Cash-Flag as a platform for digital services for small merchants was born as a result of a couple of concerns that its founders had: 1) Being frequent customers of some establishments, the founders felt that their loyalty with these brands was not recognized or rewarded by the merchants, they began a small investigation on the Internet and found that in Latin America (the region to which Cash-Flag belongs , specifically in Venezuela) there was a great opportunity since approximately 65% of consumers would be willing to participate in loyalty programs carried out by businesses if the rewards were attractive enough.
Another question arose, why the few existing loyalty programs were not effective, it was found that:
- The rewards were irrelevant, in some programs you had to make very high consumption to receive rewards that were not proportional to consumption, they did not stimulate customer recurrence, on the contrary they were demotivating.
- Most of the programs involved the accumulation of "points" to be able to claim rewards, which remained incentive, the user waits for the "immediate" recognition.
In response to this concern, the Cash-Flag coupon program was developed, which has the following characteristics:
- It is easy to implement for the merchant and the cost is very low (no affiliation, maintenance or development costs, only a commission per effective transaction), the affiliate merchant will have at their disposal the platform to run their own loyalty program according to to your conditions, your target, your market segment and your cost structure, you will only need a clear strategy of promotion and customer retention, this facilitates the adoption by the merchant who can increase the Customer Lifetime Value, as long as it offers attractive rewards .
- It is intuitive for the consumer, with a simple and easy-to-use application, obtaining the reward immediately that records the consumption, without accumulating points, without complicated procedures, the coupons are transferable to other people which can be an additional incentive.
- In addition, Cash-Flag offers the merchant statistical information and RFM reports (Recencia, Frequency and Amount) to understand and analyze consumer behavior.
2) The second concern has to do with a particular problem in Venezuela, the lack of cash for change at the time of purchase, which makes it difficult to carry out transactions at the points of sale, many times the purchase must be returned because the merchant has no change or the buyer should bring things they don't need just to round up so they can receive the change. Options such as vouchers began to appear that could be used in future purchases, but without offering security for any of the parties, which made it very easy to commit fraud, some very exclusive businesses began to sell gift cards, but they had limitations: only in USD, fixed amounts and for a single purchase; other widely used alternatives are electronic payments offered by banks, but being in local currency they suffer the high impact of voracious inflation. Researching the Internet, it was discovered that the lack of alternative means of payment occurs throughout the region (Latin America), although for different reasons.
Prepaid cards and gift cards were developed in response to this concern. Both types of cards can be local (exclusive for a merchant) or PREMIUM (universally accepted, received at all merchants in the network). The merchant can issue cards for exclusive use in their business using Cash-Flag and thus create a community of consumers or they can receive PREMIUM cards, reducing their cost of customer acquisition. The consumer benefits from an alternative means for cash that is easy to use and very low cost (if you use local cards you do not pay commission, only commission is charged to the client on PREMIUM cards) Cash-Flag cards have the following characteristics:
- Contactless payment, in three steps: select the card to use, enter the amount and scan the QR code.
- Very low cost (only a commission for effective recharging, no membership or maintenance costs), the commission is charged at the time of recharging and there is no cost at the point of sale.
- In a single application you can have prepaid and gift cards, in addition to handling different currencies, local currency, USD and Aeternity.
- It is possible to transfer balance to other cards, receive funds from other wallets, receive funds in various cryptocurrencies (all are converted to Aeternity through a SWAP service) and make payments outside of Cash-Flag (in Aeternity).
What it does
Cash-Flag offers an application so that the consumer can pay for the products or services that he acquires in the affiliated stores in an easy, fast and safe way, also allowing to obtain rewards if he becomes a frequent customer.
In the client menu, the client can:
- Manage your coupons: list them, redeem them or transfer them to another person
- Top up and use prepaid cards
- Transfer balance to other prepaid cards
- Receive funds from other Aeternity wallets
- Receive funds from other cryptocurrencies through SWAP
- Send funds to other wallets (of Aeternity)
- Acquire and use gift cards
In the merchant's menu, he can:
- redeem coupons: validate them to deliver the predefined rewards
- Receive payments with Cash-Flag cards (Point of sale)
- Receive payments from other wallets (only Aeternity)
- Affiliate users
- Reload local and PREMIUM prepaid cards
- Sell local and PREMIUM gift cards
- Issue management reports
How we built it
Cash-Flag version 0.9 is currently in alpha phase, it is a progressive web application developed in 3 layers:
- For the Back-End PHP was used, this layer is used to access the database (MySQL) and the integration with other applications (text message interface, API calls to consult exchange rates, etc.)
