What if your marketplace could be making much more than it’s currently making from the service fees you charge? We’re going to show you how a custom branded digital wallet could save you up to 13% on payout fees while opening up new revenue opportunities.

Marketplaces create an ecosystem that connects vendors with consumers. From Uber and Lyft, which connect travelers with drivers, to Airbnb which connects guests with a global network of hosts— these all work according to this principle of creating and controlling an ecosystem with consumers and vendors.

As a marketplace, you control the ecosystem, and you’re presented with opportunities to monetize it. Are you taking advantage of those opportunities?

The most obvious way to generate revenue in a marketplace is by charging a service fee calculated as a portion of the sale, tying the success of the marketplace to the success of the vendor.

But, if you’re still subject to service fees from your own financial service providers, you’re left with two problems:

1. Payment processing and payout fees will increase as your business grows, eating into your revenue.
2. You miss out on extra revenue presented by embedded financial services.

Having your own digital wallet can solve these problems. Let’s look at some numbers and you’ll see what we mean.

Reducing payout fees

Let’s validate this first with some hypotheticals and numbers to make the use case tangible. If your marketplace is a ridesharing marketplace like Uber (or Lyft, Curb, mytaxi or Flywheel) and you have approximately 5000 drivers in the ecosystem, each of which does 10 trips a day at $25 dollars a ride during a 20-day working month. You charge a 15% service fee on each ride for facilitation and you shoulder all of the fees associated with this. We’ve identified that there’s a range of 1% to 3% for fees that marketplaces are typically charged for making payouts to their vendors.

What those numbers convert to is:

• 1 million rides per month.
• $21.25 earned by each driver per ride.
• $3.75 earned per ride (15% of $25).
• Monthly revenue of $25 million.
• Monthly service fees of $3.75 million.
• Monthly payouts volume of $21.25 million.

Payout fee ranges from 1% to 3% on monthly payouts volume:

• Payout fees at 3%: $637,500
• Payout fees at 2%: $425,000
• Payout fees at 1%: $212,500

By leveraging a custom branded banking app, you can bypass a fair portion of these payout fees. The fees for Rehive with Wyre are a 0.2% fee to load your payout account and a 0.2% fee for your user to make a withdrawal to their bank account if they want to. Typically these fees are negotiable on scale. Let’s assume that equates to a payout fee of 0.4% :

• Payout fees at 0.4% using Rehive: $85,000

If we compare these to the typical payout fee ranges, like the one in our use case, you could be saving anywhere between $127,500 and $552,500 per month on payout fees — and that’s before we even consider the new opportunities presented through embedded finance in your marketplace.

Instant payouts

With Rehive you can do instant payouts at a fraction of the cost. Usually, marketplaces are required to hold back payments due to how payout processors structure their fees. But now, with Rehive, you can delight vendors with the ability to instantly receive payouts in your custom branded app at no additional cost to you!

Implementing an infrastructure for embedded finance

Money that enters your ecosystem can be leveraged, while the money that leaves your ecosystem is subject to payout fees. How can you leverage your newly implemented wallet ecosystem to increase your revenue?

Provide embedded financial services to your vendors

Significant value is added to vendors in the marketplace with a wallet and fintech infrastructure. Other financial service providers can be integrated to offer benefits to your vendors. Ways you can leverage your infrastructure to create new streams of revenue are:

Loans

Gig workers by nature have incomes that vary from month to month. Being able to partner with a loan provider to facilitate this financial service for your users is a great way for them to stabilize their income if they have a slower month. As a marketplace, you have unique insights into the activity of your vendors, such as performance metrics and transaction data, which gives you a valuable perspective to offer compelling credit solutions.

Currency conversions and crypto facilitation

Earn fees for converting currencies within your ecosystem and enable easy custodianship for cryptocurrencies, unlocking new markets and attracting potentially interested vendors.

Send and request payments

Enable your vendors to easily send and receive funds within the ecosystem at no transaction cost, this incentivizes your vendors to keep funds within their wallets, increasing the value of your marketplace and your ability to earn interest on funds within it. This is valuable to your gig workers who can use the app to pay support personnel or send money to friends and family.

Cards and payments

With Rehive it is straightforward to partner with a card provider in order to allow your gig-workers to spend funds directly from their wallets just as they would use a debit card reducing the barriers for gig-workers to use their funds.

Increase customer retention

Funds in your ecosystem are a form of commitment by consumers to spend within that ecosystem. Riders typically spend the funds they’ve loaded onto their wallets and this represents a more stable foothold for trips for your drivers. Finances in your ecosystem are a good indicator of how confident drivers can be that their services will be purchased.

Increase your competitive edge by integrating with merchant partners

Riders are not the only consumer foothold you can guarantee in your ecosystem. If you, for instance, partner with gas stations in your area of operation, you can incentivize your drivers to spend their earnings at those partnered venues by having the merchant partners agree to lower prices for drivers in exchange for the security of their patronage. This incentivized transaction foothold for merchant partners is a valuable way to increase your competitive edge through forming valuable business relationships with relevant industry partners while reducing payout fees.

Leverage ecosystem value to earn interest

Money in your ecosystem is capital. It’s important to consider the natural value that having access to capital provides. In the period between transaction from rider and payout between rider and driver, you have access to and control over those funds. What that means is you can be earning interest on the total cash value of your ecosystem. Instead of cash flowing directly between user and rider, with service fees being charged and fees being processed, a wallet ecosystem provides an independent ledger system that keeps track of balances due while you have holding power over finances in the ecosystem.

Generate user spending habit insights

Data is valuable. A wallet solution gives you a detailed view of the spending habits of individual wallet holders. You can use this data to analyze and profile users into user groups. This assists with targeted marketing campaigns, rewards campaigns, identifying market segments and validating the success of business decisions through the direct confirmation of user spending habits.

Increase gig-worker interest with rewards, cash backs and deals

There are plenty of examples of app-turned-fintech success stories, especially with regard to user engagement through the use of rewards campaigns. You can run rewards and incentive campaigns to drive the competitive advantage your gig-workers have when using your platform over other competing marketplaces.

In summary, there are many benefits that can be afforded to a business that looks to implement a wallet ecosystem for their marketplace and these benefits are not only applicable to a rideshare marketplace such as Uber, but to any marketplace connecting consumers to vendors. Some of these benefits are obvious and calculable while others are opportunities that might lead to improving one’s industry competitiveness.

Creating your own embedded finance solution is no longer a time-consuming and costly process. With white-label wallets, you can get set up with a solution in much less time and at a fraction of the cost of building the infrastructure yourself.

Contact our sales team for more information.