI

THE VALUE OF THE PROJECTED DEBTORS BOOK IS AS FOLLOWS

US$1 = 1 TOKEN =CAPITAL+ INTEREST+ INSURANCE+ INITIATION FEE

Cumulative Capital in market = US$2.8MValue of the Projected Debtors Book = US$9.0M Cumulative Capital in market = US$8.2MValue of the Projected Debtors Book = US$30.8M

Cumulative Capital in market = US$18.0MValue of the Projected Debtors Book = US$77.2M

Cumulative Capital in market = US$35.0MValue of the Projected Debtors Book = US$155.6M

Cumulative Capital in market = US$59.4MValue of the Projected Debtors Book = US$259.0M

Y1 :

Y2 :

Y3 :

Y4 :

Y5 :

09

THE GREATEST AGENT FOR CHANGE IN DISEMPOWERED COMMUNITIES IS ACCESS TO LOW COST CAPITALAccess to low cost capital enables individuals to build homes, improve access to markets, education & services. It enables them to create wealth, build businesses or access health services not previously available, resulting in a sustainable improvement in the quality of life.

In these disempowered communities, individuals very rarely own sufficient assets to obtain asset-backed loans and they are predominantly dependent on unsecured lending to meet their basic financial needs. However, the challenge in lending to these consumers is that in most markets lenders suffer extremely high default rates. These costs have to be recouped and are blended into the overall business model of the lender.

Even in well-regulated, economically and structurally sound emerging markets where capital is readily accessible, low risk consumers are penalised. To offset poor lending practices these consumers have to endure paying higher interest rates and are subjected to restrictive exit clauses and fees, in order to mitigate the risks for lenders against the poor elements of their debt books.

HOW PRIVATE MARKET CREDIT EXTENSION SHOULD FUNCTIONAs not all consumers have the same risk profile, low risk borrowers should receive preferential personalized service and rates.

Traditional loan screening using credit history is a crude model that does not take into account the specific set of circumstances that created the conditions that yielded the outcome. Though it can be said that it provides a reference point for credit extension, current market performance shows that at best it is a poor indicator of future performance. It eliminates potentially good candidates for loans and allows poor candidates who are over-extended to obtain loans.

Reference checks are not an adequate measure of affordability as this too does not take into account the current status of the borrower. It often also penalizes consumers with past adverse history that are otherwise rehabilitated from accessing affordable finance, as they are perceived to be high risk.

UTILIZING ARTIFICIAL INTELLIGENCE TO SCORE CONSUMER BEHAVIOUR

The most accurate measure of affordability is to obtain a real-time view of the consumers ability to service their debts and to monitor and adjust their ability to obtain loans based on this real world modelling. This can be achieved by knowing their income & employment status, processing their salary payments & their salary deductions & observing their banking behaviour in real-time.

In this scenario, risk is eliminated from the lending process. If this were possible, lenders would not need to screen for bad credit history. Lenders would not need to mitigate their risk by increasing their interest rates to compensate for risk. They would not need to force consumers to take out risk insurance to further insure against loss. They could offer higher loan values at lower rates, enabling consumers to access more capital.

The greatest agent for change in disempowered communities is access to low cost capital. Access to low cost capital enables individuals to build homes, improve access to markets, education & services. It enables them to create wealth, build businesses or access health services not previously available, resulting in a sustainable improvement in the quality of life.

IT’S NOT A MYTH, IT’S BEING DONE

PAYMENT SOLUTIONS INTERNATIONAL LIMITED

CHAPTER TWOTHE FINANCIAL INCLUSIVITY MYTH

11

PAYMENT SOLUTIONS INTERNATIONAL LIMITED (PSI)PSI is a public company incorporated under the laws of the republic of South Africa and is headquartered in Pretoria, South Africa with regional offices in South Africa, Malawi & Botswana.

PSI has three core fintech businesses structured around its product offerings, arranged into operationally efficient business units in each of the markets it operates in.

These are the PSI Affordability and Deduction Management Platform (ADMP), PSI Loan Administration Platform (LAP) and PSI Loan Investment Fund (PSII).

CHAPTER THREEGROUP STRUCTURE

PSI INVESTMENTS

TRU FINANCE

PSI

ADMP

BOTSWANA

SOUTH AFRICA

MALAWI

LAP

12

PSI AFFORDABILITY AND DEDUCTION MANAGEMENT PLATFORM (ADMP)PSI owns and operates, through its PSI Operational Subsidiaries in each country, the ADMP and contracts it’s services to governmental and large corporate employers and financial services providers.

PSI LOAN ADMINISTRATION PLATFORM (LAP)LAP licenses technology to financial services providers that enables them to manage loan processing, loan book management and administration and earns revenue on every loan application processed by the financial services provider.

PSI LOAN INVESTMENT FUND (PSII)As not all consumers have the same risk profile, PSII, a business unit of PSI, establishes relationships with independent licensed financial services providers. These providers agree to exclusively utilize the ADMP and LAP platforms & credit scoring methodologies to fairly assess consumers based on their affordability metrics. The providers then offer customized funding solutions and provide preferential credit guarantees to lenders in exchange for lower interest rates to consumers.

TRU FINANCE – FUNDED THROUGH PSIITru Finance is an independent consumer-facing, regulated and licensed lender with NCR license NCRCP4905. Tru Finance is the first lender approved by PSII to issue loans to ADMP customers. To promote the Company’s vision and corporate philosophy of total financial inclusivity, the PSII will engage with other lenders to escalate the issuing of loans to ADMP customers, radically subject to strict criteria such as beneficial interest rates and administration charges to ADMP customers, good governance and compliance, PSI representation on lender’s Board and credit committee, loans exclusive to ADMP customers etc.

Tru Finance will act as a catalyst for change in the lending market, as it is able to issue loans to PSI payroll deductees.

Tru Finance does not have any shareholding or control in PSI. PSI has Tru Finance board representation and a full time independent compliance officer.

Tru Finance can only commit loans to PSI payroll deductees and may not operate independently.A return of 15% p.a. on funding provided.

PSI renders services through its software-as-a-service ADMP platform to government & large-scale employers & financial services providers to facilitate real-time payroll deduction management. PSI earns 2.5% recurring revenue on every payroll deduction it processes for financial services providers and currently processes millions of transactions annually.

PSI earns interest on loan book investments it makes in approved financial services providers, who in turn issue loans to ADMP customers. These customers are highly valued as they have a high collection rate, low default rate and as their payroll deductions are processed though the ADMP system the loans are quasi-secured. Historically the company has achieved a 99.6% collection rate which results in a superior return for the company and translates to accessible finance for our customers.

PSI earns service fees through the licensing of its software-as-a-service LAP platform by financial services providers who require a turnkey solution to manage and issue loans. PSI earns 1% of the loan value on each loan managed through the platform.

The company will over the 5 years illustrated in the forecast earn the majority of its revenue from the ADMP platform. The funding it deploys into the PSII business unit will provide it with a guaranteed return and facilitate meaningful change in the marketplace, forcing more lenders to adopt the system to compete for business and drive down the cost of lending in the market. As loans are repaid the funding is returned to the PSII and redeployed together with a portion of the profits into new loans.