- The third layer will be the Blockchain, includes the.
Version 1.0 is currently in the testing phase and we aspire to enter production in mid-December, it is also a progressive web application developed in the same 3 layers, but with significant changes, especially at the User Interface level:
- Front-end: Angular, Client that will make the calls to the API that will control the entire process.
- Back-End: Node.JS, consists of an API that will act as a link between the client and the database (MySQL) and the other applications that are integrated
- Blockchain: Sophia, will understand the smart contract to calculate and confirm commissions for recharging the cards, in addition, a fungible token will be generated that will represent the coupons.
Challenges we ran into
The main challenge we have to face is the volatility of the markets to ensure the value of money on the platform and exchange rates, for this we have to develop a mechanism that allows us to expedite (and if possible automatic) generate the corresponding changes between the different currencies (especially between fiat currencies and cryptocurrencies).
In addition to this main challenge, other challenges we face are:
- The adoption of these alternative means as a form of payment in highly regulated markets, for which we must permanently monitor the environment and adjust to the current legislation of each country.
- The generation of confidence by the consumer especially in digital products, for this we must promote success stories and educate the consumer.
- The reduction of financial intermediation costs by the different channels to receive money on the platform, here we try to reduce intermediation to a minimum and where possible, avoid it completely.
- The security of user data, for this we have policies for the management of this information and in the case of cryptocurrencies, we use the smart contract and the Blockchain so that the transactions are auditable.
- Another challenge to face is the fulfillment of the projection of transactions in the platform, maintaining our margin to reach the breakeven point and fulfill our purpose of supporting the small merchant in increasing their Customer Lifetime Value
Accomplishments that we're proud of
- With barely a month on the market with our 0.9 version in alpha phase, we have already achieved 40 users and 9 shops, some transactions have been carried out at the points of sale that have allowed us to validate the model and we are making the necessary adjustments.
- We have built a committed and aligned human team that adds value to the project.
- We have a business model that, apart from being profitable, adds a lot of value to the trade and brings real solutions to the market, the iterations have been successful, there is very good receptivity on the part of consumers and merchants.
- In march of this year, we win the second place in the first Venezuela's Aeternity Hackaton
What we learned
- We have learned to listen, listen to clients and the work team, we have been making adjustments to the business model, the application and our communication to add more value, better explain our product, make it more profitable, more attractive to the market and more useful for the user.
- We have learned to have perseverance and patience, we have been working on this project for more than a year and we have had to advance little by little due to lack of funding, but we have not abandoned.
- We have learned about means of payment and fintech, we have linked ourselves to different cryptocurrency communities, fintech organizations and financial groups to ensure we are in the right direction.
- We have learned about Blockchain, we have evolved in the development of smart contracts with Sophia and we continue to learn
What's next for Cash-Flag
In the short term (until reaching equilibrium soon):
- Go to production version 1.0
- Commercial launch and execution of the marketing and sales plan
- Start trading and increase volume to find break-even point
In the medium term (from breakeven up to one year):
- Incorporation of new services on the platform (email marketing and surveys)
- Get an operations center for the team
- Install your own Aeternity server and node
In the long term (starting one year from breakeven):
- Creation of a financial structure that allows the creation of its own stable token
- International expansion
Currently we use Aerernity to register transactions of fees that are calculated in the app.
The first version (1.0) of smart contract (current) do this:
- Calculate the commisions (coupons and cards) and transfer funds from merchant to contract account
- Withdraw funds from contract account to Cash-Flag's account
The version 2.0 will do the same as the previous version (1.0), but also:
- Uses oracles to check the conditions of the coupon (that is not expired and that belongs to the merchant)
The version 3.0 will do the same as the version 2.0, but also:
- Use state channel to receive funds of commisions instead the contract account
In the attachemnts, we are sending presentations and projections