Webinar: Economic Resurgence Through the Digitization of Global Commerce

Hear Loqate’s discussion with Eric Rosenthal, VP and Managing Director of the Americas about how businesses can quickly adapt to the post-COVID economy to lead the recovery.

Video Notes:

Athar Naqi  0:06  

Thank you everyone for joining. We'll be starting in about one minute. All right, this thing will start we've got a lot of people signed up. Welcome, everyone. And thank you for joining us. My name is a tar Naqi. And I'm the head of strategic alliances at Loqate. In today's webinar, we will share q1 market trends and articulate why digital in borderless commerce will further continue to grow. Our experts will give their insight on what businesses should focus on now to accelerate the digitization of their businesses and lead the economic recovery. Some quick housekeeping items, everyone would receive a copy of this presentation of this webinar by email. And also please do ask questions via the q&a chat tool. And it will be answered by the speakers at the end of this webinar. Let me Next slide. All right. Let me briefly introduce our speakers and the companies that they represent as to give you some more context on who they are, and the insights they will be sharing today. Justin dueling is the Senior VP and commercial director for Loqate and is responsible for leading the global partner business and its expansion across key markets. Justin has over 20 years of leadership experience in payments, financial technology, location and identity verification industries. He's a seasoned speaker, and thought leader presenting annually at key technology conferences such as IBM think Oracle OpenWorld, as well as Oracle modern customer experience. Justin is Loqate'sd fearsome leader in North America and no doubt a great person to work for. Eric Rosenthal is a FinTech and global corporate financial expert, currently serving as Rapyd'ss Vice President and managing director for the Americas. Eric oversees business operations, and expansion throughout the US, Canada, and all of Latin America. Prior to his work at Rapyd Eric worked across Asia, Latin America and Europe for a number of Fortune 500 companies, including first data, Citigroup, and McKenzie. You must be thinking why these two companies are doing a joint webinar. So Rapyd and Loqate became partners as part of bolstering KYC checks. Know your customer. As you know, KYC is the financial services mandatory process of identifying and verifying the identity of customers. Let us start explaining the relevance of this partnership in the context of powering digital commerce by giving you a quick overview of Loqate and Rapyd Let me start talking about Loqate and then I'll ask Eric to introduce Rapyd. So Loqate We are the leading developer of global address verification and geocoding solutions. We are our partners, global ladders and geocoding data experts so they don't have to invest time in that. Loqate builds and develops premium address and geocoding reference data sets and platforms, engines covering all countries and territories in the world. Every day we are enabling our partners to integrate our API's into their applications and product lines to continuously update standardize and provide rich location intelligence services. As a partner first organization Loqate has also established strategic go to market partnerships that the world's leading software and technology companies such as IBM and Oracle, and SAS


locus parent company gbg is a global specialist in identity and location data intelligence. We have combined our technology engines to trillions of data records relating to locations and people's identity from all over the world. gvd has the ability to verify over 4.4 billion pieces And address locations across all countries and territories. With headquarters in Chester, UK and satellite offices in over 18 countries, including office in Atlanta, San Francisco and New York City. We are a stable growing global firm. Let me turn into Eric's, for an introduction to Rapyd, Eric.


Eric Rosenthal  5:24  

Good morning. And thank you. My name is Eric Rosenthal. And as he suggested, I am the managing director and vice president of the Americas of Rapyd Rapyd is a global company with four major offices in the United States base here in California, Israel, where we are basis a headquarters with Office in London and an office in Singapore. Rapyd provides companies with a single platform that allows companies to connect to Rapyd'ss platform to facilitate global commerce, and connect global payment methods all over the world. Rapyd'ss FinTech as a service platform is used by challenger banks, banks, ecommerce, merchants, businesses, and a variety of other platform businesses that are looking for an easy way to expand globally as well as expand across multiple use cases. In the next slide. See that the Rapyd platform enables companies to collect funds across 100 different countries, connect to over 900 different payment methods store over 65 different currencies, and facilitate the ability to collect payments across banks, cards, e wallets, and a variety in cash networks, as well as dispersed payments, across 170 different countries. Pleased to be with you today. And we'll talk a little bit more about Rapyd and how we're working together throughout the presentation. Thank you.


