how-does-quadpay-make-money

How Does Quadpay Make Money? The Quadpay Business Model In A Nutshell

Quadpay was an American fintech company founded by Adam Ezra and Brad Lindenberg in 2017. Ezra and Lindenberg witnessed the rising popularity of buy-now-pay-later service Afterpay in Australia and similar service Klarna in Europe. Quadpay collects a range of fees from both the merchant and the consumer via merchandise fees, convenience fees, late payment, and interchange fees.

Origin Story

Quadpay was an American fintech company founded by Adam Ezra and Brad Lindenberg in 2017. Ezra and Lindenberg witnessed the rising popularity of buy-now-pay-later service Afterpay in Australia and similar service Klarna in Europe.

They also identified that the American market was still in its infancy with no established players. After working on the platform for twelve months, a beta version was released in 2018. The pair worked hard to sign up as many merchants as possible and launched a VISA-linked debit card.

Quadpay was acquired by Australian fintech company Zip Co Limited in September 2020. The scrip deal was reportedly worth $403 million.

This capital injection enabled Quadpay to partner with merchants such as Nike and GameStop and acquire fashion search engine Urge.

The Quadpay platform now has 3.2 million customers and has become strategically significant for Zip Co Limited in the North American market.

Quadpay revenue generation

Quadpay collects a range of fees from both the merchant and the consumer. Each is explained below in more detail.

Merchant fees

Quadpay generates revenue by charging merchants to sell on its platform. The exact fee is undisclosed, but competitors such as Sezzle charge a fixed transaction fee of $0.30 plus 3-6% of the total purchase price.

Merchant fees help Quadpay cover the risk of a consumer defaulting on their payments. The platform gives merchants:

  1. A 20% increase in sales conversion rate.
  2. A 60% increase in average order value (AOV).
  3. An 80% increase in repeat customer rate.
  4. A 20% increase in total sales processed through Quadpay.

Convenience fees

Quadpay charges a $1 convenience fee for every repayment a consumer makes. For Quadpay, this fee funds operational expenses and payment facilitation.

In a typical purchase paid off over 4 fortnightly installments, the total charge is $4.

Late payment fees

Late payment fees are charged whenever a consumer fails to meet a payment.

If the consumer does not make the payment within a 10-day grace period, Quadpay charges a $7 fee.

It should be noted here that Quadpay does not offer credit in the way a traditional financial institution does. As a result, it does not charge interest on any outstanding payments.

Interchange fees

Whenever a Quadpay user purchases with their branded VISA debit card, an interchange fee is paid by the merchant to VISA.

VISA then split this fee with Quadpay in exchange for promoting its services to the Quadpay user base. Similar to merchant fees, the exact interchange fee is undisclosed.

Key takeaways:

  • Quadpay was an American fintech company founded by Adam Ezra and Brad Lindenberg to capitalize on the largely underserved buy-now-pay-later market in the United States. It was acquired by Zip Co Limited in 2020.
  • Quadpay charges merchants an undisclosed fee to offer its platform as a payment option. It also charges consumers a late fee for missed payments that run over 10 days.
  • Quadpay split an interchange fee with VISA when a user makes an eligible purchase. Similar to merchant fees, the exact amount is not publicly known.

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