Most Iranian Landtech companies get their credit from leasing companies or banks, but in the meantime, SnappPay has chosen another model for this. SnappPay gets its credit from Snap Group and provides its facilities to its users without fees
According to the IDEA, Majid Hesami the CEO of SnappPay stated: the correct income model for landtechs is to charge a fee from the receiver and not from the user; But the inflation rate in Iran has made most of the Iranian landtech companies unable to implement this model.
Hesami believes that the correct revenue model for landtechs is to receive fees from the receiver and not the user, but the inflation rate in Iran has challenged the players in this field. He continues: From the last 3 years when we started SnappPay, our philosophy was to provide our users with the experience of crediting and BNPL based on the real experience that has been formed in the world and with a comfortable user experience.
At first, our only reliable data was the data inside Snapp and we did not have access to other data, as a result, we calculated the probability of default with the algorithms and gave credit to users based on that.
He continues: At first, our credit started with small amounts of 200 thousand tomans and gradually we built a bigger ecosystem and our users and adopters increased. Of course, our preference is that this amount should not be too high. Until now, the majority of our financing in SnappPay has been from the group’s resources and liquidity, and we took a part of our credit line from banks and we pay the installments ourselves.
Because we don’t want to involve the user in the banking process, and of course, in this way, we were able to create a good user experience on the user’s side, and this experience of ease of use is our advantage and difference.
SnappPay default rate; Below 2 percent
Regarding SnappPay’s default rate, Hesami also says: First, we measure SnappPay’s default rate based on each user, that is, on a person basis, and then consider the default rate for all users. The aggregated default rate of all SnappPay users has always been below 2%. More than 80% of our assessments have been correct.
Hesami continues to talk about the central bank’s concern about the credit given to users and the issue of money creation: in SnappPay’s business model, money is not created, because we pay the money to the supplier within a few days. be done with delay.
There is money creation where I don’t pay the supplier, but we pay the receiver with a delay of several days, so money creation doesn’t happen. We do not charge a fee from the user and the money of the receivers is paid on time. As a result, the game is double-ended.
Inflation has changed the income model
Hesami explains the income generation in SnappPay as follows: We actually created a transformation in Landtechs with SnappPay. In the landtech world, they get their income from adopters, not from users. Because we are the ones who bring more customers to the seller and make it possible to buy. In general, this business model is the correct one in the world. Landtechs rarely charge user fees.
Although the inflation rate in Iran has complicated the work. In Iran, bank financing costs more than 30% and it is difficult to implement this model. But so far we have managed to do it and our income has been provided by the recipient.
According to Hesami, currently SnappPay credit is offered in two models. He explains about this: One part is monthly credit and one part is installment credit, the monthly credit is 300 thousand to 5 million and the installment credit is from 2 to 15 million tomans. At first, the monthly credit was only on the Snap ecosystem, but we added the installment service from July 2022. Now we have launched the installment service on Snappshop and our future plan is to provide it on SnappTrip as well.
Hesami also mentions the issue of credit increase and says: We increased credit in the first two years according to the permanent algorithm, if we had more financial resources, we would have continued this work. But the biggest challenge of the Landtech industry is financing, and the bottleneck of Landtechs is financing. Unfortunately, the wrong policies of the banks have also involved us.
According to Hesami, Snap Taxi is by far the leader of credit users, and outside the Snap ecosystem, the most used credit is installments, cosmetics, clothes, household appliances, and mobile phones and accessories.
Data security
Hesami also says about the issue of crediting and encouraging people to buy consumer goods: this issue has been happening in the West for decades, but the situation is different in Iran. Unfortunately, in this economic situation, it is not good and finally people go to their obligatory purchases with BNPLs. In addition to that, we also consider on what basis to give credit. We give facilities based on repayment and increase it little by little.
SnappPay’s CEO also says about data sharing among landtechs: data sharing has a serious operational challenge, in fact, there should be an intermediary institution and there should not be any conflict of interest between businesses in this field. The next issue is data security, and the more important point is the weakness of the legal infrastructure. A bad user can sue us for giving the data to a company. We were the first company to provide our data to this organization in validating Iranians, and this is a very good and deterrent issue.
According to Hesami, in the last two years Landtech has made many changes in Iran. He says about the future of this industry: Landtechs have started their work since 2005, many banks, neobanks and even technology giants have entered this field. Apple and Amazon have launched their landtech and it is not even unlikely that Google and Facebook will do this.
Newly in Iran, the bad economic conditions have increased the need for financing, and if Landtechs can provide facilities to users at zero or low rates, it will become more practical and popular. In addition to the changes in technology, artificial intelligence and ChatGPT have also changed in recent years.
Landtechs have been made more attractive. With artificial intelligence, personalized offers and many facilities are provided to users, and in fact, landtechs have not yet turned their trump card. It is true that we have many limitations in Iran, but we are forced to move towards technology and we at SnappPay are trying to increase the use of technology.
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