Athar Naqi  6:52  

Great, thanks, Eric. So let's dive into the digital commerce trends we are seeing in q1 as we enter into creating what we call now new norms as governments and as far as governments have asked, not as insurance brands and retailers to shutter their physical stores, consumers had no choice but to turn to digital channels for discretionary categories. For and for any purchases. This is an analysis done by a digital commerce from over 1 billion shoppers worldwide. It shows that q1 20% Global digital revenue growth even outpace was a very strong 2019 holiday shopping season. No doubt. Very impressive. Let me get my speakers engaged here. I'll start with Justin. Justin, can you kind of tell us what impact COVID-19 has had on e commerce? And what business trends you see leading us into a post COVID recovery?


Justin Duling  7:56  

Yeah, definitely. Thanks, Naqi. I think the short answer is that we all observed through the the unique common worldwide experience that business models for for retailers and retailers changed overnight. Right, we saw supply chain disruption, we saw surges in certain areas and and the businesses needed to adapt to survive. So if we take a look at the the numbers that we view from our platforms, and in our partners platforms, the first quarter quarter started off fairly consistent with prior years, you know, following the holiday season, and things change once the virus began to spread. In particular, there was a 41% spike in digital revenue during the first final 15 days of the quarter. With the increase in demand and along with the shuttering of stores and distribution centers, we started to see some retailers struggling to pivot their operations and adapt more to traditional e commerce model of pick and pack and ship orders. Some scramble to accelerate and retool supply chains to offer curbside pickup drive thru and home delivery for a contactless last mile. And those who had robust digital channels were able to more quickly adjust to deliver for their customers. In general terms what we saw during the first few weeks, as the world went into lockdown was e commerce centric businesses thrive. Businesses with robust secondary digital channels adjusted and businesses with limited to no digital capability came to a near and complete stop. If we look on the next slide, we'll talk a little bit about consumer behavior. If we look at the period between March 10 and march 20, spending on essential goods via digital channels surged by 200%. And so for everybody who tried to order toilet paper online, that spike is for you And it remained elevated throughout the quarter. Shopping digitally for essential categories such as food and personal care items has now become commonplace. There's a big caveat to the surge in digital spend them. brands and retailers are using a high discount rates to help drive the demand to liquidate their inventory. discount rates in the US surged 34% in mid March, well above discount seen during cyber week. This trend was mirrored globally as March became a critical month in containing the virus across the world. So predictions are naturally that digital spending will level off. Some as we move out of lockdown, the the expectation is that some consumers will continue to operate in a risk averse mode once shelter in place mandates are lifted. And over time purchasing behaviors formed during the crisis will remain. Digital commerce is no longer a secondary channel. And if we look on the next slide, the the Loqate autocomplete addressing solution called capture plus, as is, well it's our platform that we operate. And because it's mostly consumer facing e commerce, we got a good idea of transaction volumes and consumer behaviors. So for example, there's a global brands of Nike and kohls.com. That, that utilize the platform. So we've seen the the trends over time and increase of 50% on daily volumes during these lockdown periods. And on the next slide, just because we get a good view, and our heritage at Loqate is in the UK, we have a very large customer base in the UK. One of the consumer behavior anecdotes that that I found, personally heartwarming was on Thursdays in the UK, people go outside at eight o'clock to applaud NHS and show their appreciation for the frontline workers. And so you can see on this chart is a daily chart of a Thursday, and at 8pm transaction volume dips significantly in picks right back up several minutes later on when people go back in after after applauding the NHS. So it's not all bad news. And it's it was kind of kind of neat to witness the the heartwarming customer base consumer behavior via our platform. And then on the next slide is in summary, and globally, we're seeing a dramatic shift to digital browsing and buying. For the first two months of the crisis. We saw retailers being impacted dramatically around the world. businesses and consumers changed the way they operated nearly instantly. brick and mortar locations closed or limited operations because of the social distancing measures, and people across nearly every demographic were thrust into the digital world for their social interaction, well being health and wellness information, and as well as the shopping needs. Despite the economic uncertainty, it's clear that people want to make themselves more comfortable as they transition to work and personal life at home. Whether it's arts and crafts items to make the home environment or work from home was higher, more comfortable. Consumers are spending Beyond the Essentials. Some spending will be temporary, but the habits that have been formed and will likely continue and exacerbate the already


increasing trend from a brick and mortar retail to an e commerce driven world. And so what a business needs needs to do. If they haven't done it already, they need to accelerate their ability to conduct and conduct digital commerce and generate revenue anywhere anytime customers choose. This is where the digitalization of commerce must include FinTech and payments to power borderless shop. Naqi. That was a little long winded answer. But that's you


