Giuseppe Turitto Development Manager at ServiceChannel

December 11th, 2020

I am in the middle of designing a Mobile-App that will have similar functionality as a gift card. We have three personas, the "gifter," the "receiver," and the "merchant." The gifter sets the amount and who will be the receiver and pay with his Credit-Card. The "receiver gets the notification about the gift and proceeds to go to any merchant in the system. The merchant scans the gift code and deducts the amount sent by the gifter in the app from the cost of the item that the receiver got.

We want to act as an escrow in the middle of these transactions, but we will be having a problem with a double fee paid to the payment system as far as we have researched. Once when the gifter pay, another when we send the money to the merchant. This is a bit hard because the fee from the payment system is $0.10 per transaction, so for a gift of $1.00, the total cost of this transaction will be $0.20. If we add $0.05 per transaction, we are making the total cost of a gift 25% expensive.

We are looking for a payment system that removes their fee when we transfer to the merchant or no fee when the gifter pays.

Does anyone know about a service that offers that?

Dane Madsen Organizational and Operational Strategy Consultant

December 15th, 2020

Giuseppe - There are a ton of new rules around issuing cards - is being the intermediary that important to the model or can you have an agreement that allows you to get transaction data?

Dane Madsen Organizational and Operational Strategy Consultant

December 13th, 2020

Why do you want to be the escrow agent? Are you planning your revenue model to include interest income and breakage?


What is the USP to the gifter? Why would they not send a gift on one of the major credit cards? What is the USP to the merchant? Again, one of the major card issuers is attractive because they now they will get paid.

Giuseppe Turitto Development Manager at ServiceChannel

December 14th, 2020

@Dane, I can see how we can look like we want to follow the escrow model. It was no idea to use the interest earned on the money provided by the gifter as part of the revenue model for us.

It could be no major USP for the merchants, so we are thinking of ways to reduce the cost per transaction. This is the only way we can make it attractive for the merchants to join the network.

For the gifter, the value in the proposition comes with some extra added features. For these features to be executed, we need to know when the receiver completed the transaction with the merchant.


Chris Kwan Founder@bankguru.com & Inventor 10 US Patents in FinTech, P2P Prepaid Cards (US PATENT 8,650,126)

December 20th, 2020

From your statements, it seems to me that the costs are with the credit-card being processed under the bank's EMV platform? Why don't you fund this yourself vide an installment model ? So instead of clients paying by a credit card, you have an agreement with the merchant you will pay them on monthly basis. You then collect the funds from the gifters and you extract a penalty if there is a late payment. Ie you only make money when someone is late. This model is now popular with "Z" gen as they detest credit cards. Why would the merchant obliged? Cause there is no charge-back. Whats the catch? You collect data about gifter and giftee. Can you find funders to "layby" for you ? with the Interest rate at lowest, I am sure there will be offers.