SmoothPay – Growing a mobile Payment User Base Harvard Case Solution & Analysis

SmoothPay - Growing a mobile Payment User Base Case Study Solution 

Introduction:

Smoothpay offers public a mere gateway, to make the payments and enter a forum, where retailers are more close to their customers than ever. Also, customers are offered rewards and discounts for signing up and making payments through Smoothpay.These can be redeemed in future payments. The company provides a unique service where not just the customers, but also the retailers benefit themselves, through entering into an active network of multiple merchants.

Everyone loves discounts,but likes free cash even more.That is one key factor how Smoothpay found its way to the smartphone users, by offering $5 free credit on each sign-up. However,the lack of trust on payment through a mobile app and conservative approach of other market operators, have created a hinder for smooth play in providing a single forum in the market.

Summarize the Facts:

Being a newborn, Smoothpay has proved to be a successful and stable organization, capturing around 100 merchants and 5000 consumers in just one year time. It is possibly, the result of adopting the updated technology of QR codes and partnering with Point-Of-Sales companies like NCR and Touch Bistro.Merchants are given free access to theSmoothpay app, which can be integrated, with their POS systems or can work solely.

Smoothpay helps setting up an integration of Smoothpay App, with merchant’s current POS system.If it is not limited by hosting POS, which can assist them to keep tracks of their customer’s purchasing habits.

The White label loyalty application is offered to retailers and merchants, if they wish to use a customized application, which can better suit their needs and help them entertain their customers more efficiently.

Smoothpay has smartly targeted the quick service restaurants and cafes,which are focused on customer’s experience. According to the data provided 20% revenue of these targeted businesses is equal to CA$7.4 billion and Smoothpay’s market share of this figure is 6% or CA$440 million. 20% benchmark was given in the most recent publish of Starbucks.

University Students are an integral part of Smoothpay’s engagement with the community and its majority clients. And therefore are significant to maintain. It is important for Smoothpay to keep strong bond with these students, so that it can grow itself through into their connections. It seems that Smoothpay is currently involved with the university, for providing academic and professional experience.

Industry Analysis

The industry can be better explained using Porterfive forces

  • Threat of substitute
  • Bargaining power of customers
  • Bargaining power of suppliers
  • Threat of new entrance
  • Industry rivalry

The threat of new entrance:

Competition always results in the division of market share, depending on the size and quality of the competitor’s services. Facing a competition that forces a company to extend its potentials, it takes away the leverage of controlling the market solely.Monopoly, on the other hand, is an ideal situation for any organization, where market share total belongs to one group.

Smoothpay is one of those later ones. It currently faces no competition, which gives it far more space for growth. It is probably the reason for its rapid growth and why it captured 100 merchants and 5000 consumers in its first year. Smoothpay’s decision of partnership with other successful businesses has only made its roots strong, which may be threatening for any newcomer in future. Although holding a monopoly, Smoothpay does not hold any legally exclusive right (license) to operate in the current market, which could stop any newcomer from dealing in the same product and industry.

Smoothpay has competitors in other countries like Rituals, Everytap and Extole, which operate in other countries, are therefore not currently competing with Smoothpay. But this cannot remain forever, and Smoothpay will likely face a competitor in future. Infact the industry of mobile application is one of the most common industries throughout the world, and it is not unlikely for another mobile application developer, to come up with a similar idea as of Smoothpay’s. Hence the threat to new entrance high.

Bargaining Power of Customer:

The bargaining process between a company and its clients varies, depending on both parties. Basically, if the size of a company is big and the product’s demand is high, the customer will have to take whatever he is getting, unless he has more options in consideration. The table can be turned if the customer’s size is even bigger than the product provides.An example can be, if the customer is a multinational company.

As mentioned before, Smoothpay’s services are unique and are growing demand rapidly among smartphone users, which means that customers demand smooth play and don’t have any alternate to switch. An argument can be made on capturing customers, as smartphone users are not big fans of paying through mobile phones. This logic creates a threat to smoothpay that customer may stop using these services, as there is nowhere to switch, if they are not satisfied or even get bored of using this app. However, chances of this incident are highly unlikely, and so the bargaining power of customer is little for smoothpay....................

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