Athar Naqi  14:35  

know, that's great. Thank you, Justin for giving us a really good sense of where we stand. And the key takeaway is that digital commerce across the border is accelerating and you either participate or you basically die. Eric, let me kind of ask you a question here for our customers who no doubt want to take advantage of this digitization or digital digitalization of commerce. How do you see challenges adoption Pre slash post COVID as really, as related to FinTech payment and location data, expanding local markets. Excellent question.


Eric Rosenthal  15:13  

So I think ultimately, I'll break this response down into, as he said, what we learned from the pre COVID and versus what we need to do as a result of the post COVID. I think that ultimately, what we saw, as Justin was highlighting during the pre COVID is it those businesses that had already begun the path of adapting to digital channels, and had already as well, what we would actually observe as well as those businesses that were well positioned to sell across multiple markets, were able to not only in some cases, accelerate their growth during this period of COVID, which obviously continues as of right now. But as well, being fairly resilient to the shock to the system is similar to any kind of natural disaster, you have a stage in which you need to observe from during the natural disaster, which were those businesses, which were those organizations that were able to be more resilient to a shock to the system. And ultimately, which are going to be the ones that are able to adapt and remain resilient and continue to take advantage of this, this this situation for the positive. What Rapyd has actually seen this, one of the challenges and opportunities in digital conference is, first and foremost, the fundamental challenge is, there's now a proliferation of payment methods, there's a proliferation of different ways that people are accustomed to pain. So for those businesses that we've observed, particularly those that are selling cross border, those that are selling across multiple countries, what they observed is they may have actually positioned themselves to sell using the credit card to sell using cards. But yet, what they discovered along the way is that people in Mexico, for example, have traditionally been paying using cash or have traditionally been paying using bank transfers. In this period of COVID, what they've actually been able to do is to can they continue to want to pay the way that they might be paying for the bills or the way that they might be paying using local e commerce websites. So those companies that have been able to adapt, or were already well adapted to that have been able to take advantage of the situation. So we really have this dynamic right now. Where you have a significant amount of fragmentation, and proliferation, different payment methods, in particularly keeping in mind that only 18.4% of the world even has a credit card. In places like India, people are using real time bank transfers using the system called UPI. In places in Africa, people are using mobile wallets in order to pay. So the lesson learned really here is those businesses that had actually begun to prepare to a certain degree for a situation of diversification of payment, that that's not necessarily for the COVID situation, we're able to continue to sell throughout and accelerate their businesses. And now on a go forward basis, companies that are looking to accelerate their exit from the situation should be thinking about how to continue to diversify not only their payment methods, but as well, their g rep accomplish, what you'll see on the next slide as well is that, really, you have this dynamic. If you could actually go back to the last the second one right before that, sorry about that. You really have this dynamic that people want to be able to pay the way they're accustomed to be able to pay. So in a similar dynamic of what Loki focuses on and helping to can not only manage the element of fraud at the checkout, but as well as managing the conversion, the easier it is for a client. And for your customer to be able to check out and complete the transaction, you're obviously going to experience more conversion. If someone gets to a checkout page, and he or she is only presented with the option of using a credit card and they don't have a credit card, you're not going to be able to convert them. If a business needs to pay another business. And the business is accustomed to using a bank transfer to be able to pay and you only present them with a credit card they're not going to be able to pay you. So ultimately, what we're recognizing is this fragmentation and proliferation of different payment methods and ultimately call it all the complimentary services around it was already happening before COVID. What COVID really has done is essentially did the realization that those businesses that were already in the process of adapting to this, call it new payments environment, were able to sustain their business or at least be able to in some cases be able to accelerate. But we'll also see in the next slide, which also speaks to the fact of how and why Rapyd is working with Okay. Is that when companies think about diversifying


their strategy, particularly coming out of COVID is there going to be waiting Throughout not only this country of different states and different communities that are coming out of shelter in place, and whose be buying behaviors will either sustain as being primarily digital versus not. But the same thing is going to happen as well across borders. And therefore what we've observed in the past is that those companies that are thinking about how to make sure that if they're hard hit in one geo, that they're able to offset that they need to be able to think about going cross border, and they need to be thinking about expanding globally, but that payments is just one component. Another component is, can we verify the identity of the buyer, and therefore use the address verification solution that Loqate has to validate an address and therefore help to lower the fraud rate? Can we actually localize our website so that people are able to check out the way that they're accustomed to checking out? Can we actually optimize logistics? And of course, as Rapyd'ss primary focus, can they actually pay using the payment method that they're accustomed to using?


