5 ways a custom branded wallet can benefit your business

“Every company will be a fintech company” — Angela Strange

Have you noticed how more and more companies these days have their own apps that offer financial services? Think of Starbucks — they reported that 17% of their purchases came through their mobile app. Apple recently launched a credit card. These companies have recognized the potential of offering in-house financial services, often delivered through mobile apps.

Launching your own app and offering in-house financial services can sound intimidating if you have limited resources. The good news is that white-label providers make it easy to build fintech apps even if you have no dev team. Businesses are no longer constrained by the cost of hiring developers. Now any company can offer financial services, and the potential benefits of doing so are becoming clearer.

Here are 5 ways that a custom branded fintech app can benefit your business today.

1. Improve cash flow forecasts

Cashflow is the oil that keeps your business’ engine working. From making supplier payments on time to meeting payroll and increasing stock, healthy cash flow is essential to ensuring that everything runs smoothly. There are many ways that innovative financial solutions can improve your cash flow. Two of the biggest ones are 1) getting paid faster and 2) selling products ahead.

Getting paid

One big problem that businesses face when it comes to cash flow is delayed payment from creditors and customers. By improving and diversifying the payment infrastructure of your business, you can offer more payment options. And the more payment options you offer, the more likely it is that you’ll get paid in a timely manner. From online payment options such as credit cards, e-wallets, cryptocurrencies, and debit cards to mobile payments such as Google Play, PayPal, Venmo or Apple Pay, each consumer has the method they prefer — and they’re more likely to pay you and pay you faster if you cater to their preference. Adding to the mix your own branded wallet gives a personal touch to the payment experience.

Selling ahead

During the covid crisis, cash flow became the difference between boarding up and scaling up for many businesses. In these times when businesses like restaurants were unable to generate the revenue they used to, voucher and gift card solutions offered customers the means to keep their favorite spots in business.

California-based Blaze Pizza used a gift card campaign to keep its cash flow in the green. They launched #BlazingItForward, a campaign that offered customers who purchased $20 gift cards free pizzas on their next purchase.

We have now seen the way pay-it-forward campaigns can improve cash flow — and these sorts of campaigns are sure to be a common strategy after the coronavirus pandemic.

Gift cards might seem like a solution for retailers only, but the same ideas can be applied to other industries. The travel industry saw businesses offering a paid membership that would get customers discounts on their post-covid travel plans.

Administrating gift card-type promotions can be tricky — but with the right technology, you can run powerful rewards programs that do more than just boost your cash flow. Rewards programs are a great way to get customers to return to your store more often and spend more on each return.

2. Grow customer loyalty and drive retention

Aah the old coffee stamp card…Ten stamps and you get a free treat or cup of coffee. It might be old but it is certainly not an outdated idea. In fact, the concept has only grown in popularity and with the features made possible by fintech apps, it offers more ways for you to grow customer loyalty.

Big companies like Starbucks have paved the way for others to launch their own digital loyalty programs. Consumers are used to loyalty programs. One in three consumers says that a loyalty program would make them more likely to choose one restaurant over another in the coming months, according to the same State of the Restaurant Industry report mentioned earlier.

Customer loyalty is so sought after because it increases sales. A Paytronix Systems report shows that loyalty program members spent double the amount of their uncommitted counterparts in the restaurant industry in 2020.

3. Reduce banking and transaction fees

The fees your business pays for banking and transaction fees fall into three categories: banking fees, customer service, and overheads. Under each of these categories, in-house fintech solutions can dramatically cut your costs and make your business more profitable. Let’s take a look at each of these categories.

• Credit card processing fees
• Credit card chargebacks
• Banking fees
• Payroll fees

The merchant and transaction fees charged by many credit card providers quickly add up. Many small businesses opt for accepting cash only for this very reason. But this seems like an unnecessary compromise in the age of digital banking.

You can reduce fees on credit card purchases by offering a preloaded wallet. Customers load funds to their wallet using an app that they can use to purchase your products — this way, the number of transactions is reduced which leads to reduced transaction fees. Let’s take a closer look at how a wallet can help you cut transaction costs.

Preloaded customer wallets

Suppose you run a shop that sells handmade ice cream. Accepting card payments, you pay both a fixed fee (also called a “processor cut”) and a percentage fee for each card transaction. Depending on your business, the fixed fee generally ranges between $0.05-$0.50 per transaction, while the percentage fee can be anything between 0.5%-3% of each transaction.

