This article is part of the Lockdown Look In series. Welcome to part one.

Inspiration

The original idea for a cashless payments app came from two things.

Firstly, I’d been discussing money with a local homeless guy.  He'd been explaining that he had no income at all. He relied solely on the generosity of local people to keep him going*. He went on to tell me that that he lives in a tent by the canal and one of his biggest outgoings is buying fire wood to cook on and to keep warm. 

Have you ever tried to set fire to wet wood? It’s nigh-on impossible without an accelerant! So his source of dry firewood is a local garage, at about £10 a bag. So that’s £40 a week on firewood alone.  

Unfortunately, the next time I saw him I had no cash in my pocket to give him. It got me thinking, what will the homeless, street vendors and buskers do as the world moves closer to a cashless society? Especially during Covid, there is a direct impact on how much money people have in their pockets and therefore how much ends up in the pockets of those that rely on it so much.

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The second source of inspiration was take-aways. I love a good take-away. During the first Covid-19 lockdown we definitely relied on a take away to help break the Groundhog Day monotony of it all.

Even before Covid-19, I would regularly find myself cashless when wanting to tip the delivery driver of my favourite take-away. I am also frustrated when I don't have a small amount of change in my pocket to give to a charity or to tip for great service. Increasingly, I'd noticed that card payment machines didn’t always offer a gratuity facility when paying for a meal; so unless you have some cash to hand, the service team are not getting a tip. 

So, I had been thinking about the original concept for this app for some time; to build a cashless service that used a mobile phone, a QR code and a bank card to send a small payment to an individual. But with the onset of Covid-19, now felt like the time to put the wheels in motion. The less handling of cash the better. 

Clearly, we might be onto something here. 

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So we did some research.  What was out there already and what’s the market like? 

Actually the west is behind the curve here.  WeChat and AliPay have been using personal QR codes for initiating payments for a while now.  WeChat has about 93% population penetration in China and with identity verification and payments built in, the usage is already widespread. 

So QR codes to initiate payments is a goer; we just need to make it more mainstream domestically (more on this later). 

"So QR codes to initiate payments is a goer...."

But is there a problem worth solving?

On the face of it, the idea for our app sounded valid. But we needed to know if there would genuinely be interest in the product or if my passion for it was clouding my judgement and just getting me excited to build our own product. 

So I took the plunge and laid out the idea to my family, friends and the talented team at Method & Class. It's quite hard pitching an idea you are passionate about. But I got a lot out of this, especially from the M&C team. Everyone had their view on why it would work and why it wouldn't. Where it might work and where it couldn't. But the great thing about this was it helped us write down a set of assumptions that we would need to test.

And if I thought that was difficult, next came getting out into the real world to talk to potential customers. I can't stress enough how important it is to start within your network. 

Who do you know that could be a customer or could give you insight into your target markets?

I hit the pavement in my local area and spoke to take-away venues and restaurants. I called in some favours from my wife's network of artisan makers and bakers and interviewed them for information. My team had great contacts in hospitality and charities and quickly learnt (and enjoyed) the power of a chat over a pint. 

What we learnt was this.

  • Take-away owners loved the idea and would be happy to sign up to test it with us
  • Makers and bakers liked the idea and would sign up to test it with us but were nervous it might offend their customers
  • Many hospitality venues already have a solution in place for cashless tips (through their existing POS terminals) and there is no problem to solve there
  • Small charities (whose income comes from self organised events eg PTAs) have an immediate and daunting problem to solve because social distancing has made many of their fundraising activities impossible this year. 

The more we discussed the idea and the more we learnt, we realised that there were in fact a multitude of uses for a small cashless payment service (that didn't rely on hardware) beyond tips. We started to capture these and categorise them into sectors and use cases. Tips, charity donations, small payments, gifts etc. 

And has anyone else already solved the problem?

One piece of feedback from interviewing our network was that most people couldn't tell you if this product already existed - a product to scan a qr code and make a tip or a small payment. 

So we started looking around for similar solutions. We did in fact identify a number of similar products for tipping (particularly in the US) but after looking into them further, they seemed very focussed on the hospitality sector. None of these seemed to have gained significant traction yet.  

Our conversations in the charity sector were more interesting. Here we found a lot of products on the market for donations and ticket sales, but nothing that seemed to help charities take small payments at their events. The charities we spoke with could really see the value in being able to take payments at an un-manned stall (honesty box style) or being able to create a new POS without the need for buying hardware. 

Time to break out the Lean Canvas and establish a business model and that’s the subject of our next article….


Footnote

* I appreciate there are other systems in place to help someone in his position, but for whatever reason it’s not working for him - lets just park that discussion for now

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