Athar Naqi  21:07  

Thank you, Eric. Very helpful, I did not realize that at some demographic like India, the credit card penetration is so low in the context of having this cross border, cross border payment capabilities that are supporting local customers requirements and needs. Why is digital digitalization of commerce is important?


Eric Rosenthal  21:32  

Yeah, so as we'll see in the next slide, first is a level to give some context of how prevailing cross border is, is that in for particularly, I imagine on the on this call, we have mostly American businesses or businesses that are based in North America. The vast majority of people that are buying cross border are buying from us based businesses. So it's quite prevalent in Latin America, for people to be shopping from America on us websites, whether they're buying a digital good, or whether they're buying a physical good, whether they're purchasing a type of service, or in many cases where there's one business sourcing products or services from another business. And this has to do with a variety of different to certain Greek common sensical dynamics. One is significant variety of different products that the US market may have that their local markets don't have, as well as price. And so when we think about why people are shopping cross border is, I think, similar to what COVID has taught us about the global is what the significant impact that globalization has had upon the world is that this is a this is a reality. So in a place like the United States, for example, almost almost half a trillion dollars, or more than half a trillion dollars of our payments. Volume, by default, is already cross borders already very international. And this includes business, a business payments, as well as consumer to business payments. And therefore what we're seeing is that those businesses that have been able to understand the local preferences are the ones that are able to do it. So very classical scenario is a business in the United States might discover along the way that it might be selling into Brazil, or it might be selling in Argentina, or might be selling in even just to Europe. And what they begin to see this sort of classical conversation that we have with them is that they're using credit cards. And they're beginning to see interest because of the products because of their service, they see where people are coming from. But then what they begin to discover is that the acceptance rates of those payment methods is quite low, due to the fact that it's a considered a cross border transaction. The second thing that they begin to realize is that when they begin to understand the demographics of the countries that they're selling into, such as Brazil and Argentina, they realize that the vast majority of people there do not have a credit card. And if they do have a bank account, therefore a local debit card, that that local debit card is actually not provisioned or configured in order to facilitate a cross border transaction. So they find themselves in this sort of dilemma that they want to sell more. And particularly they say, as I was saying now in the context of COVID. Being able to sell across border, particularly when people are can will likely continue to be stuck in their homes, in places that are hardest hit such as Brazil, Peru and other countries throughout Latin America, for example. People are going to want to be able to transact, but if they can't actually pay, they're not going to transact with you. Now the other dynamic that we continue to hear constantly, very commonly hear from clients that we serve, is that 567 10 years ago, they made a decision to go global but they thought very limited about this notion of going global. They thought about the BRIC countries they thought about how do I sell them to Brazil? How do I sell into India? How do I sell into perhaps turkey to China, those are five countries of over 200 different countries we have in the world. And the effort that was required in order for them to integrate into those local payment methods typically is led to a dynamic where they plateaued. They were not able to expand into more. Along the way, as I was mentioning earlier, we've seen the proliferation of local payment methods. So when they started off and said, let me figure out how to enable balletto, which is a common payment method in Brazil. We'll fast forward to 2020. Brazil is at the is months away from launching their own real time payment method that will probably within a year or two over supersede, but that is the primary payment method. So how do you begin to future proof? And how do you begin to ultimately, imagine that what you want to invest it in Maine soon become called expired.


