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COMMUNITY EMPOWERMENT Presents :. TagPay Business models: Tools and strategies to structure your fees and commissions French Webinar: December 6th , 3:00pm – 4:00pm, Paris time (GMT +1) English Webinar : December 7th , 3:00pm – 4:00pm, Paris time (GMT +1 ).

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COMMUNITY EMPOWERMENT

Presents:

TagPay Business models: Tools and strategies to structure

your fees and commissions

French Webinar: December 6th, 3:00pm – 4:00pm, Paris time (GMT +1)

English Webinar: December 7th, 3:00pm – 4:00pm, Paris time (GMT +1)

Presented by: Isabelle Berner (Tagattitude Head of Marketing) & Charles Ozanne (Tagattitude Director of Projects)


PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up

Submit questions or comments via private chat throughout the presentation and Tagattitude will address questions and comments submitted during the Q&A session at the end.

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PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up


Introduction

  • Building a business model:

  • What are the transaction costs?

  • What are usersprepared to pay?

    • Value of the transaction

    • Marketstatus & competition

    • Direct Telecom cost of the transaction

  • What do other parties expect to becompensated?

    • Indirect transaction value

    • Pain: Time, effort, float, etc.

    • Market status & competition

    • Direct Telecom cost of the transaction

  • Haitian Case Example

    • Building a business model for a new mobile money service in Haiti

  • Manydifferent Types of Transaction

    • Information/ administrative

    • Financial

  • Different parties involved

    • Clients, billingcompanies, employers, agents, merchants, etc.

  • Transaction channels:

    • Agent/Merchant (POS, SMS, or e-tagpay)

    • Client web interface

    • Client IVR

    • Client SMS


PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up


Types of Transaction

Which of these are Value Creatingand for whom are theycreating value?


PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up


Value Analysis

Cost of Transaction


Value Analysis

  • What do othertransfer services cost? In Haiti, Approx. 3%

  • Client feealsoneeds to cover the commission paid to a different agent on cash-outfromtransfer

Cash-to-Cash transfer

  • Is the Client willing to pay for this? NO. This transaction does not bringany value in and of itself.

  • How to cover the cost to the service?

Cash-in

  • What do merchantspay to acceptcreditcardpayments?

  • Whatis the service worth to the Merchant? Security, new clients, loyalty of existing clients…

Merchant Payment

  • Should the client pay to check his or her balance?

  • Differentfees for differentchannels…

Client check Account balance


PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up


Telecom Costs

  • Costs to users (merchant, client, agent…)

    • Calling IVR

    • Sending SMS to service

  • Cost to service

    • Call to Client(s)

    • Sending SMS to Client(s)

    • Data used by merchant & agent terminals


Telecom Costs


Telecom Costs for a Cash-to-Cash Transfer


Telecom Costs for a Cash-in


Telecom Costs for a Merchant Payment


Telecom Costs for a Client Check Account Balance


PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up


Differentfees & commissions structures

  • Goals: Maximize value capturedaccross transaction values, maintaincompetitivepricing, covercosts, & keepis simple

  • Differentpricing structures and approachesmaybeapplied to different transaction types/channels and to the different parties involved

  • Remember: The revenues generated by the whole service are what count—revenues on a single type or channel of transaction don’t tell the whole story

  • Setting transaction minimums canensurethat value captured > cost of transaction

  • The Fees & Commissions class of service allows for each of these and/or a combination of each

  • The Fees APIs canbeused to design a different model all together


PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up


Transaction revenue simulator

  • Transaction Revenue Simulator: Excel model available to all members of the TagPay community

  • Input:

    • Local telecomcosts (SMS, IVR, Data)

    • Macroeconomicfactors (population size & growth rates, mobile penetration & growth rate, GNI)

    • Service usage projections (% of mobile-equipped population using service, % of service usersmakingeach type of transaction, breakdown of channelsused for each transaction type, averagenumber of transactions a user makes per year via eachavailablechannel, averagevalue of a transaction…)