CHAPTER FOURHOW PSI EARNS REVENUE

ADMPRecurring revenue stream of 2.5% of deductions processed by financial services providers.

Revenue stream of 1% of approved loan value obtained through PSI systems.

LAP15% p.a. yield on funding provided to institutional lenders for exclusive on-lending to PSI customers.

PSII

14Comparably non-compliant lenders have a default rate of over 40%1

1

CHAPTER FIVEWHY ICO

16

Through this initial coin offering we are intending to complete the first round of fundraising to launch PSII for a total of US$25 Million through the issue of 25,000,000 PSI ERC20 Tokens valued at US$1 each which represent 1 Preference Share in the share capital of PSI Limited.

Our objective is to launch a retail participation opportunity to broaden our shareholder base and enable a wide range of interested parties who would not normally have access to capital markets to invest in the preference shares though the cryptocurrency markets. Institutional shareholders are welcome.

The objective of the ICO for PSII is to create an investment fund that will be used to invest in quasi-secured markets where PSI operates and has identified key opportunities to profitably and securely lend to our consumer base.

Through this process we will profitably act as an agent for change and will enable previously underbanked consumers, who due to the high cost of borrowing are excluded or restricted from borrowing, to access affordable capital. The loans will be interest bearing but will be issued at preferential interest rates that

reflect the quality of the borrower, and due to the exceptionally low default rate not only enables our borrowers to access capital more affordably but offers an excellent return on investment for the company.

Through our relationships with licenced financial services providers we will administer the administration and collection of these loans, enabling consumers to access more affordable and inclusive financial services.

Traditional lenders have not responded by rerating the borrowers in the AMDP ecosystem and adjusting their interest rates accordingly to lower the cost of capital for these consumers. This has created a unique market opportunity for PSI to enter a low risk high yield market.

PSI through its platforms ensures near 100% collectability on loans, as it administers the deductions on the payrolls of corporate and governmental employers prior to a consumer receiving his salary.

CHAPTER SIXREASONS TO INVEST

Payment Solutions International is an innovation orientated fintech company developing and commercializing uniquely developed Software-as-a-Service information technology products including its payroll deduction & payment management and loan administration platforms that offer an unique opportunity to earn enhanced returns with limited capital risk featuring:

As a pioneering financial services intermediation business, PSI operates in a market with high barriers to entry, having secured a long-term recurring income base, which will diversify across a broad range of industry sectors and participants, as well as across various international jurisdictions.

The business approach and market space provide the group with significant first-to-market advantages and a cost-competitive operating business.

PSI’s ADMP platform has proven to substantially reduce collection risk for participants in the financial services sector by transforming the traditional “unsecured loan” into a quasi-secured loan.

From an investment perspective, the business model on which the ICO is based translates into a strong cash flow profile, a high return on investment and medium term investor payback period.

Investors in the fund will receive 1 token or part thereof for each equivalent value in US$ paid during the token sale window through the token sale site at ico.psi.limited

Above average returns on capital invested

Supporting the concept of financial inclusion by providing affordable finance to average and lower income consumer

A preference share offers security and preference over the ordinary shareholders

Unprecedented high collection rate on loan repayments secured by the ADMP

Experienced Board and management team with a successful track record of driving growth and creating value

A strong pipeline of opportunities

PSI has the intention to list its PSI ERC20 Token on cryptocurrency exchanges immediately after the token sale event

South Africa is a trusted and highly ranked corporate jurisdiction with a strong rule of law and entrenched shareholder rights

18

CHAPTER SEVENPSI’S VISION FOR FINANCIAL INCLUSIVITY

20

PSI’s vision is to become the catalyst for change in Africa and other Emerging Markets spearheading true financial inclusivity and creating the bridge between under-banked, formal sector employees requiring financial services and the formal financial sector providing these financial services.

Our principles of financial inclusion include access to financial services, affordability, appropriateness, usage, quality, consumer financial education, innovation and diversification and simplicity.

Through our principles of financial inclusion, underpinned by our technology and services we will improve the range, quality and availability of financial services and products available to our unserved, under-served and financially excluded clients.

We intend to realize this vision by facilitating access to sustainable private finance for emerging market under-banked public sector employees & corporate employees by facilitating efficient, effective and transparent financial intermediation.

FACILITATINGPSI acts as exclusive ‘gateway’ between public and private sector payrolls and commercial banks

SUSTAINABLE PRIVATE FINANCE ACCESSPSI resolves inherent conflict between the banks’ commercial and government’s social objectives by ring-fencing low risk customers and highlights opportunities for private financiers to offer preferential loans at lower interest rates that reflect the quality of the consumers

FOR EMERGING MARKETS UNDER-BANKEDPublic sector employees remain subject to high lending rates and over-borrowing. PSI disrupts the market by stepping into the breach left by financial infrastructure shortcomings

THROUGH EFFICIENTMarket imperfections are generally accepted as the ‘fundamental premise of microfinance’ (defined as the provision of financial services to low-income clients who traditionally lack access to banking and related services)

PSI optimises financial system access for the under-banked, which results in a more optimal allocation of economic resources

EFFECTIVEPSI facilitates the objectives of employees, governments and commercial lenders

AND TRANSPARENT FINANCIAL INTERMEDIATIONPSI improves and formalises institutional arrangements, as well as the regulation thereof

The company is committed to actively promoting a transformed, vibrant, and globally competitive financial sector and will achieve this by providing accessible financial services to historically disadvantaged individuals and by directing investment into targeted sectors of the economy.

PSI believes that through it’s Initial Coin Offering (ICO) the company will be enabled to actively pursue all the principles of financial inclusion.

PSI is a holding company with investments in African entities, which act as financial intermediaries between government and large public sector employees and various financial institutions.

CHAPTER EIGHTPSI TECHNOLOGY

22

We make use of Microsoft Azure for our server and database hosting. We made the decision to migrate from physical to cloud hosted servers and services for multiple reasons, some being as follows:

Due to security being of the utmost importance, we have implemented multiple security features over and above those inherently provided by Microsoft Azure. We have added additional firewalls to each of the servers, with VLANs and VPNs restricting all access to the servers and data to only authorized systems and individuals.

SCALABLE AND ELASTICInstead of having to worry about physical hardware, we are able to dynamically allocate more or less resources to our solution depending on the load. By leveraging other hosting platform, we are always running on the latest underlying hardware allowing us to focus on our core business and not having to allocate unnecessary resources in upgrading or maintaining our own hardware.

LATEST TECHNOLOGIESBy hosting our Servers and SQL Databases with Microsoft Azure, we are always able to make use of the latest technologies available and are always up-to-date with the latest security updates and patches.

1

2

3

4

SECUREMicrosoft is a long-standing technology company and being one of the forerunners of enterprise technologies. Microsoft Azure is based on their Security Development Lifecycle, which enabled them to provide the most secure platforms to meet our requirements.