If you move on to the next slide, what you'll also see is that local payment methods constantly, really matter. So it's very similar dynamic, where I think this is sort of situate this in the US reality, or the reality of many of us on this call, is when you get to the checkout, whether it's online or at the supermarket. And you're told that you can't pay that you want to the way that you want to pay. So if you're holding an American Express card next merge Express is not accepted. If you're holding a Discover card and discovers not accepted or you want to pay with a check and checks are not accepted. Unless you have a significant significant no other choice. to transact with that business, the likely dynamic is that you're going to not transact with that business, what you're likely going to do is you're going to go elsewhere. And therefore, it's really important to consider that in many markets that have throughout the world 19% of online transactions are actually still taking place in cash. This is a dynamic where someone is initiating the transaction on a website on an app on a phone. And then when they get to checkout, they're selecting I want to pay in cash and then going offline and pinging cash. And this is still happening even despite the shelter in place. We've seen this with a number of our clients, that many of the traditional cash channels have actually been closed. And this is only the central businesses the seven elevens of supermarkets that remain open, and therefore they continue to see their buyers going to those channels to pay in cash. The other thing that we witness is that bank transfers as a form of payment. Even in the United States and throughout the world. bank transfers have typically been seen as ways of paying people's bills, paying your electricity bill paying your phone bill paying other bills, but have rarely been really considered as a way of facilitating commerce. What we're seeing in the context of COVID is that those companies that actually already integrated bank transfers as a checkout payment method have been able to take advantage of this of the current lockdowns where someone says, Well authority paying my electricity bill using a bank transfer, I could actually use this bank transfer to buy my groceries to buy some some Sue's to shop effectively online. And those companies that had already integrated in bank transfers have been able to sustain with less impact than those that only were really being very credit card centric. Lastly, in the case, primarily in the case of of Africa, but as well, we see wallets. And if you've seen what's been happening with other companies that are in the wallet space, people are also using wallets to transact online. So the net net really messages. If you're a company that's thinking about what do I do next? And what can I learn from the situation? Really, the message is, you need to consider the fact that local payment methods are critical, as well as the diversification of payment methods, even the United States.


Athar Naqi  29:19  

Thank you. very insightful information, Eric. I really appreciate it. So I guess this will be a question for both Justin and Eric. So what will be your key takeaways for the attendees? Is how Rapyd and Loqate can help businesses as they're looking to start grow their digital commerce footprint. Justin, we'll start with you and


Justin Duling  29:43  

yeah, thanks, Mikey. I think the it's two prongs, right. So after the businesses have made the decision to get in the game, which everybody has read it we've been thrust into that position. It's it's two pronged, right? It's it's Developing, seamless, consistent, frictionless customer experiences on the front end of the transaction. So what does that mean to work in an omni channel world where there's a brick and mortar activity of color curbside pickup, what have you online ordering, ordering via a mobile device or ordering via a desktop application. All of those applications need to work in a similar way and deliver a consistent, consistent customer experience. And that experience should be as frictionless as possible. Right? So when we're looking at the shopping, cart abandonment, for example, we've there there's been dozens of probably hundreds of studies, over the years, that the faster a customer can check out and fill out the forms on a website and get through the payment process on the website. And the more choices that they have with with payments, the the more likely they are to complete their order. And so what what we've seen and why we do business with some of the marquee names, like Nike and Adidas, and, and Kohl's and the nordstroms of the world is that when especially when they're crossing borders, customers want to enter in their information quickly, and they are able to, to autocomplete their address, in line with with the payments and shipping workflows from the consumer. And then the second problem of that is on the back end, from the merchants point of view, you want to make sure that you're doing business with the right person and and doing that in a compliant manner. And so the the the relationship with Rapyd and bloqueo started with, with KYC and set location, a person's address, a business address, is is a key component of the individual identification workflow. Right, that's where it starts. And then as you go a little bit looking at it from the retailer's point of view, if you go downstream to transportation and logistics, and supply chain, tracking your your supply chain and ensuring that the proper addresses geocode delivery points are entered into the order. And not only aid in completion of but you know, so save you millions of dollars annually in a failed delivery costs and ensure that the right item is delivered to to the right person.


Athar Naqi  33:10  

Right. So thanks, Justin. Eric, would you like to comment anything on this key takeaways?


