Small value payments — Why is it such a hot topic these days
Did you know that the fixed components of the debit card processing fees, contributes to over 10% of your Uber taxi charge?
That’s correct. Up to 10% of the cost of your Uber ride goes to cover debit cards transaction fees. In some emerging and low-income economies this fee alone could buy you an intercity train ticket. This is what has led Uber to introduce a dedicated Uber payment card, which can be topped up by any debit card and then used to pay for any service on the Uber platform.
Uber is by far not the only company introducing its own brand of mobile money or e-money to reduce payment friction and high transaction costs. Twitter is exploring ways for users to receive tips from their followers. Rumors have been around since their acquisition of Revue, a service similar to that of Substack where writers/creators get paid from their audience. It’s essentially v2.0 of the paywalls we’ve been seeing from news companies, except that it’s about individuals this time.
These companies are not alone — OnlyTweets, an experiment from Stir Money (which is raising their Series A at a 100m valuation led by Andreessen Horowitz) also adds fuel to this emerging content creator economy. Clubhouse, an audio streaming app, recently announced to embed payments into to the user journey, enabling users to send donations to content creators with the click of a few buttons.
The real secret to unlock this 70-billion-dollar market lies in enabling small-value cross-border payments between people — seamless and as simple as clicking a like button. As an indication of the potential from one-click small-value payments, it is worth having a closer look at China’s popular online-streaming industry where virtual gift-giving is big business. You can send your favorite live performer anything from a rose for 5 yuan (80 cents) to a space rocket for 500 yuan. Direct audience monetization is the key to unlock new income streams in this age of the gig economy. Twitch — the leading live streaming platform for gamers — has helped numerous of their users to earn money by broadcasting how they master a video game. Their followers can subscribe for $5 a month or they can send small value donations during live games, which can add up to thousands of dollars per day.
The reason why we haven’t seen more of this yet is because the underlying infrastructure for small-value cross-border payments is still in its infancy. Transferring money between individuals is key for a gig economy to flourish, but the channels available today have been built on old economy use cases, such as sending money along migrant worker corridors. The pattern of money flow is completely different for digital communities: Earners and spenders can be anywhere; amounts are typically very small and transfers may happen multiple times in a day. As one of our founders is fond of saying — If a second can make a difference, imagine what one dollar can do too.
Your company may not be in the payments business, but eventually, a payments company will be in your business!
Tomorrow’s financial apps might not be the ones you think of. Streaming apps are looking for ways for their users to store value within them. But the complexity arising from different regulations in every country, varying degrees of financial inclusion amongst their users, and operational overhead — most apps are choosing their own in-app currencies.
Verso will play an instrumental role in unlocking this value. Our decentralised protocol will enable various non-financial actors embed financial products on top of their primary product offerings, in a compliant manner. We are a decentralised marketplace for centralised financial services providers. Verso maintains strict regulatory compliance by ensuring that products are only displayed to consumers who fit the eligibility criteria. Network is powered by the VSO token, issued on the Avalanche C-Chain. VSO is a utility token to access network services and reward network service providers. VSO tokens are also required to participate in community governance to continuously develop the Verso ecosystem.
For more in-depth information visit our Telegram group and Website.
Read more:
- The Verso Network — An Introduction
- Verso Network validators — What are they and why do they matter
- A look under the hood — overview of the technology that powers the Verso network