AVAILABILITYBy hosting our platform on multiple global data-centres, our data is secure and available should one of their data-centres unexpectedly become unavailable. This advantage means that we and our clients are protected against single points of failure.

23

HIGH LEVEL FLOW OF NEW DEDUCTION

HIGH LEVEL FLOW BETWEEN ADMP AND EMPLOYER

SEND- Employee number

- Reservation number- Deduction reference

- Deduction team- Action (create)

RETURN- Employee details

- Current reservations- Current deductions- Current affordability

SEND- Employee number

- Reservation number- Action (Cancel)

EMPLOYEE

Issues funds to employee PSA employer flow

RETURN(Error code)

Adheres to Government rules

Employee number valid

Employee takes loan

Adheres to government rules

RETURN(Error code)

Supplies employee with loan options

Employee chooses loan option

SEND- Employee number

RETURN(Error code)

Employee signs loanContract with 3 party

RETURN(Success code)

RETURN- Deduction number

(Success code)

RETURN- Reservation number

(Success code)

3 PARTYRD

RD

SEND- Employee number

- Reservation amount - Action (create)

NO

YES

NO

YES

NO

NO

YES

The 3 party deduction code holders make use of the PSA website interface to:

1. Check employee affordability 2. Load new deductions3. Update existing deductions4. Delete existing deductions

(ACTION)

The ADMP matches the deductions expected to the deductions processed.Possible deduction rejection reasons:

- Employee no longer employed- Employee deceased

SUBMISSION FILE

- Additions - Deletions- Updates

Occurs a couple of days before payroll finalization – determined by the employer.

*Format decided on between PSA and employer (CSV)

RECONCILIATION FILE

- Successful deductions- Failed deductions

Used for reconciling payments made on behalf of the employee

*Format decided on between PSA and employer (CSV)

PAYROLL FILE

- Employee details- All employees- Deductions- Statutory and 3 party- Allowances- Recurring and non-recurring

Occurs a couple of days after payroll finalization – determined by the employer

EXCEPTION FILE

- Failed deductions

Request for reasons behind failed deductions

* Report format (XLSX for comments)

A

D

B

E

C

F

DPSA Imports new

payroll data

FException file

EReconciliation file

PSA

CNew payroll data from employer

Employer pays employee net

salaries

BSubmission file

to employer

Employer finalizes payroll

EMPLOYER

Employer imports payroll updates

Employer 3 party deduction code

holders on behalf of the employee

3 PARTYRD

rd

rd

rd

A

CHAPTER NINETHE PSI ERC20 TOKEN

25

10.1 | ETHEREUM AS A PLATFORMWe set out to create a more seamless investment experience for our global investors. Our internal objective was to create a single, stable platform through which investors could purchase PSI ERC20 Tokens, representing beneficial shareholding in PSI, track ownership of PSI , earn dividends on the income of the company and ensure transparency and accountability with seamless immediate execution.

We identified Ethereum and its unique ability to leverage blockchain smart contracts would cut down on the cost and time of authenticating ownership, executing global instant transactions and clearing funds to our shareholder accounts.

Furthermore, through our token issue we wanted our initial investors to securely purchase PSI ERC20 Tokens. These PSI ERC20 Tokens may be sold through smart contracts, on exchanges or through peer-to-peer transactions.

10.2 | WHY USE PSI ERC20 COMPLIANT TOKENSEthereum has created an ecosystem where everything works together seamlessly using PSI ERC20 Tokens to power the network. Ethereum based PSI ERC20 Tokens allows exchanges, crypto wallets, and smart contracts to know in advance how any new PSI ERC20 Tokens will interact on the system.

In addition, PSI ERC20 Token defines six functions that allow other smart contracts to interact within the Ethereum network creating an immutable transactional environment.

Because of its capacity for smart contracts — and other complicated computing capacities — Ethereum is viewed as more agile, adaptable and stable. Due to its reliability and the growth of decentralized apps (dapps) we felt the Ethereum platform was a logical choice.

10.3 | PSICOIN TOKENEach PSICOIN (PSI) ERC20 token issued shall represent one ordinary share in PSI Limited (DAO) and have all the rights attached to a preference share.

PSI ERC20 Token ( Ð ) represents the ownership of PSI.

The ownership percentage is calculated as:

Where totalSupply is the total number of PSI ERC20 Tokens that exist. The totalSupply is fixed after the Creation phase.

Voting on matters related to the company will be done through the DAO Voting Smart Contract. Voting will not burn the token.

Shareholders will be eligible to receive dividends. Dividends will be paid to each token holder through the issue of a dividend pool smart contract, which will equally distribute dividends to each token holder. Dividend claims will not burn the token.

Dividends will be calculated using the dividend distribution formula and will be converted from FIAT currency into ETH at the prevailing exchange rate at the time of transfer.

10.4 | TOKEN SALE SMART CONTRACTThe token sale smart contract (0x00000000000000000000000) enables the purchase of PSI ERC20 Tokens at a predetermined time and date. This smart contract will issue PSI ERC20 Token at an exchange rate of US$1 to 1 PSI ERC20 Token.

10.5 | DIVIDEND PAYMENT SMART CONTRACTThe dividend smart contract (0x00000000000000000000000) enables the company to issue dividends based on token ownership at designated block times. Token holders interact with the smart contract and the owner of the token at the blocktime of dividend declaration can withdraw their dividend.

GITHUB LINK

The dividend to each tokenholder is calculated as:

( Ð ) held by ShareholderShareholder Dividend = totalDividend

http://www.investopedia.com/news/what-erc20-and-what-does-it-mean-ethereum2

2

Shareholder % PSI ownership =

( Ð ) held by Shareholder

totalSupply

26

Where totalDividend is the total ETH value of the dividends issued. The totalDividend is a fixed amount of ETH transferred into the smart contract by the contract owner.

Dividends are issued based on blocktime ownership and the address that owned the token at the time of distribution is the only address that can claim the dividend. If the token is held on an exchange, then the exchange will distribute the dividend to you.

10.6 | TRANSFERS OF TOKEN OWNERSHIP & KYC/AMLToken holders are free to transfer ownership of the token via cryptocurrency exchanges or direct peer-to-peer transfers. The company may enforce KYC checks periodically and may require token holders that have changed ownership to update their KYC information prior to dividend distribution.

10.7 | CONTRACT COMPLIANCESmart contracts will be externally validated, tested and certified compliant prior to release.

SMART CONTRACT

INVESTOR

ICO SITE

REGISTER

KYC / AML PURCHASE

WHITELIST PRESALE WHITELIST

REGISTER

KYC / AML

DEPOSIT FUNDS INTO ESCROW

ON ICO OPEN

RECEIVE ALLOCATION %

IF OVERSUBSCRIBED WITHDRAW BALANCE FROM ESCROW

CURRENCY SHAPESHIFT

DELIVER SHARE BACKED PSICOIN

Testing will utilize best practice methodology and external certification agencies.

10.8 | CONTRACT AUTHENTICATIONSmart contracts will be authenticated on the Etherscan Network through the processes required to validate and authenticate ownership.