    • Fees & commissions A + B(x) for each party involved & for each transaction type

    • Periodyouwouldlike to simulate revenues for (years 0-4, term=year, quarter, month)

  • Output:

    • Telecom costs per transaction type & channel and distribution of thesecostsamong parties involved

    • Service usage projections, numbers of transactions over time

    • Revenues simulatedacccording to inputs for a definedperiod and year


Transaction revenue simulator

  • Using the TRS for our Haitian example…


PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up


Implementing Fees & Commissions

  • Fees and commissions are labledaccording to: user_channel_transaction. When a second party isimplicatedthisisindicatedwith a ":" followed by the party type (e.g. :agent)

  • E.g. in the case of transfers:

    • user = Client

    • Channel = ivr, SMS, POS(includes e-tagpay), web, API

    • Transaction = gift, transfer, transfertocash, cashtotransfer, cashfromtransfer

    • 2nd party = merchant, agent, parent


Transaction Fees & Commissions on Example transactions

client_pos/web_cashtotransfer:

Fee= 45 HTG + 0.5 %

client_pos/web_cashtotransfer: Agent

Commission= 15 HTG + 0.1 %

Cash-to-Cash transfer

Client_pos/web_cashin:

Fee= 0 HTG + 0 %

Client_pos/web_cashin: Agent

Commission= 5 HTG + 0.25 %

Cash-in

Client_pos/web/sms_debit:

Fee= 0 HTG + 0 %

Client_pos/web/sms_debit: Merchant

Fee= 0 HTG + 1 %

Merchant Payment

Client_web_balance:

Fee= 0 HTG + 0 %

Client_IVR/SMS_balance:

Fee= 20 HTG + 0 %

Client check Account balance


ImplementingFees and Commissions

In the Fees Class of Service of the Admin interface:

Client Fee when doing a cash-to-cash transfer via an Agent’s POS device:

Agent Commission when doing a cash-to-cash transfer using a POS device:

*Note: You can set a threshold simply by entering one in the threshold box and modifying the fees COS a new row will be added allowing you to configure a different fee/commission for transaction amounts below and below the threshold. Multiple thresholds are also possible.

.525

HTG

HTG

:Agent

.110

HTG

HTG


PARTNER WEBINAR DEC. 2011

TagPay Business models: Tools and strategies to structure your fees and commissions

  • Introduction

  • Transaction Types

  • Value Analysis

  • Telecom Costs

  • Different fees & commissions structures

  • Transaction Revenue Simulator

  • Implementing Fees & Commissions

  • Q&A and Wrap-up


Wrap up

  • The TagPay Platform offers several different types of transactions, each with multiple channels through which to do them

  • Every transaction is subject to specific telecom costs which are supported by the service or directly by other users

  • Evaluating what users are willing to pay, the transaction costs, and what you as a service provider might be willing to pay gives an idea of an appropriate range for fees & commissions

  • TagPay supports many different fee & commission structures—choosing the right one allows you to maximize the value captured on each transaction

  • Using tools like the transaction revenue simulator can help you evaluate an appropriate fee and commission structure for your service

  • You can then implement your fee & commission model in the admin interface as a class of service


Relevant Resources

  • For further information or for the sources used in some of theseslidessee:

    • http://mmublog.org/wp-content/files_mf/pricingandcommissionswebinarvfinal_english2_nocomments88.pdf

    • Mobile Money in Haiti: A baseline analysis: http://www.audiencescapes.org/sites/default/files/Haiti%20HMMT%20Project%20Baseline%20Survey%20Report.pdf

    • http://mmublog.org/profitability/


Q&A

Submit questions or comments via private chat.

Tagattitude will address as many questions as possible.


UpcomingWebinar…

Thank you for your participation.

Due to the holidays, no webinar will be held in January

 2011 webinars: (Passwords TCE2011)

Happy holidays!


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