Mobile payment is going to be free. This is the hypothesis of serial entrepreneur Erik Hougaard, founder of Zalr,which he aims to make the Mobile payment. 2.0.
Not a day goes by without media coverage of a new store introducing mobile payment. Which is kind of funny, because you have been able to pay with your mobile for several years in Africa. But if you investigate the subject a bit, there is one consistent catch: the fees.
Paying though your mobile might be smart, but it is basically just another way to move money from A to B.
“The price for the transactions will naturally get pressured over time,” says Erik Hougaard, Chairman of the board and Founder of Zalr A/S. Moreover, he is co-founder of the successful companies such as Vertica A/S and dukaPC A/S.
The idea behind Zalr came from a wish to add more value to the payment transaction.
“I wanted to create a business model, in which transactions are accomplished without charge for both the store and consumer. It is a healthy exercise to remove the most obvious source of income and create a model that functions without,” says Erik Hougaard.
Zalr’s innovation is that income is generated at the point where you add the new customers to the business and increase sales. The solution is currently being tested in the first stores, both physical and online. One of the first customers is the chain PetWorld, who plan to establish Zalr in their 23 stores as soon as possible.
“I bought the idea about Zalr from the first day I heard about it. It is a solution, which provides us with both lower costs and helps to increase our sales at the stores and online. Something I believe that many store owners would happily accept,” says Jan Sørensen, CEO at PetWorld.
More free of charge and more fun
As a part of the business model, Zalr offers their stores to establish and run their customer club free of charge.
“Loyalty programs are an important element, if you want to increase your turnover and the customer loyalty. Therefore we want to offer this to our customers, if they want it” says Erik Hougaard and continues: “ It is natural to combine the customer club with the actual payment action, so that the customer only has one thing to do.”
The customers’ experience of the purchase situation is central for Zalr. The goal is to make the payment experience better, but also more fun. Thus, the customers automatically participate in competitions when the Zalr app is being used. Simultaneously points are earned, which can be exchanged into goods, experiences, and gift certificates.
To take action based on the customer’s terms is, according to Louise Byg Kongsholm, Trend Researcher and CEO of pej gruppen – Scandinavian Trend Institute, the key to the current and the future consumer.
“For a number of years the consumers have been further ahead than the stores, with regard to the use of technology and mobile payment. Now, the stores are seriously embracing the opportunities and new payment solutions, to make the transactions as frictionless as possible, are developing fast,” says Louise Byg Kongsholm.
The revenue is coming
Even though the solution is free, Erik Hougaard is not concerned about the company lacking revenue.
“ We have a clear strategy about how we can assists our stores to sell and earn more and it is there we need to make our profit. Within a near future, we hope to announce the first of a long range of promotional initiatives, which is already a work in progress with out first stores,” says Erik Hougaard.
The solution first needs to be thoroughly tested in the real world. This is going to happen in the approximately 50 physical and online stores, who already have joined Zalr’s banners. Zalr anticipates to be running at full speed by the middle of October and until then they regularly opens the systems to new businesses.