10.9 | CONTRACT SECURITYDevelopment will utilise best practice security, ensuring the latest safe version of solidity, geth and associated software tools and based on the established protocols and code that has been proven to be secure. Code will be published and made available for testing as well as tested through external certification agencies.

FIG1. TRANSACTIONAL FLOW OF INVESTOR PURCHASE

PRE SALE OPENS - US$2M

FIRST DIVIDEND DISTRIBUTION

SECOND DIVIDEND DISTRIBUTION

- To be completed - 31.08.2020- ALL AT TRADING PRICE

01.10.2020

CHAPTER TENROADMAP & MILESTONES

28

3 699 696Top - Up Transactions

913 011 Reservations

1 051 975 Contracts for Deductions Managed

93 285 170 Payslip Data Lines

99.6%Recovery Rate

13 659 574 (US$508m) Deduction Instalments Processed

PSI ESTABLISHES ICO TEAM ICO PLATFORM AND SMART CONTRACT DEVELOPMENT ETH DIVIDEND MANAGEMENT PLATFORM AND SMART CONTRACT DEVELOPMENT

- First US$1m :- = 50% Bonus - Second US$1m :- = 30% Bonus

01.08.2018

03.2018

ICO LAUNCH

- Hard Cap $25M

01.10.2018

- To all Coin Holders

31.03.2019

ICO US$40M (YEAR 2)

- To be completed - 31.08.2019- ALL AT TRADING PRICE

01.10.2019

- To all Coin Holders

31.03.2020

THIRD DIVIDEND DISTRIBUTION

ICO US$45M (YEAR 3)

31.03.2021

CHAPTER ELEVENUSE OF FUNDS

30

Founders and management will receive no PSI ERC20 Tokens representing preference shares as they already benefit through ownership in the company.

The funds raised during the ICO will primarily be used to create an investment fund through which the company intends to partner with qualified and approved independent financial services providers to issue loans to previously underbanked consumers who due to the high cost of borrowing are excluded or restricted from borrowing. As evidenced in this whitepaper and associated investment document, we have shown that these consumers are low risk investments and the fund will earn an above average yield from extending these life changing loans through its partners.

The balance of funds will be used to extend the reach of the business into new markets and grow the ADMP footprint in new emerging markets.

12.1 | PSII LOAN INVESTMENT FUND (85%)This pool of funds is earmarked for consumer loans at preferential interest rates.

Following the guidelines and lending rules as set out by the company, funds will be invested into issuing loans in local currency to PSI consumers.

The company will keep a reserve for the following activities:

12.2 | LEGAL & REGULATORY COMPLIANCE (3%)This fund will be used to open new markets, ensure compliance with relevant in-market financial services obligations and support the business as it expands across new markets.

12.3 | ICO COSTS (5%)This reserve is allocated to the costs of the ICO process, including the required cryptocurrency software development, implementation and fundraising.

12.4 | NEW MARKET EXPANSION (7%)The company has identified key markets it intends to expand into and will utilize the new market expansion reserve to set up new offices & acquire financial services licences in these markets.

USE OF FUNDS

LOAN FUND

NEW MARKET EXPANSION

ICO COSTS

LEGAL & REGULATORY COMPLIANCE

85%7%

5%3%

CHAPTER TWELVETHE TEAM

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RIAAN SWART | CEO

Serial financial services technologist entrepreneur Riaan Anton Swart is a highly successful businessman whose portfolio spans mining, construction & finance.

Riaan co-founded and listed Blue Financial Services on the Johannesburg Stock Exchange. He spearheaded it’s international strategy and opened ten African markets before leaving to Payment Solutions International.

Understanding that the most complex problem facing emerging markets today is the lack of total financial inclusivity and the total cost of credit to the consumers, therefore Riaan is proud of being the founder of Payments Solutions International which is a FinTech Company changing the unsecured lending market in Africa through technology.

He is passionate that PSI allows low and middle income earners total financial inclusivity and access to new financial products that are unheard of in the unsecured lending market, giving all individuals the power to improve their lives holistically without sacrificing their future to fund one specific ambition (e.g funding the tertiary education of a child)

For Mr Swart, the true appeal of PSI is that it positively and powerfully impacts the lives of its customers because the engagement rules built into the system will ensure that employees do not over-commit their resources and do, in fact, maximize their income.

Further, in countries where much work still needs to be done to create broad financial literacy, he is convinced that a system which can provide the basics of financial management while allowing users to reap the benefits of fiscal responsibility is both compelling and necessary.

His knowledge of the micro lending industry started in 1998 being a founder of a company that sold white goods to the unsecured market with innovative lending products. Riaan believes that the future of this market worldwide, through the use of financial services technology is essential to mitigate risk for financial service providers, therefore placing them in a position to offer employees far cheaper, more affordable unsecured credit instead of the exhorbitant rates they face currently.

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CLINTON MELLET | COO

Versatile and adaptable, Clint Mellet spent over a decade with leading South African retailer PicknPay in accountancy, management and ownership roles, before working as a consultant for retail giant Shoprite, where the knowledge he had previously gained franchising the popular 7/11 convenience store brand was a valuable asset. Among his other positions, Clint then spent two years as the Financial Director of The Lighting Warehouse, before moving on to head the African expansion efforts of Blue Financial Services, a company where he worked alongside Riaan Swart.

A qualified accountant who graduated from the University of Pretoria, Mr Mellet is well versed in the areas of finance and negotiation and has a proven ability to create and manage networks effectively, a highly evolved skill he brings to the Payment Solutions environment in its entirety.

During his time with Blue Financial Services, Mr Mellet was responsible for rolling out 13 branches across Zambia, where he was based for two years in a multi-function role, managing all aspects of the local business from staffing and roll out to banking and licensing. This, in addition to the two years he spent in a similar role in Tanzania, and coupled with his experiences in Botswana and Uganda, has allowed him a unique perspective on the best ways in which to create and implement new infrastructure in line with business requirements across highly diverse, emerging markets.

As a result of his wide exposure to commercial enterprise, Mr Mellet is strongly motivated by clients who understand and support social responsibility initiatives that marry their ability to generate revenue with their desire to make a philanthropic contribution to society.

Speaking to the merits of the ADMP, Mr Mellet says that in environments which are sometimes understandably resistant to change, the payroll deduction solution helps to foster greater transparency in the financial process and ensures that both the interests of the credit providing institutions and the aspirations of credit seeking individuals can be well balanced throughout the duration of their engagement with one another.

MORNE STEVENSON | GROUP LEGAL OFFICER

Morne Stevenson is an exceptionally talented and highly qualified lawyer who holds a B.Proc and LLM degrees from the University of Pretoria, where he also attended several certificate courses.

Having completed his articles at Van Huyssteen’s Commercial Attorneys in 1998, he spent close to ten years with the company, becoming a Partner in Commercial Litigation in 2002.

