PaID

Inspiration

Through research, interviews, and personal experience, we've found how the majority of small businesses have struggled with maintaining operational cash liquidity, especially when faced with unforeseen disruptions.

Regardless of sector, small business owners have depicted the stressful reality of meeting strict liabilities (rent, interest, mortgage, etc.) while keeping up with day-to-day expenses necessary to run the business. In short, most of the expenses/liabilities have to be covered from that month’s operating revenues. However, cash outflows (liabilities & expenses) are due on a specific day of the month, while revenues and income are acquired incrementally over the month – which puts a powerful strain on net cash position, impairs financial flexibility, and most importantly - reduces their disruption resilience by lowering the available income from which to reinvest in changes, however useful they might be.

Stipe, a small business owner, told us how once he settles liabilities due on the first of the month, he hopes no unforeseen disruptions/expenses will occur until the month’s end because he usually won’t be able to fulfill them due to lack of cash.

• “Even though business is good following lower restrictions, I still have to wait an entire month to fully refill my cash reserves. If an urgent unfortunate event arises, I will either have to take up a credit loan or somehow postpone the payment.”

Stipe’s situation is an unfortunate reality for many of the small business owners. For this reason, we've created a unique solution that benefits multiple local small businesses at once, improves their cash liquidity, and creates a solidified community of business owners and customers alike.

What it does

In order to overcome cash liquidity hurdles, and therefore be able to respond quickly to disruptions, we have come up with an alternative to traditional payment schemes utilized by most small businesses – pre-paid cards.

The premise is simple – a large proportion of small business customers are local people which shop relatively frequently. Instead of incremental payments over the entire month, we introduce a way for business owners to receive a lump sum in advance (e.g. a customer pays upfront the sum for the next 3 beauty treatments). This way, business owners will rapidly improve their cash position and create a cushion for unforeseen circumstances - instant cash loans with zero interest. This card is represented by an app, using which business owners can easily offer their perks to customers for depositing to their account (distributing a pre-paid amount for use at their business).

What’s in it for the customers? Our card serves as an elaborated loyalty system. Depending on the pre-paid amount, the customer receives various perks - unit discounts, additional free products or services, and others - across multiple local businesses.

Additionally, to make the cards more appealing to the consumer, and to create a more stable network of both owners and customers within a particular local community, we've created a bundle option. A bundle option allows customers to bundle up their favorite local small businesses together, from our curated list, and receive discounts/benefits across the entire bundle contents (e.g. “Health & Lifestyle Bundle” – includes a local gym, hairdresser, beauty parlor, and a local smoothie place - pre-paying $500 on the app for this Bundle comes with both individual perks set by each business, and combo perks - lowering the gym monthly rate and hair treatments, extends massage time free of charge, and gives one free smoothie per week). For the business, the cost of this solution comes at a small monthly subscription, while customers get to use the service for free.

Such a way of interacting between business and customers offers multiple options for upselling, cross-selling, and creating revenue opportunities across different businesses.

How we built it

As technical development challenges present the smallest hurdle to realizing this solution, we've decided to focus on it's merit, marketability, and strategy.

Challenges we ran into

On the conceptual side, most challenges were presented with conceiving the approach which bridges the gap between businesses and customers, while having benefits for both parties - one app (card) for multiple shops for the customer, and the assurance each shop will get the right pooled amount. This challenge was relieved with Bundles – a diversified way to pre-pay for multiple businesses, and getting perks for doing so - you're still deciding in which shop to spend what amount, but get rewarded for pre-paying to more than one. Naturally, as a form of additional insurance, PaID takes a small fee (~<1%) from every transaction in order to build safety nets in the case of small business default. If a business defaults, while still having unfulfilled pre-paid commitments, PaID will settle the difference from our Loyalty Fund.

Accomplishments that we're proud of

Considering the available time, and our personal commitments - we're proud of our output and the ability to effectively work in unison.

What we learned

We learned the importance of core business fundamentals when it comes to leading a successful enterprise – trust, planning, and business acumen are all instrumental qualities for every business leader (regardless of business size). From our interviews, we found out how difficult leading a small business can be, especially during the pandemic and the greater influence of large corporations. Additionally, we've discovered how useful pre-paid cards are for big businesses, even if done in the traditional way - e.g. earning Starbucks 1.6B$ of available cash-on-hand. However, on the other hand, we also learned how rewarding it is to make a sale and establish a connection with loyal customers.

What's next for PaID

Digging deeper into creating a sophisticated algorithm to test out the math – what discount percentage is optimal, at what rates, what are standardized pre-payment options, how to send cards to other people, how to curate the best bundles, etc. On top of this, creating an investment-ready business plan with financial projections, market outlook, strategical pipeline, and marketing activities.

Built With

• mysql
• powerpoint
• react