Faso is a financial technology company started back in 2016 in Sydney, Australia. The company was started with a vision to provide seamless online transaction experience to its customers. The company caters from individuals to corporates in Australia assuring them of safe and secured payment solutions to their business need. Moreover, the customers have given strong preference to the company due to its fast and uninterrupted service and customer support. Apart from the fast and secured transaction, the company has other attributes enticing more customers toward it. Now, the company is growing at a very fast pace covering new milestones one after other.
Since the inception the growth of the company expanded to foreign boundaries, catering to the US, New Zealand with the home country Australia. The features of accepting multiple currencies of these three countries and different modes like net banking, credit card and debit card payment mode has eased the pain point of its customer. Also, the company provides escrow account and e-wallet service linked to the bank account. An escrow account is an account where the company as a trusted third party holds funds temporarily on behalf of other parties making a transaction with each other (Ajupov & Ponomareva, 2015). Whereas E-wallet is a virtual wallet where money loaded by a bank account or a card and can be used to make payments or store amount (Kalyani, 2016). Thus, to increase the trust and confidence of the customers, the company pays 90% of the amount lost by cyber-attacks. The salient features of the Faso have made its customer stick with this and refer others to join this.
After a run of four years, the company has passed the threshold of 100000 customers and $50 million annual revenue from three countries including the business customers and individual customers. Low charges are one of the major factors in attaining the success of the business because the company offers zero setup cost with no maintenance and hidden charges. Moreover, the company charges a very little portion of the amount in a range of 0.2% to 1% as applicable to the amount and other factors such as payment mode, country, exchange rate and several others. The substantial growth of the company in a short time is the result of factors constituting low charges, fast secured transaction and amount settlement, transparency and heart winning customer support. After gaining it is successful in three countries, the company is ready to tap a huge market of India to attain massive success.
Considering the success of the company in Australia, New Zealand and the US, it has identified a new market opportunity to enter in India. According to world bank, (2018) India is a vast country with a population estimating around 1.35 billion and out of that 564 million are using the internet which makes them 2nd in the world in terms of the number of internet users (Statista, 2020). Many domestic and international e-commerce company entered the market observing the rising stats of internet users in India. The country has witnessed a massive improvement in its internet usage and connectivity in the past few years along with a rise in online purchases year by years. Besides, the government of India has raised FDI higher than ever to attract foreign investment in the country by providing a structured infrastructure and feasible policy.
Currently, the country is home to some of the E-commerce giant like Amazon, E-bay, Flipkart (Indian e-commerce giant) and some others (Khanna & Sampat, (2015). Besides E-commerce websites, even small businesses and entrepreneur are accepting digital payment in India which is increasing at a high rate. Despite all these, some challenges still uprooted in the country such as poor infrastructure in the countryside and a high rate of the returned order. Though the number of digital payment users has grown significantly, the majority still stuck to cash payment (Singh & Rana, 2017). Even in Ecommerce shopping, some people prefer cash on delivery. Also, there is fierce competition in the market among payment gateways service providers and there are many players like CC Avenue, Payumoney, Payoneer, Skrill, Paypal including many others. Though several challenges are entering into the market the these can tackle with an appropriate strategy.
To tackle the challenges in the company, it will be required to enter with extensive preparation and huge investment to fund the business in initial years. The company should first get in the market with a free trial. The free trial for a year will attract many customers in India because the free trial is a good strategy for penetrating the market (Foubert & Gijbrechts, 2016). Once the free trial of a year is expired, the company should offer the customers the lowest charges in the market. Though there is a scope that some people may quit the service but others will remain with it.
Small business will be an ideal target to enter because they cannot afford higher charges in each transaction. The refer and earn will be an effective strategy to acquire more customer quickly. Here the existing customer will promote it personally and people are tending to purchase if suggested by friends, family or peer. The co-branding and tie-up with a domain registrar and e-commerce website design service provider will promote it to their client. It will increase the chances of getting more customers in a short time. Once a customer is acquired the company should try to retain them by providing excellent service.
Here is another opportunity for Faso, it can enter into the domain name selling business. The domain name selling is business to sell the virtual address that enables access to a website online. As land is required to build a house, similarly a domain name is required to build an online presence which can be accessed through the internet (Pakroo, 2018). The businesses are considering it as an essential part of the business to have a website along with the individual and professionals to enhance their branding and global reach.
This business requires some certification from ICANN (Internet Corporation for Assigned Names and Numbers) which is the authority that Issues license to carry domain name selling a business and manage several databases for ensuring the stable and secure operation of the Internet (ICANN, 2020). To set up this business a very light budget is required like fees of getting affiliation from ICANN around $4000 annually, developing a website, paying for the hosting & maintenance and some staffs. Moreover, existing users can also be approached to acquire initial customers and this will give a decent return due to low investment.
As it is easy to set up a business with a low initial capital requirement, there is a cut-throat competition in the market. Many companies and individuals are selling domains and the internet is full of such websites offering the same services. There are over thousands of domain name registrars and resellers across the world and increasing every year. The higher number of players in the market is creating an unlimited option to choose for customers. It also confuses the customers because they find it difficult to choose the best one (Umair & Alamgir, 2016). To ease the problem of choosing the best, most of the customer goes with the brand they are aware of. Moreover, to gain the attention of the customer of it will require to create the brand of the company popular along with excellent service. The company will need to create a differentiating factor to distinguish from other existing brands.