During his time with the Van Huyssteen’s he was involved in various high profile commercial litigation matters which included matters before South Africa’s Competition Tribunal as well as cross border litigation matters. Morne was also involved with various mergers and acquisitions in countries such as Cyprus, Ghana, Namibia, Botswana, Zambia, Malawi and Tanzania, and during this time he gained a wealth of experience and a fine understanding of the legal systems of these countries.

In 2008, having achieved all his objectives in his current environment, Morne bid a fond farewell to Van Huysteens and joined the Payment Solutions Group where his focus includes corporate counsel, commercial agreements and compliance. With an abiding respect for the rule of law and the inherent value of legal regulation, Morne is dedicated to PSI because he feels that the services it provides for ‘unbanked’ or ‘under-banked’ populations to access money and products that they may never have had the opportunity to engage before, is vitally important.

Further, Morne holds a firm conviction that good governance, which PSI strongly supports, will bring untold benefits to all stakeholders involved in business across emerging markets, from consumers to corporate clients and beyond.

An avid ‘catch and release’ fisherman, Morne enjoys travelling, especially to the coastal country of Mozambique where opportunities to enjoy his hobby are abundantly available.

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MARC GRUNDLING | INFORMATION TECHNOLOGIST

Having always had a passion for IT and having been brought up in an IT home, Marc studied at Torque IT after school, specializing in networking, Microsoft server administration and Microsoft SQL database administration.

He completed his Systems Administration and Business Fundamentals (SABF) and Master Networks (MNE) courses with full honors and top of his group. During his employment at Microsoft South Africa, he completed his Microsoft Certified Professional (MCP) and Microsoft Office Certified Expert (MOCE.)

During his career, he has been exposed to many IT technologies and methodologies and began focusing his career towards his passion which is server administration, database administration and software development.

He is currently studying at the University of South Africa (UNISA) towards his Bachelor of Computer Science as well as through CompTIA towards his Security+ certification.

Having started working at Payment Solutions Africa in 2010, over the past 8 years, he has brought the IT infrastructure, the systems as well as the Affordability and Deduction Management Platform (ADMP) into the 21st century and is constantly researching and bringing the latest technologies into the company’s IT environment.

He is passionate about security which is of the utmost importance to Payment Solutions Africa due to the company working directly with individuals’ financials.

CHRISTIAAN JAKOBUS DE KOCK | GROUP FINANCIAL MANAGER

Chris de Kock studied at the University of South Africa where he obtained his degree in BCompt Accounting during 2003 after which he completed his Honours in BCompt Accounting in 2004. Subsequently he has also obtained his CIMA Diploma in Management Accounting (2010) and CIMA Advanced Diploma in Management Accounting (2014).

During 2004 he commenced working at an auditing firm for three years and in 2006 joined a Manufacturing firm in the automotive industry as their financial manager. In 2008 he became part of the Payment Solutions group of companies as group financial manager where he has been working for the past 10 years. He is a very enthusiastic and positive person who will take on any challenge that comes his way.

CHAPTER THIRTEENFINANCIAL RESULTS & PROJECTIONS

The forecasts below include revenue estimates based on organic growth in our three primary current markets. We have not accounted for any revenue from any new expansion markets in this forecast.

SUMMARY OF COMBINED AUDITED & UNAUDITED HISTORICAL & FORECAST INCOME (US$)

YEAR 1 YEAR 3 YEAR 5YEAR 2 YEAR 4

REVENUE

CONSOLIDATED ACTUALS

CONSOLIDATED FORECAST

6 336 673 4 093 468 20 293 979 52 750 808 110 440 783 197 807 777

EXPENSES -2 080 297 -2 054 679 -5 016 998 -7 812 914 -11 626 618 -16 009 901

NETT PROFIT 4 256 376 2 038 789 15 276 981 44 937 894 98 814 165 181 797 876

TAXATION -1 276 715 -544 214 -3 978 742 -12 001 314 -26 903 919 -50 052 286

DIVIDENDS - -1 195 659 -5 649 121 -9 880 974 -21 573 074 -39 523 678

RETAINED INCOME 2 979 661 298 915 5 649 119 23 055 606 50 337 172 92 221 912

GROWTH IN ADMP PLATFORM ADOPTION

EMPL

OYE

ES

Mill

ions

3,5

1,5

2,5

0,5

SOUTH AFRICA 78050 287740 770040 1602190 2858550

98172 119736 147944 190793 252140

20627 64995 115161 164921 202228

MALAWI

BOTSWANA

3

1

2

0Y1 Y3 Y5Y2 Y4

36

CONSOLIDATED REVENUE BY PRODUCT (US$)

37

REVE

NU

EM

illio

ns

450

350

150

250

50

LAP 175 419 994 223 2 853 592 6 281 709 11 639 912 21 944 855

1 012 971 5 530 550 12 598 311 24 332 271 40 460 792 83 934 895

2 905 079 13 769 207 37 298 905 79 826 802 145 707 073 279 507 065

PSII

ADMP

400

300

100

200

0YEAR 1 YEAR 3 YEAR 5YEAR 2 YEAR 4 TOTAL

CHAPTER FOURTEENBACKGROUND TO THE FOUNDING OF PSI

A SHAMEFUL HISTORY LESSON IN UNSCRUPULOUS LENDING PRACTICESWhat follows is a short case history in South Africa. Similar situations played out in many emerging market economies and this exhibit is included so that you, the reader, can gain a fuller insight into the drivers of short term lending, microfinance and the environment into which PSI was launched.

When the exemption to the Usury Act in South Africa was granted in 1992 it was anticipated that this would bring about a far greater degree of financial inclusion. Up until that point the formal sector had contended that the lower and unbanked income sector could not be serviced as the default risk could not adequately be addressed at the maximum allowed interest rates that were prescribed by the Usury Act.

History however shows that the exemption initially failed to motivate the formal sector to extend their product range to the lower income market. Instead, an influx of smaller lenders engaged in extending loans over 30 day periods at rates of 30% per month and collected their repayments through retaining the bank cards and PIN numbers of borrowers.

The practice of drawing payments directly from the bank accounts of borrowers through the use of bank cards and PIN numbers received negative attention due to the risk of fraud and regulatory concerns for the protection of the consumer. The unsecured credit extension industry had to search for a more socially acceptable collection method.

This resulted in a plan to secure payroll deductions from employers, ensuring that loan repayments could be collected from the income source prior to the salaries being deposited into the bank accounts of the employer.

The first successes in this regard were achieved in the unionized environment where lenders with support of the unions secured deductions from payroll. In time the Government also opened its payroll to allow deductions and this enabled the participation of formal lenders in the economy.

Given the effectiveness of the payroll collection methodology it was generally accepted that with the entry of more substantial financial institutions that competition and market forces would exert

downward pressure on costs and rates. What however transpired was the introduction of longer term loans granted at the maximum permissible rates.

The certainty of collection through payroll was unfortunately also the undoing thereof as lenders gave no or little regard to the ability of borrowers to service their basic needs after satisfying their repayment obligations.

There was no legislation governing affordability or maximum deductions and by 1999/2000 the Government had no choice other than to discontinue payroll deductions as a large number of their employees were left penniless after each monthly deduction run.

