Is MiBiz too good to be true?

Two months ago, I wrote an article about a group of companies: AllQuotes, BuyDirect and MiBiz, which fall under a parent company FinGroup.

I wrote about concerns raised by investors and insiders regarding the business practices behind these companies, which sell “licences” in the business, which they claim will produce a passive income.

The promises range from 26% to 40% income a year, yet the investors have received no income since October last year.

Further investigation into the MiBiz operations by City Press has revealed how these companies and their key role players operate.

MiBiz has been contracted to be the marketing arm of a payment technology called Pay2, developed by tech entrepreneur Llewellyn Morkel.

In a nutshell, Pay2 is a payment system that allows small businesses to collect payments from customers without having to have a credit card or debit order facility.

Pay2, like any technology, has the potential to grow, but over time. It is almost impossible to deliver to its investors an income of 40% in its first year.

But that is exactly the marketing pitch that MiBiz is using to get people to spend between R39 000 and R50 000 on a MiBiz licence.

Sources indicate that the number of current transactions has been exaggerated, as has the time frame in which certain transaction levels are reached.

These sources further claim that the level of involvement of businesses that MiBiz claims to have signed up has also been exaggerated.

The problem for MiBiz, and therefore Pay2, is that people have no interest in high-risk, long-term investing. Marketing material that says “this is a high-risk venture that will only see meaningful profits in three to five years, if at all” would have no investors.

The key individuals behind the marketing of the product know that the best way to lure investors is to turn on the charm, and talk about passive income and high returns.

Robert Weimar is listed as the director of MiBiz, although sources say that Kevin Cholwich and Theuns Schoeman are central figures and have been involved in previous “passive income” schemes.

Weimar told City Press that Cholwich and Schoeman are independent consultants.

Marketing material that was sent to a potential “licence” holder shows Pay2 as having 5 000 transactions a day in month one, which will increase to 51 000 transactions a day by month 12, and that MiBiz receives 15c per transaction, which is paid to licence holders.

Based on the spreadsheet contained in the marketing material, licence holders can expect to receive a total income of R15 104 per licence over a year – about a 40% income return.

Although it does state that these returns are illustrative, the document also states that it is a low-risk, good return on capital outlay.

City Press met with Morkel to discuss these figures. When Morkel saw the current and projected transactions used in the marketing material, he told City Press that current transactions were a fraction of these figures and that the goal of 51 000 transactions a day is years away.

Based on this, it is not vaguely possible for MiBiz to meet the income projections used to market the licences to potential investors.

The marketing presentation made to potential licence holders also claims MiBiz has signed up various companies, churches and foundations to use the Pay2 system.

In response to questions from City Press specifically about one church and one foundation mentioned in the marketing presentation, Weimar, listed as director of AllQuotes, BuyDirect and MiBiz, as well as spokesperson for FinGroup, stated that “this church uses or [sic] facilities to collect tides [sic] on Sundays”, and “this charity uses us to collect donations”.

When contacted by City Press, these entities asked not to be named in the article due to negative association, but in both cases there was neither an active payment app nor existing transactions.

The foundation/charity said the app was still in development and the church informed City Press that it was still making a decision about whether it made sense for its members.

Promises that they are signing up with major retailers turns out to be part of a project with the WiGroup, which Morkel said had not happened yet because of a limited development budget.

Morkel is understandably upset that what he believes to be promising technology is getting bad press due to being associated with MiBiz.

MiBiz has already received more than R800 000 from new licence holders, yet Morkel said Pay2 had not received a single cent to use towards development costs.

According to the brochure, the 2 000 licences for sale (which would bring in about R78 million) would be used to market Pay2 and MiBiz.

Another issue is that the hundreds of existing licence holders in AllQuotes and BuyDirect, who believe they have lost their money (an estimated R120 million), are pinning their hopes on Pay2’s success and are hoping that it will generate sufficient income to at least give them their money back.

Morkel believes this may be possible, but they have to be realistic about what those returns will be and how long it will take before they see any real benefits.

City Press would like to note that Weimar has reiterated that the licence holders have not lost any money.

“We have been working under difficult circumstances to maximise income to share with licence holders.

Further each licence holder has had ample opportunity to generate their own income from the licence and others have chosen not to utilise the licence to generate their own income.”

So, if it seems too good to be true, is it? You decide.