Israeli digital wallet app Colu is changing the model for the commission that it charges businesses. The company will now charge businesses with which it has an agreement a uniform 1% commission and a fixed NIS 75 monthly payment.
For some businesses, mainly those in Tel Aviv, the new commission is an increase from the previous 0.5% commission (for businesses that subscribed before 2019). It is cheaper, however, for new businesses, some of which currently pay Colu a 3-4% commission. Colu has 1,500 business subscribers in Tel Aviv and 500 in Haifa. The current average commission in Haifa is 0.9%.
The change will go into effect on March 1. In the first quarter of 2019, Colu will expand the services that it provides on the app to small business owners, with an emphasis on advertising and promotion of business through the app. Colu’s model includes an incentive for users in the form of accumulating 5% of the value of the transaction in “Colu currency,” which can be used in payment to the businesses.
The accumulation value was initially 10%, then fell to 5%, and changes according to individual campaigns, such as the one operated by Colu with the Tel Aviv municipality to encourage businesses in the Jaffa area. As part of the campaign, a increased accumulation of 30% in Colu currency was offered for purchases from businesses in the Jaffa area. The project was successful, and ended earlier than expected, because the subsidy budget for the bonus in accumulated currency ran out. The transactions conducted through Colu amounted to NIS 2.5 million in 23,000 transactions by 4,000 consumers. The project was designed to compensate businesses in the area of Jerusalem Boulevard in Jaffa that suffered substantial damage when the boulevard was closed for work on the light rail.
In general, Colu founding partner and CEO Amos Meiri explains, the app works through cooperation with municipalities in order to promote small businesses. Colu also uses a similar method in the UK and Ireland, and will soon launch its service in six US cities. Meiri says that 200,000 transfer payments amounting to NIS 6.5 million take place monthly just in Tel Aviv.
The digital wallet segment in payments to businesses is being rejuvenated. The banks’ Pepper Pay, PayBox, and Bit applications have begun operating in chains such as Aroma and Domino’s Pizza, and major international payment companies Google and Amazon Pay are also expected to enter Israel this year.
Meiri says that Colu is still acting like a startup in its profit line. “As a startup, our goal is to grow, without paying too much attention to profit at this stage. We’re generating revenue and could make a profit, but the goal is to enter more cities and not slow the pace. Our advantages over the competitors lie in a connection with the local authorities to encourage small businesses and accumulation of currency for use in those businesses – a model unique to Colu. We welcome the entry of the major payment companies. To the extent that more places accept digital wallets, it will encourage consumer behavior in this direction. Our advantage over the competitors will continue to focus on small businesses and accumulation of the currency for use in them,” he says.
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Meiri: “Small businesses are the focus and the company’s calling card. The change in our commissions model now comes after joint work with the Misadanim Chazakim B’yachad (Restaurant Owners Strong Together) organization. We’re lowering the commissions for hundreds of businesses in Tel Aviv. We have reached agreements on a price that the restaurant owners think is fair, and it enables us to cover our costs.”
Misadanim Chazakim B’yachad CEO Tomer Mor said, “We realized that Colu is a business like ours, which has to build a profit model. The main difference is that I’m here to make sure that the profit doesn’t turn into stealing from restaurant owners or make things tough for them, as happened with a number of apps and technology companies that the industry works with now.”
Published by Globes, Israel business news – en.globes.co.il – on January 2, 2020
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Article source: https://www.globes.co.il/en/article-1001313404