Key insights
- The article contrasts Stripe's low-fee, efficiency-focused approach with Ezypay's high-fee, captive-customer model in the gym industry. It suggests Ezypay's reliance on dishonor fees, potentially exploiting consumers, creates a more stable revenue stream, though ethically questionable. This model, if replicated, could negatively impact consumer spending and sentiment, indirectly affecting US equities, but the direct impact is limited.
- Stripe prioritizes efficiency and low dishonor fees ($2.50)
- Ezypay provides low-tech and obscure payment rails for 4.6x that cost ($16-35).
Guess who's got a better and recurrent revenue stream?
From an investor's perspective, we can see that Stripe is an extremely ineffective company. They: - openly allow merchants to switch providers easily
- are forced to constantly iterate upon and improve their software
- can only charge 0.156x of what its direct competitor charges
By comparison, Ezypay is "baked in" as the primary payments layer for major gym management software platforms (gym members are delivered to Ezypay without individual consent or the ability to opt out).
Thus, Ezypay is able to exploit their stranglehold over customers in the fitness industry to basically turn recursive dishonor fees over the same transaction (of over 17-20% per bounce- meaning dishonor fees can easily account for more than half of a gym member's monthly subscription!) into a consistent revenue stream.
Discuss or suggest how Ezypay can continue to build their dishonor payments to accumulate more payments from gym goers. We'd love to hear your thoughts!