These transaction fees quickly add up — especially on the small-ish margins of an ice cream store — eating into your profits (excuse the pun). So you decide to launch a wallet allowing customers to load a balance upfront.

Now let’s say you sell 10 of those creamy-delicious gelatos at $3.00 each, and assume that your card network charges a fixed fee of $0.30 and a percentage of 3% per transaction. The total merchant processing fee would be $3.90 ($3.00 total fixed fee + $0.90 total percentage fee).

If customers load an upfront wallet balance of $30.00 on a standard Rehive wallet, for argument’s sake, using a credit or debit card, the merchant fee would only be $1.60 ($0.30 fixed fee and $0.90 percentage fee). Rehive charges $0.25/monthly active user and $0.001/transaction. The total fee using a wallet solution would be $1.95 in this case.

OK, maybe we lost you with the story sum. Bottom line: your wallet won you a 50% fee reduction on $30.00 revenue.

Not only do you save on processing fees, but you also get revenue upfront if customers preload their wallet balance. This increases customer loyalty and retention.

A preloaded balance app like this doesn’t only cut your transaction fees. It can also increase your customer retention and give you a guaranteed revenue stream by increasing customer conversion rates — not to mention the improved customer experience of an additional payment method.

Employee or marketplace wallets

Moving your payroll in-house is another way to reduce transaction fees — and businesses are increasingly exploring this option. Paying your employees’ salaries directly into their wallets managed through your own branded app will dramatically reduce third-party transaction fees. This concept is becoming increasingly more popular for marketplace payouts like Uber or Airbnb.

4. Increase sales and open new revenue channels

The overlap between commerce, finance, and incentives creates a win-win scenario for you and your customers. You can tailor product selection and offers while providing more payment methods that suit your customers’ preferences. This helps you increase sales, while your customers get better service at a better price.

The straightforward benefit is opening up in-app sales. Now your customers can simply order and pay for goods directly via the app on demand. What if you could upsell customers a specific product during checkout or soon after? A growing trend is to embed insurance products as part of the checkout flow, powered by programmable API platforms like Root.

What if you want to let customers buy now, but pay later? Perhaps you are not interested in charging customers an interest rate, but you simply want to get a sale over the line. Buy now and pay later has proven to be extremely popular among consumers and is expected to reach $100 billion in 2021. Alternatively, you could offer a line of credit to customers via your own branded wallet and charge a small interest fee.

As we have seen with Starbucks, the power of gifting should not be underestimated. What if you could make it easy for your customer to buy something for a friend or send them a gift voucher via the app? SnackMe in South Africa has seen some success with its unique gifting concept of sending friends snacks.

You may wonder, how much can you really tap into financial services within your business, if this is not your core expertise? Every business is different. Brands like Redbull, Tesla, or Manchester United might capture the attention of their loyal customers by offering a custom branded app to buy and sell cryptocurrencies. There is a recent trend for some brands moving into NFTs to drive more engagement and sales through gamification.

You could charge a small fee for customers using your app to split the bill with a friend.

If your business is positioned as a marketplace or centerpiece of an ecosystem, you can provide merchant payment processing for local merchants from your app and charge a small fee. More traditional services could include cash deposits or cash collection points.

As you can see there are different ways you could leverage a custom branded fintech app to increase sales and open new revenue streams.

5. Get insight into your customers

Last on our list is definitely not least among the advantages of offering fintech solutions. When you host payments on your own platforms, you can learn about them in ways that traditional methods simply didn’t offer: you get invaluable data on who your customers are, what they’re spending on, and what they’re likely to spend on in your store in the future.

This insight will help you better serve your customer. You can offer your customers the products they really want and run effective product promotions — not to mention being able to announce those promotions right on your payment app. Precise transaction data also revolutionizes your ability to manage stock proactively, which in turn enables you to source your products at better prices and reduce waste.

Every business has its peak times and its lulls. Precise data about when customers spend in your store can help you create better revenue models, like offering better rates during quiet hours/off time or simply changing your shop times to be more in sync with the rhythms of your customers.

Whether you’re a small business or an established company with hundreds of employees, your business stands to benefit from fintech in a variety of ways.

Not sure where to start?

Rehive offers white-label and grey-label wallet solutions to get your fintech app up and running with minimum in-house developer resources. We do the heavy lifting for you. Contact us today for fintech solutions made easy.

Try the demo app here. Better yet, create your own sandbox project here.