who owns a Nubank declares himself a fan of the purple card. And it's not for less, as already I commented in the past, it's really worth getting one of these to be happy. The card is not linked to a bank , does not charge fees, is completely online, has differentiated service through apps and text messages, and other advantages. 172b6z
But can this disruptive model, which goes against everything we know in the Brazilian financial market, be sustained? That is, does it have a chance of becoming profitable? that's what Eduardo Caronefounder of Next Investments, analyzed in a super complete article published in his LinkedIn, which I comment below:
The Business Model 2k3w5x
Analyzing in depth, we saw that for a credit card to exist, three sectors work together: Flag, represented locally by the well-known VISA, Mastercard and How much; o purchaser, which are the companies that own the "maquininhas" such as speech e Sky; and finally, the issuer, which can be a bank, a store and, of course, even the Nubank.
When you make any purchase on the card at a machine, approximately 97% of the money goes to the store owner. The remaining 3% is divided between the three characters featured. O purchaser e Emitter take most of it, and the Flag with a smaller slice.
After all, Flag it is nothing more than a “brand” for printing credit cards, which offer some benefits, such as frequent flyer programs, discounts at movie theaters, among others. Even though it is “just” that, a flag like the VISA profited a mere US$ 5,99 billion in the 12 months ending in September. You see, if the little guy who gets the smallest slice of the pie makes all that money, the Emitter must do well, right? Take it easy, kid padawan, We'll get to that point soon...
For purchaser, the business is also profitable. The company just needs technology to make its machines work. In the first quarter, for example, the Heaven profited R$1 billion from this alone.
And Emitter? Well, this one basically makes money in three ways: (i) istration Fees, which is the percentage charged to the shopkeeper (taken from that 3%), (ii) Rates, as an annuity and (iii) charging interest who pays the invoice in arrears or does not pay the full amount.
And how does Nubank work? 3u57v
Since the Nubank, a broadcaster, has given up charging any tariff and fee from its customers, item (ii) does not generate revenue for it. And, charging a below-market interest rate, about 7,75% am, it doesn't earn that much, even though it has practically doubled the interest for some customers.
And for that reason, we come to the real problem…
Now we come to the problematic part of being the Emitter: the client. That's right, possibly you who are reading this article (and I who wrote it). Simply put: When the customer makes a purchase of R$100,00 in a store, the retailer will receive R$97,00 from the Emitter, and the customer should receive the total amount (R$100,00) from the customer, but not everyone pays the total amount of the invoice, or is late, and even so the Emitter (Nubank) needs to pay his Manoel from the bakery with those R$97,00 he sold.
This practice consumes a lot of cash, and therein lies the problem. The last balance of Nubank (Nu Pagamentos S/A), published in 2015, points to a tax loss of R$ 32,7 million, for a company of this size, this value is small. The cashier… In 2015 she spent BRL 245 million, and its investors contributed R$300 million to cover this gap.
And that wasn't the only money injected into the type.
Now the key question of the article: can a card with no fees be sustained in the Brazil or will it break? in the opinion of Eduardo Carone, it is unlikely, investors are more likely to continue covering losses until they sell the business. In my opinion, I don't think so either. In the world of technology, we have already seen many companies, which did not generate R$1,00 in profit for their creators, being sold for very high figures.
Another solution for purple would be to charge an annual fee (cheap, please) to continue offering a service of quality and technology that it has, which is something innovative here. I would easily pay an annuity of R$12,00/year (look at me suggesting a nice value) to continue with the Nu.
And you? Would you pay an annual fee to use your Nubank or would you cut the card and cancel on the spot?