Eric Rosenthal  33:16  

I think just to highlight some of the points that Justin has made as well as maybe add a few so similar to what just said is highlighting is that conversion at checkout is key to success. What Rapyd is seeing time and time again, is not only is it about the speed of conversion, but it's actually even the option to convert. If one of your customers gets to check out and he or she cannot pay whether it's a business, that person, whether they're shopping for something worth $5 or $500 or $5,000 if he or she is not able to pay, because the payment methods that you've presented as an option are not ones that they have. They want to transact with you. So in this conversion of what is a digital transformation mindset is let's hope that we do not find ourselves across another college shock to the system over the next five to 10 years. But ultimately, what we need to do to have a digital mindset is not thinking incrementally. The strategy that companies have had to say let's let's dedicate 510 percent of our budget to digital has actually put them in a significantly worse situation than those that are already many years beforehand. We're investing in having omni channel strategy, as well as understanding that digital is the future. The second thing that we've also seen as a relates to the digital commerce mindset is that those companies that already understood and embraced effectively the diversity of the world from a payments perspective, we're better suited and therefore should really be thinking that way on a go forward basis. As it relates to to creating a great customer experience, what we've seen time and time, again is understanding that there actually is a way to create a payment experience that incorporates these local payment methods as well as incorporates the type of information that we can get from Loqate and others as a relates to minimizing fraud. Being able to quickly verify the address, being able to do KYC, if so required, are all things that help also minimize exposure of a company to fraud. I think that ultimately, what we would ultimately say, as it relates to leading economic recovery, is look across your portfolio of selling geos. Look across the your portfolio where you're able to sell into where you would like to be able to sell into and recognize that your ability to actually capture a diversity of different sources of buyers can be a significant accelerant as it relates to your ability to just to recover from the current situation, or if you're in a situation now where you're already actually in a very good state to even further accelerate your growth.


Athar Naqi  36:15  

Very good. Thank you. Very, very insightful. Again, I believe we are all done with our presentations. Thank you for showing such great insights, both Justin and Eric. Plus get to our q&a. For our audience, please submit your questions using chat function, chat toolbar on the bottom. Let's give a few seconds if you're getting any questions.


All right, you've got a couple of questions so far. So let me go ahead and start I think it looks like Eric, the first one is for you here. And you have answered it already. But just to kind of reiterate, so from top of your mind, what are the payments related pain points that you or your business are experiencing today? Snake is in perspective of Rapyd.


Eric Rosenthal  37:09  

So the payments for if you're referring to what are the payments, pinpoints that our clients are experiencing today? I think that the number one pain point that we hear from our clients, particularly as it relates to this conversation that we're talking about, which is ultimately a purchase discussion, is the fact that merchants are seeing that they need to be able to collect payments, and that they maybe haven't actually adequately prepared themselves to collect payments from a diversity of different methods. So just taking the example even just in the US, of clients that perhaps were used to accepting cheque as a form of payment, what they're realizing is that they may have actually had cheques, and they might have had credit cards, but they haven't actually figured out how to integrate ecdh into their ability to collect payments. This is the same dynamic that we're hearing from clients that have said to us, I want to now expand into these new markets. Or perhaps I already did expand into these new markets. But yet I didn't consider the fact that people wanted to be able to pay in Europe using ideal or they wanted to pay and using so forth. And now I'm in this situation where I know there's a market, I know that there's people that continue to be able to purchase, but yet I haven't actually considered or implemented a way to engage with them from a payments perspective. So I think the number one challenge we're hearing from our clients is how do I do this quickly? And how do I do this in a low cost manner. What we're ultimately seeing as a backdrop to that is that the COVID situation is either leading to significant quality, aggressive growth behavior from several clients, but also leading to this revisiting of what is my tech stack look like? What does my payment stack look like? And how do I rationalize costs, where I do want to now expand or I do want to be able to add these different payment methods in but yet I can't really afford both in monetary terms and as well as far as resources and time to go do 10 different integrations to go support 10 different payment, that's how to actually do that in a seamless manner. Those are kind of the things that we're mostly hearing from our clients


Athar Naqi  39:25  

are pretty good. Thank you. Second question. I think probably both of you can tackle it. When you think about global expansion, which of the following region is on your expansion list? Latin a pan Crimea? Justin, we'll start with you first. You know, I


Justin Duling  39:43  

so I think from the from the Loqate business, we we see a lot of a lot of activity in APAC, right and when when we're looking at cross border commerce and location information in purchasing ticular it's the quality, the data quality, underlying data quality is the is the driver of, of the business for us and allows us to provide more value. So we are seeing, pun intended, Rapid increase of in, in data quality in in APAC, and the ability to provide more value to our customers and partners in that region.

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