By the time that payroll deductions were discontinued the industry had grown to such an extent that lenders simply had to find alternative collection methods such as virtual banking accounts and preferred debit orders. These methods were short lived and were all eventually disallowed leaving the industry in disarray, relying on randomized (no preference) debit orders.

Illegal Emolument Orders Surface

Having lost an extremely reliable collection methodology unscrupulous lenders engaged in illegal practices aimed at securing collections through emolument attachment orders that were issued on default, ultimately resulting therein that deductions were forced from payroll through an order of court.

From 1992 to 1999 the micro lending industry was self-regulating but the Government enforced regulation on the 1st of June 1999 through the Micro Finance Regulatory Council (“MFRC”). Unfortunately, this step came too late to have any effect on undesirable lending practices, resulting in over indebtedness, through payroll deductions.

The regulation of lending and practices relating thereto was further bolstered with the commencement of the National Credit Act 34 of 2005 (“NCA”) on the 1st of June 2006. This heralded a new era of consumer protection against undesirable lending practices, placing the focus on affordability. The predicament with the NCA coming to its full right lies in the enforcement of its rules and regulations.

39

Current data indicates that many lenders continue to act irresponsibly and that the borrowers have no choice and suffer exploitation rather than face the prospect of financial exclusion. To aggravate matters borrowers that wish to enforce their rights often do not have the means or opportunity to do so and many illegal loans continue to be enforced against borrowers.

One further factor that needs to be mentioned is that irrespective of collection method and the surety thereof many, especially unsecured, lenders continue to advance loans at the maximum permissible rates and costs and to date the only downward movements have been those imposed by legislation.

The above reflects the progression of events in South Africa but similar experiences have presented themselves throughout other African, Asian & South American emerging markets with similar legislation. In some markets the abuse is even more profound as no access to credit can be enjoyed through any means other than payroll deductions.

40

CHAPTER FIFTEENINDUSTRY OVERVIEW

MACRO-ECONOMIC ENVIRONMENT USING SOUTH AFRICA AS AN EXAMPLE FOR EMERGING MARKETSThe macro-economic trends and developments identified below highlight the framework within which PSI operates and underline the imperative for its service offering.

International financial institutions like the World Bank have long recognized that well-functioning financial systems are essential for economic development. The work of its financial sector has, over the years, emphasized the importance of financial stability and efficiency. Promoting broader access to financial services, however, has received much less attention despite the emphasis it has received in theory. The access dimension of financial development, which implies both deepening and broadening the financial infrastructure, has often been overlooked.

All across Africa, access to finance is rightly seen as the key to unlocking growth for poorer, under-banked families, as much as for expanding export firms. The World Bank has emphasised that Africa not only needs funds, but also a more effective and inclusive means of channelling funds and other financial services to where they can be most effective.

Making financial systems work better is already a widely shared goal among policy makers in Africa. Stronger financial systems have helped deliver rapid overall growth, as well as direct and indirect benefits, across the income distribution spectrum. Reflecting this understanding, policy reforms that have halted and reversed earlier deterioration have been adopted over the past decade. Governments have started the process of building the required legal, information, and regulatory infrastructures. They have facilitated entry of, and competition among, more solid financial intermediaries, but much remains to be done in most countries, for instance to attract commercial banks to making private loans.

The World Bank’s view too is that important foundations have been laid, but the performance of national financial sectors still falls short of its potential. Policy makers in many African countries are confronting similar issues and choices:

42

How to get credit flowing more readily to where it can boost growth,

How to get more finance for long-term and riskier projects,

Whether small national equity markets should collaborate across national borders,

How best to design the regulation of banks and microfinance institutions in the African context, and

Where governments should concentrate their efforts

http://documents.worldbank.org/curated/en/254441468009032125/pdf/388960Making0f10082136909101PUBLIC1.pdf

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43http://siteresources.worldbank.org/INTAFRSUMAFTPS/Resources/MFWfAFinalNov2.pdfhttp://www.uctunileverinstitute.co.za/research/aspirations/https://mg.co.za/article/2013-10-25-00-garnishee-abuse-is-order-of-the-day

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The fact that such a wide range of fundamental questions is being asked in so many parts of Africa motivated the World Bank to conduct a regional financial study in 2007. Drawing on recent experience across the region and in international comparisons, the study entitled ‘Making Finance Work for Africa’ sought to present a coherent and consistent policy approach that addresses African priorities and that can work in African conditions.

THE WORLD BANK STUDY HIGHLIGHTED THREE RECURRING THEMES:

FIRST, there is a clear institution-building agenda, but scope also exists for energy and imagination in adapting and applying universally sound principles to local conditions – levelling the playing field and making the market more efficient.

SECOND, despite the sometimes problematic political overtones, there is much to be said for being open to regional or international solutions. The re-entry of foreign banks and the renewed interest in multi-country regulatory agencies show that this thought already has its adherents. Partnerships and outsourcing are also keys to making the most of new technologies that are providing innovative solutions to the challenges of access to finance.

THIRD, countries have benefited from adopting an inclusive approach, ensuring not only that reforms are targeted at embracing all income groups and sectors, but also that regulators facilitate the emergence and growth of a range of different types of intermediaries and ownership structures, and of different types of financial products.

The low level of private sector investment is both a cause of Africa’s growth shortfall and a consequence of low confidence engendered by the repeated setbacks in many countries in the region. Escape from these conditions can hardly be imagined without a central role for finance. Policies that strengthen finance will also address these core development gaps. By providing an alternative to government patronage as the basis for personal financial management and entry into business activities, a strong, independent financial system can transform the economic environment. Financial development and making finance work for Africa is thus one of the most central and far-reaching economic growth and development goals for the continent.

Expanding access to financial services remains an important policy challenge in many countries, with much for governments to do. However, the World

Bank has pointed out that not all government action is equally effective. Government policies in the financial sector should focus on reforming institutions, developing infrastructures to take advantage of technological advances, encouraging competition, and providing the right incentives through prudential regulations.

UNSECURED LENDING INDUSTRY IN SOUTH AFRICAUnsecured lending is the key to many South Africans’ journeys to economic stability and relative affluence.

This is according to the Aspirations Report , based on in-depth research involving 8 000 participants in five income groups conducted by the University of Cape Town’s Unilever Institute of Strategic Marketing. The research found that South Africans are heavily reliant on “good” unsecured borrowing to achieve their aims.

“Asked what was holding them back from reaching their aspirations, strugglers say lack of jobs, lack of assets [to] give them access to secured credit, ‘black tax’ and lack of access to quality education,” said the institute’s director, John Simpson.

“Informal forms of finance such as borrowing from family and unsecured credit are used to fund things that provide a bridge into the middle class, such as education, making home improvements in order to rent out rooms, buying a car, which provides mobility, access to more job opportunities and the ability to generate income, starting a small business from home, getting off the grid to become self-sustaining, and playing asset catch-up, including paying a deposit on a low-cost house.”

