Agree entirely. Just think how hard it is for a merchant to up...

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chookiewookie

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22/04/15

12:42

Post #: 15133532
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Originally posted by beachshack ↑

Hey there

Thanks - I dont understand at all the cafe owner thinking re rewards etc so I am not qualified to tell

But I do understand the merchant payment issues and it is going to be very difficult to get a merchant to switch their merchant provider. Clipping this ticket is actually quite difficult. And the margins are minuscule.

For example the typical cafe/food service operator in Au has revenues of around $800k pa of which around $300k are on cards.

As an intermediary its hard to get more than half a percent as a merchant rebate. So that $300k turns into max $1500 pa. And you just need a few hours of tech support and a customer training visit of two to wipe that out. And dont even go into the expense of chareback management, fraud management etc.

Lets say GP ends up being $1k pa. Lets say 25% of their merchants take up the offer (and this would be incredible take up).

net result to rewardle - $1m pa. And this assumes no cost of sale.

Now on the plus side there are 70k+ food service outlets in AU. So lots to go after. But as soon as an operator has more than one store then the point of sale system gets very sophisticated and theres no way a stand alone tablet will cut it.

So some one help me out - how does the merchant payment offer scale? If Mint couldn't get this to fly how will Rewardle?

Great to get some thoughts -

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Agree entirely.

Just think how hard it is for a merchant to up and move from an existing merchant agreement to simply move to one where they can take amex, for example.
In practice they are locked in for years and even if rewardle offered an attractive package, reality is that it is not a simple transfer like a choice of 'do I go to coles or woolworths'.

Why would you change FROM an integrated POS system where your till talks to your eftpos machine and does the accounting all automatically? Rewardle is a bonus option at the moment, a nifty toy. It looks cool and shiny.

In reality if Rewardle move in this way, it will actually take more cash to provide such an integrated system, above and beyond the rollout of tablets.

having said all that, again, I don't think this detracts from the short term share price. anyone around in the 90s for the dotcom boom? common sense doesn't have to get in the way of making a mint, pardon the pun....

RXH Price at posting: 29.0¢ Sentiment: None Disclosure: Not Held
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0 Great analysis

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