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.

Value Proposition:

  • Flexible Payment Options: Quadpay allows consumers to split their purchases into four equal payments, spread over six weeks, without the need for traditional credit checks or interest charges. This flexibility makes it easier for customers to manage their budgets.
  • No Credit Impact: Quadpay does not perform hard credit checks when customers use its service, ensuring that users can enjoy flexible payments without affecting their credit scores.
  • Easy Integration: Quadpay integrates seamlessly with various online and in-store retailers, enabling customers to choose Quadpay as a payment option at the point of purchase.
  • Transparency: The platform offers transparent pricing with no hidden fees or interest charges, helping customers understand the costs associated with their purchases.
  • Quick Approval: Quadpay provides instant approval decisions, allowing customers to complete their transactions quickly and without delays.

Customer Segments:

  • Online Shoppers: Quadpay is popular among online shoppers who seek flexible payment options when making purchases from e-commerce websites and mobile apps.
  • Younger Demographics: The service is particularly appealing to younger consumers who may not have established credit histories or prefer to avoid traditional credit cards.
  • Budget-Conscious Consumers: Quadpay caters to budget-conscious individuals who want to manage their finances and expenses effectively by breaking down payments into manageable installments.

Distribution Strategy:

  • Online Integration: Quadpay partners with a wide range of online retailers and e-commerce platforms, allowing customers to select Quadpay as a payment method during the online checkout process.
  • In-Store Payments: Quadpay has expanded its services to support in-store purchases, enabling consumers to use the platform for both online and brick-and-mortar shopping.
  • Mobile App: Quadpay offers a mobile app for consumers to manage their accounts, view transaction history, and make payments conveniently from their smartphones.

Marketing Strategy:

  • Retailer Partnerships: Quadpay collaborates with a broad network of retailers, both online and in-store, to make its payment solution available to a diverse customer base.
  • User-Friendly Experience: Quadpay emphasizes its user-friendly and straightforward payment process, highlighting the ease of splitting payments into four installments.
  • Customer Education: The platform provides educational resources and guidance to help users understand how to use the service effectively and make informed financial decisions.
  • Transparent Pricing: Quadpay’s marketing materials emphasize transparent pricing, emphasizing the absence of interest charges and hidden fees.
  • Promotions and Incentives: Quadpay may offer promotions, discounts, or incentives to encourage consumers to choose its payment option, boosting adoption and loyalty.
  • Social Media Engagement: Quadpay maintains an active presence on social media platforms to engage with users, share updates, and promote its services.

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.
ElementDescription
Value PropositionQuadpay offers a compelling value proposition for its users, including: – Buy Now, Pay Later: Providing shoppers with the flexibility to split their purchases into four equal installments, easing the burden of upfront payments. – Interest-Free Financing: Offering interest-free installment plans, making it an attractive payment option. – No Credit Checks: Allowing users to use Quadpay without requiring traditional credit checks, making it accessible to a broader audience. – Transparent Fees: Displaying clear and transparent fees to users, ensuring no hidden costs. – User-Friendly App: Offering a user-friendly mobile app for seamless shopping and payments. – Instant Approval: Providing instant approval for installment plans at the point of sale. – Virtual Card: Issuing a virtual Quadpay card for in-store and online purchases. – Spending Insights: Enabling users to track their spending and manage budgets. – Retailer Partnerships: Collaborating with a wide range of retailers to expand the network of merchants. – Personalization: Offering personalized recommendations based on user preferences.
Core Products/ServicesQuadpay’s core products and services encompass: – Installment Payments: Allowing users to split their purchases into four equal, interest-free payments. – Mobile App: Providing a mobile app for account management, shopping, and payment processing. – Virtual Quadpay Card: Issuing a virtual card that users can add to digital wallets for in-store and online purchases. – Retailer Integration: Partnering with various online and offline retailers to offer Quadpay as a payment option. – Spending Insights: Providing users with insights into their spending habits and budgets. – Quadpay Plus: Offering a premium program with additional benefits like higher spending limits and exclusive deals. – Customer Support: Providing customer support for inquiries, assistance, and issue resolution. – In-App Shopping: Offering an in-app shopping feature to discover and purchase from partner merchants. – Merchant Tools: Equipping retailers with tools to integrate Quadpay as a payment option. – Referral Program: Encouraging users to refer friends and earn rewards.
Customer SegmentsQuadpay serves a range of customer segments, including: – Online Shoppers: Targeting individuals who shop online and seek flexible payment options. – Budget-Conscious Consumers: Attracting consumers who prefer to budget their expenses using installment plans. – Millennials and Gen Z: Appealing to younger demographics who embrace digital shopping and payments. – Frequent Online Shoppers: Serving users who make frequent online purchases and prefer a streamlined checkout process. – Retail Partners: Partnering with retailers looking to offer Quadpay as a payment option to attract more customers. – E-commerce Platforms: Collaborating with e-commerce platforms to integrate Quadpay as a payment solution for their sellers. – Mobile-First Users: Catering to users who prefer mobile app-based shopping and payments. – In-Store Shoppers: Expanding into the offline retail space to provide installment options for in-store purchases. – Savvy Shoppers: Appealing to individuals who value interest-free financing and transparent payment terms. – Affinity Shoppers: Targeting users who are drawn to Quadpay’s partner retailers and exclusive deals.
Revenue StreamsQuadpay generates revenue through various revenue streams: – Merchant Fees: Charging fees to retailers for offering Quadpay as a payment option. – Consumer Fees: Earning fees from consumers in the form of late payment and transaction fees. – Quadpay Plus Membership: Earning subscription fees from users who subscribe to the premium program. – Interest on Overdue Payments: Charging interest on overdue payments. – Referral Program Costs: Paying out rewards to users who refer friends to Quadpay. – Marketing Partnerships: Collaborating with brands and retailers on marketing partnerships. – Data Insights: Offering anonymized data insights and analytics services to retailers and brands for a fee. – Integration Services: Charging fees for providing tools and services to retailers for Quadpay integration. – Co-Branding: Earning fees through co-branded partnerships and promotions with retailers. – Promotional Campaigns: Collaborating with retailers on promotional campaigns and earning fees for campaign management.
Distribution StrategyQuadpay employs a strategic distribution strategy to reach users and promote its services: – Mobile App: Offering a user-friendly mobile app as the primary channel for account management, shopping, and payments. – Retailer Partnerships: Partnering with a wide range of online and offline retailers to expand the acceptance of Quadpay. – In-App Shopping: Allowing users to discover and shop from partner merchants directly within the Quadpay app. – Online Marketing: Implementing online marketing campaigns to attract new users and promote deals. – Customer Referrals: Encouraging users to refer friends through a referral program. – Point of Sale Integration: Enabling retailers to integrate Quadpay as a payment option at the point of sale. – Payment Flexibility: Providing users with instant approval and flexibility to choose Quadpay as a payment method during checkout. – Educational Content: Offering educational resources and content on responsible spending and budgeting. – Customer Support: Providing responsive customer support for inquiries, assistance, and issue resolution. – Brick-and-Mortar Expansion: Expanding into physical retail locations to cater to in-store shoppers.

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