Martin Neethling, a contributor to the research and a business science lecturer at UCT, said unsecured lending filled a vital gap in the economy.

“I would say that unsecured debt has had a bad rap,” he said. “The unsecured debt market has addressed something that the institutional banks have ignored. We simply wouldn’t see people moving forward if it wasn’t for unsecured loans giving people that push forward.” A few years ago, the unsecured lending market was growing at a rapid pace, increasing by about 20% a year. It was led by the likes of African Bank and Capitec Bank, with a huge market of smaller lenders.

But, in the wake of the Marikana tragedy in 2012, abuse of the system began to make headlines, with almost 13% of employees in the mining sector found to have garnishee orders against them.

4

5

6

44

The collapse of African Bank and the treasury’s increasing scrutiny of the industry led to formal lenders tightening up their policies substantially and easing the pressure on consumers.

Capitec announced in September2015 that it would reduce interest rates on longer-term unsecured loans from 28% to about 20% over the next five years.

But supply and demand still drives the informal market, with an estimated 50 000 unregistered credit providers sometimes charging four or five times the legal amount of interest on loans.

COURTESY: THALIA HOLMES, UNSECURED LENDING ‘HAS HAD A BAD RAP’, MAIL & GAURDIAN, 07 OCT 2016

In the six months after government issued proposed caps to charges on loans, unsecured credit ballooned by almost 30%, suggesting that lenders were maximising prevailing high interest rates before lower legal limits rained on their parade.

Unsecured lenders embarked on a lending spree in the months before caps to interest rates and fees came into effect, data from the National Credit Regulator’s (NCR) Consumer Credit Market Reports (CCMR) reveal.

From levels above R21 billion for the quarter to December 2013, unsecured credit growth fell during 2014 and the beginning of 2015, before spiking upwards for the six months to December 2015 – immediately after the Department of Trade and Industry (dti) first published the draft recommendations on caps to rates and fees towards the end of June 2015.

It was proposed that the maximum prescribed rate on unsecured credit transactions be slashed from 32.65% to 24.78%.

Short-term loans, which have also seen interest rates reduced, show a similar increase.

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https://www.iol.co.za/business-report/companies/report-lifts-lid-on-african-bank-collapse-2021078https://www.moneyweb.co.za/news/companies-and-deals/capitec-plans-to-reduce-lending-rates-dramatically/

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Credit providers warned of the unintended consequences of this dramatic reduction in interest rates, which they said would see the credit taps tightened and consumers forced to source loans from unregulated loan sharks.

They then promptly went on a lending spree, presumably to grant as much credit as they could at the prevailing higher interest rates.

Larger loans granted over a longer term picked up during this time, according to the NCR’s data.

Following widespread consultation with industry, the maximum prescribed rate on unsecured loans was changed to the repo rate plus 21% (currently 28%).

The final regulations were published in November 2015 and came into effect in May.

PULLBACK IN UNSECURED LENDINGUnsurprisingly, new unsecured loans granted in the first three months of this year have fallen by 16% to ZAR18.9 billion, as credit providers pulled back following a bumper six months and in a weaker economic environment.

That lending ramped up in the months following the release of proposed caps to rates and fees is also reflected in the total outstanding gross debtors’ book. This provides a snapshot of the total unsecured loans still to be repaid at a given point in time.

This book was on a declining trend, but has spiked upwards following last year’s lending (borrowing?) spree. From ZAR162 billion at September 2015, it ended March 2016 at ZAR165 billion.

UNSECURED + ST LOAN EXTENTION PER QUARTER (ZAR-BN)

SOURCE: NCR DATA, MONEYWEB GRAPH

18,70

SOURCE: NCR, CCMR

17,40 17,45

20,66

22,47

18,88

2,68

Dec-1

4Jan

-15

Feb-1

5M

ar-1

5Apr-1

5M

ay-1

5Ju

n-15

Jul-1

5Aug-

15Se

p-15

Oct-15

Nov-1

5Dec

-15

Jan-1

6Fe

b-16

Mar

-16

2,543,93 4,07 4,49

3,21

Unsecured loans (ZAR-bn)

Short-term loans (ZAR-bn)

DTI issues proposed rate caps

29% increase in unsecured loans

46

While some credit providers have cautioned that short-term and payday lenders are filling the gap left by a contraction in unsecured credit, the NCR counters that short-term credit is unlikely to fill such a large gap.

For the three months to March 2016, ZAR3.2 billion in new short-term credit was granted, a decrease of 28.5% from the previous quarter. Short-term credit refers to loans of less than ZAR8 000 granted over terms of six months or less.

Almost 52% of the amount granted was for loans of less than one month, according to the NCR’s head of statistics, Ngoako Mabebe. Some 63% of the numbers of accounts granted were for one month or less, he said.

“Larger credit providers account for a considerable chunk of the value of short-term loans being extended,” Mabebe told Moneyweb.

A number of smaller credit providers including, for example, those lending out of the boots of their cars, continue to go unaccounted for.

In an attempt to curb consumer abuse, all credit providers are now required to register with the NCR.

Previously, entities needed to either have loan books amounting to ZAR500 000 or 100 credit agreements in order to have to register. This threshold has been scrapped.

COURTESY: HANNA ZIADY, “UNSECURED LENDING JUMPS 30% AHEAD OF INTEREST RATE CAPS”, MONEYWEB, 4 JULY 2016

UNSECURED CREDIT – OUTSTANDING BOOK (ZAR-BN)

SOURCE: NCR DATA, MONEYWEB GRAPH

Dec-1

4Jan

-15

Feb-1

5M

ar-1

5

Mar

-14

Apr-15

Apr-14

May

-15

May

-14

Jun-1

5

Jun-1

4

Jul-1

5

Jul-1

4

Aug-15

Aug-14

Sep-1

5

Sep-1

4

Oct-15

Oct-14

Nov-1

5

Nov-1

4

Dec-1

5Jan

-16

Feb-1

6M

ar-1

6

156

158

160

162

164

166

168

170

172

174

Unsecured credit – Outstanding book (ZAR-bn)

CHAPTER SIXTEENGENERAL STATEMENT

This initial coin offering (ICO) refers to an Ethereum protocol based PSI ERC20 Token sale event during which 25,000,000 PSI ERC20 Tokens each representing individual preference shares in PSI Limited will be sold.

These shares are classified as securities and have the rights and obligations of a shareholder in a public company, registered in South Africa:

25,000,000 (twenty five million) par value preference shares in the share capital of PSI Limited (represented by the PSI ERC20 Token) will be sold during the token sale event at an issue price of US$1.00 per preference share.

After the conclusion of the token sale event the company will list the token, representing the shares in PSI, on cryptocurrency exchanges.

Your attention is drawn to the fact that the shares on offer are unlisted and should be considered to be a risk-capital investment and prospective subscribers should review the potential risks. Capital invested as well as the dividends, returns and repayment on capital is not guaranteed. However, the Company secures investments against its underlying assets. Investors themselves are therefore at risk and investment could result in the loss of the investment to the investor if the Company should fail.

