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What are the challenges associated with Transaction Fee based business models?

My start-up is a peer-to-peer money remittance platform. What's unique about us is we are designed to work specifically with cash remittance. Cash is still king in many developing countries. Its easy to send money as digital currency, the challenge is converting paper to digital and visa versa. Traditionally, the only options for doing that is at a bank teller or expensive remittance service like Western Union or Moneygram. Until now, we solve that problem in a peer-to-peer marketplace model.

Seeking some expert opinions on transaction fee ( commission) based business models for tech companies. If you can share challenges you faced,comments about ideal customers, the steps to collecting revenue and the key revenue drivers.

7 Replies

Sam McAfee
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Sam McAfee Advisor
Building Popup Incubators for Corporate Innovation Programs
What would help is if you can give some info on your planned business, and then folks can provide feedback. It's hard to give generic advice about a space. :)
Anthony Largie
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Anthony Largie Entrepreneur
Entrepreneur and Investor
Sure thing Sam. I have updated my description to provide some background.
George Lambert
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George Lambert Advisor
Interim CTO - CTO's for Hire
Being in the "Money Transmitter Business" comes with a great deal of potential problems.

These rules vary fromjurisdictiontojurisdiction, and there is a history of these companies being shut down, investigated, and politicallyoppressed. I spent hours with the New Hampshire Banking Department discussing issues around BitCoin (which is very popular in NH) as soon as there was a conversion from or too cash it the banking department wanted to be involved - and they wanted all parties registered and licensed.

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In the law code of theUnited States, amoney transmitterormoney transfer serviceis a business entity that provides money transfer services or payment instruments.[1]Money Transmitters in the US are part of a larger group of entities calledMoney Service Businessesor MSBs.[2]Under federal law, 18 UCS ? 1960, businesses are required to register for a Money Transmitter license where their activity falls within the state definition of a money transmitter.[3]

http://en.wikipedia.org/wiki/Money_transmitter
George Lambert
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George Lambert Advisor
Interim CTO - CTO's for Hire
Topic: Both Bitcoin-24 and Mtgox having problems in the EU (Read 11930 times)
https://bitcointalk.org/index.php?topic=179827.0

Bitcoin investors call for legal action against MtGox

http://www.ndtv.com/world-news/bitcoin-investors-call-for-legal-action-on-mtgox-552235

Cryptocurrency News Round-Up: MtGox Woes Continue as New York Pushes for Bitcoin Law


http://www.ibtimes.co.uk/cryptocurrency-news-round-mtgox-woes-continue-new-york-pushes-bitcoin-law-1437359
Anthony Largie
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Anthony Largie Entrepreneur
Entrepreneur and Investor
Yes George, I am well aware of the regulatory challenges. Do you have any other expertise you can share?
Lynn Gabbay
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Lynn Gabbay Entrepreneur
Managing Director at Queue Continuum LLC
Anthony, my company operates something very similar to a stock exchange and collects transaction fees as the primary revenue stream. If this is along the lines of what you're interested in, reach out to me offline and we can discuss.
Christophe Lassuyt
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Christophe Lassuyt Entrepreneur
co-founder at Moneytis, avoiding fees on cross-border money transfers, using Blockchain
Hi there
Moneytis works with many MTOs and there are many solutions. One of them which is very interesting is the one of Xendpay: based on donations
According to them there are 60% of customers who give the donation suggested.
Anyway having no fees does not work, it is better to make pay % at least (you can see on reddit that % fees is not trusted, unfortunately.
Anthony feel free to contact me for further discussions on the subject

best regards
Christophe Lassuyt
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