The business has many competitors and it is difficult to gain a competitive advantage. Though there is a tuff competition and many players are endeavouring to get market share still there is some possibility to enter this market and fetch a decent revenue. When everyone is offering the same service, then it is time to offer more and different. Thus, to enter in this market the company needs to offer more services or bundle offers. This is will attract the customer because they will get more at the same price, such people are easy to attract but difficult to retain because they always seek for more (Smith & Thomassen, 2015). To enhance the branding, the company should tie-up with another existing brand, this will help the brand to reach to the customers of the partner brand.
It will also let the brand to improve brand recall value because the customer will relate the brand with the brand of the partner company. It is a quick way of improving brand but it should be ensured that any failure of poor service of the partner's brand will adversely affect the brand of own company (illicic et al., 2019) Moreover, to differentiate the brand from others, there are several ways like offering pricing factor, quality, expertise or specialization, unique point of purchase experience and many others. In the described case, the company should try to offer bundle services with minimum charge in the market.
To create more awareness of the brand, the company should spend more on advertisement because the advertisement may not convert everyone into a customer but can create an awareness of the brand in the market at least. This advertisement campaign should be aggressive and should run for at least a year, only then it will be remembered for a long time (Khan, Jadoon & Tareen, 2016). Once a customer is acquired he should be retained with excellent service and customer support. Therefore, the customer should be put first on the core of the business.
The company may consider opening a new subsidiary company that will provide the payment solution consultancy to businesses and professionals, POS machine for offline payment service and issue a credit card with contactless payment features. The company has a huge data of over millions of transactions, this can be used to gain insight about the payment behaviour and to find where people pay more amount or what is an average pay within a particular region or place. Thus, after analysing these data the company can prepare a report to sell to the company who will avail the consulting service. Also, the company can enter into POS machine selling business, where it sells the POS machines to the offline retailers. The retailers will either pay a one-time payment for the machine or will choose for renting while paying an amount every month for the maintenance and lease charge. The company may also earn by charging a specific percentage from each payment made through the machine.
Apart from the POS machine and consulting, the company can also enter into credit card business. The company may need to come in partnership with other existing company to co-brand the new credit card of the company. Initially, it will be beneficial for the company because the company will get an opportunity to establish in the market along with the experience of doing this business (Cunha, Forehand & Angle, 2015). The partnered company will have the expertise and brand name and by leveraging partnership, the company may incorporate these two attributes in its business. Moreover, the existing users who are availing the online payment gateway service from Faso can be prospected to try out the offline payment solution with a huge discount. Therefore, partnership and co-branding will give some benefits to the company such as enhance the branding, expand the presence, reduce the risk, reduce the capital investment and many others.
Every opportunity comes with a risk, similarly, the risk is associated with opportunity as well. The major risk in the credit card business is the payment default by the customers or sometime duped by fraud. It is obvious that almost every credit companies face issues like payment default or ask for the settlement. The recovery of amount costs the company in terms of time and money, in some cases the company has to settle the disputes. This will hamper the liquidity of the firm in the business, thus every credit card company has to ensure the eligibility of the customer before issuing a credit card to them (Abid, Masmoudi & Zouari, 2016).
Also, there is a huge investment required along with firm understanding and knowledge of finance to enter in the business of credit card which Fasos lacks. Besides, finding a good and trusted partner and hiring new staffs is equally important for a business to sustain in the market. Otherwise, the company may fail to get a fair share in revenue or may face losses. In sum, there is a competition in the market to overcome.
If there is little knowledge about the legal formalities, it is better to seek advice from the corporate lawyer or legal expert. They will not only explain the procedure but also tell the fast and convenient of getting it done (Stolper & Walter, 2017). Once the procedure and information to start this business are gathered, it is the time to find a new partner (Plouffe et. al., 2016). Therefore, starting early will give enough time to find the right partner and to convince them to come into a joint venture for some time. Later, after getting a partner and information about the legal procedure, it is time to develop the strategy to launch the product. While developing the strategy, the policy and eligibility for issuing a credit card should also be considered. The eligibility criteria should be such that it caters only those who have a very strong financial background and good credit history of a long time like elite class people. After four to five years of targeting elite class, the company should gradually target the lower stratus people. In this way, the company will be able to overcome all the obstacle.
After considering the nature and position of the company, it is suggested that the company has three market opportunity. Expanding a business in India is a good choice because the company is emerging very fast and more internet users are being added every year. Moreover, the company will enjoy a huge customer base when the users in India will much fold in future. Additionally, the company may also discover another big market opportunity in India in future. However, entering in domain selling a business is also a good decision. The company can generate a huge profit with low investment but it is required to gain a big portion of market size. This market is full of many sellers and it is difficult to maintain an identity among them.
Starting a new subsidiary company is itself an expansion of the business. The company can offer payment solution related consulting to others because it has the data, experience and expertise in this. There is a high probability of getting many people seeking advice from here. POS machine and other retail store payment solution can give huge market revenue because still, people prefer to shop from the stores. These stores have many customers visiting daily where the cheap payment solution will work better for both the company and the retailers. Also, credit card service is a high yielding business but there is a major risk like payment default and sometimes there is a liquidity crunch in the company. Thus, it is suggested that the company should enter into the market with another dominant player as a partner and should acquire enough funds from the bank to avoid a shortage of cash.
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