This ICO document includes forward-looking statements. Forward-looking statements are statements that include, but are not limited to, any statements regarding the future financial position of the Company and its future prospects. These forward-looking statements have been based on current expectations and projections about future results which, although the directors believe them to be reasonable, are not a guarantee of future performance.

Risk factors which may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by it in the forward-looking statements include, among other things, economic decline and currency fluctuation risk.

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The directors, whose names are stated in this document, accept full responsibility, collectively and individually, for the accuracy of the information given herein and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement false or misleading, they have made all reasonable enquiries to ascertain such facts and that this ICO contains all information required by law.

The auditors whose names are included in this ICO document, have given and have not, prior to registration, withdrawn their written consent to the inclusion of their names in the capacities stated and, where applicable, to their reports being included in this ICO document.

If you are in any doubt about the contents of this document, you should consult with your own independent legal, tax, accounting, investment or other relevant advisor when contemplating any investment decisions described in this document.

This document has been compiled from information supplied by the Company.

The information contained herein has been prepared to assist in forming an initial view of the Offer. The document does not purport to contain all the information that an investor may require nor is it intended to replace any form of legal, financial or technical due diligence.

The content hereof may not be utilised and/ or relied upon for any purpose other than to evaluate whether you wish to participate in the Offer.

DISCLAIMER This document is not an advertisement but is provided exclusively for information purposes and should not be regarded as an offer or solicitation to purchase, sell or otherwise deal with any other particular investment. While we have taken and will continue to take care that the information contained herein is true and correct, we do not guarantee the accuracy, timeliness or completeness of the information provided, and therefore disclaim any liability for any loss, liability, damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use of or reliance upon the information. The document is protected by copyright and may not be copied, reproduced, sold or distributed without prior written consent.

* Terms & Conditions apply

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DEFINITIONSIn this Initial Coin Offering (ICO) document, annexes and attachment hereto, unless the context indicates otherwise, references to the singular include the plural and vice versa, words denoting one gender include the others, expressions denoting natural persons include juristic persons and associations of persons and vice versa and words have the meanings stated opposite them as follows:

“Act” or “the Companies Act” the Companies Act, 2008 (Act No. 71 of 2008) of South Africa and the Companies Regulations, 2011, as amended from time to time;

“ADMP” the Affordability and Deduction Management Platform developed and operated by PSI;

“Auditors” or “Reporting Accountants” Uys & Associates Auditors Incorporated, Registered Accountants and Auditors, incorporated in terms of Section 53(b) of the Act, in their capacity as the auditors and reporting accountants to the company;

“Board” or “the Directors” the board of directors and the executive management team (whose members are to be appointed as directors) of PSI at the date of this coin offering document, further details of whom appear on page 32 of this coin offering document;

“certificated shareholders” shareholders who hold certificated shares represented by PSI ERC20 Cryptographic Tokens;

“CIPC” the Companies and Intellectual Property Commission, a division of the Department of Trade and Industry, and based in Pretoria, South Africa;

“Cryptocurrency” Ethereum, Bitocoin, Bitcoin Cash and other similar instruments that store value;

“DAO” A decentralized autonomous organization (DAO) is an organization that is run through rules encoded as computer programs called smart contracts. A DAO’s financial transaction record and program rules are maintained on a blockchain;

“dividends” the dividend applicable to specific classes of shares determined by the Board of Directors of the Company;

“documents of title” Cryptocurrency PSI ERC20 Tokens, share certificates, certified transfer deeds, balance receipts or any other documents of title acceptable to PSI in respect of shares;

“EAO” Emoluments Attachment Orders, also commonly referred to as garnishee orders;

“ETH” Ethereum is similar to Bitcoin. It’s a public, peer-to-peer network or blockchain with its own digital currency called Ether. Where Bitcoin stores a list of balances and transactions on its blockchain, the Ethereum blockchain is designed to store different

types of transactional data such as ownership transfers and dividend payments. This data can be accessed and used by computer programs running on the Ethereum blockchain. These programs are called decentralized apps, or dapps. The purpose of these is to improve the industries of finance, personal information storage, governance and more by using the transparent nature of a blockchain;

“FAIS Act” Financial Advisory and Intermediary Services Act, 37 of 2002 as amended;

“FIAT” Fiat money has been defined as any State-issued money declared by a government to be legal tender;

“FSP” Financial Services Provider as defined in the FAIS Act;

“ICO” this Initial Coin Offering, incorporating, inter alia, the annexures attached hereto and the non-disclosure agreement enclosed herewith;

“investor” A person or legal entity who subscribes to the products of the Company with the expectation of financial return;

“King Code” or “fourth King report” the fourth report on corporate governance issued by the King Committee;

“KYC / AML” Know your customer (‘KYC’) is the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the bank and anti-money laundering (‘AML’) regulations which governs these activities;

“LAP” the Loan Administration Platform developed to and operated by PSI;

“MOI” or “Articles” the Memorandum of Incorporation of the Compa¬ny, registered under the Act;

“NCA” National Credit Act, 34 of 2005 as amended;

“NCR” National Credit Regulations as amended;

“non-resident” a person whose registered address is outside the Republic of South Africa;

“non-voting” The limited right of shareholders to vote at meetings of the Company as determined by the Act and the Company’s MOI;

“Offer” the offer for subscription as set out in the ICO document;

“ordinary shares” the par value ordinary shares in the capital of the Company;

“POPIA” Protection of Personal Information Act, 4 of 2013;

“preference shares” each class of redeemable; cumulative; non-voting; par value preference shares at an issue price of US$1.00 per preference share in the share capital of the Company, as described and offered in terms of this ICO;

“PSII” PSI Loan Investment product

“PSI ERC20 Token” An PSI ERC20 Token protocol compliant cryptographic token, representing one ordinary share in PSI

“PSI” or “the company” or “the group” Payment Solutions International, a private company registered in South Africa, with company registration number: 2009/002518/07, and registered address at Block A, Lombardy Corporate Park, c/o Graham & Cole roads, Shere A.H, Pretoria, including all its subsidiaries;

“PSI shareholders” or “shareholders” registered holders of PSI ordinary shares;

“PSI shares” or “shares” All securities of the Company, including the ordinary shares and preference shares, of the Company as defined in the Company’s MOI;

“PS-MW” Payment Solutions Africa (M) Limited, a private company registered in Malawi on 4 February 2011, with company registration number 11102, physical address at Unit 8, Ground Floor, Southern Wing, Arwa House, Plot 13/14, City Centre Lilongwe;

“Smart Contract” A smart contract is a blockchain based computer program that directly controls the transfer of digital currencies or assets between parties under certain conditions. These contracts are stored on blockchain technology, a decentralized ledger that also underpins Ethereum and other cryptocurrencies;

“South Africa” the Republic of South Africa;

“the register” the register of shareholders;

“Tru” Tru Finance (Pty) Ltd, with registration number: 2017/0853000/07, a private company registered in South Africa with the purpose of providing affordable consolidation loan products;

“voting” The right of shareholders to vote at meetings of the Company as determined by the Act and the MOI;