Help keep transfer fees to save the referral system and help Bitshares grow!

[Empirical1.2]

You made me spit out my coffee 'Who are you to know'  lol. https://www.youtube.com/watch?v=7LyfwHYB8xw  (Putin Laughing)

I didn't say I knew $0.15 was more than customers are willing to pay for basic transfers. I was saying you can't follow a line of logic that says we need to charge X for a product to make the referral programme lucrative and generate network effect. As if X overprices the product then it won't work.

We've already discussed the various ways of determining prices. Atm the approach seems to be keep them high for a while so that it can be tested.

I'm glad I've made you laugh
And I'm even more glad that finally we have something we seem to agree: we both don't know if $0.15 is more than customers are willing to pay for basic transfers. It might be too much but maybe not.

So we have these two statements:
(a) We don't really know if $0.15 exceeds our online consumers' tolerance level.
(b) We do know that $0.15 (or maybe $0.10) is the minimum for the referral program to work effectively.

Therefore, by combining (a) & (b) and using nothing else but rational thinking, we can safely come to the conclusion that we should stick to $0.15 for a while and give the referral program a chance to prove itself.
If you agree with (a) & (b) and still arrive at a different conclusion, then I rest my case.

Again I've already explained that's incorrect thinking.

(a) is correct but (b) is not known. In fact as explained previously the referral programme may be far more lucrative with lower fees. As a thumbsuck example, if $0.15 dissuades 90% of Chinese users but $0.05 only dissuades 50%. Then referrers will attract 5x more users and generate 66% more in referral income with a $0.05 fee. (Those users may also make a lot more transfers when the fee is in the 'acceptable range' too, making it even more lucrative.)

Having 5x more users who may then go onto refer others will then generate exponentially more network effect over time too.

As it stands BTS is near an ATL vs. USD and BTC. If you're going to keep it high for a while (Which may counter-intuitively be damaging the referral programme.) At least come up with a time frame and some other measurement, so at some point you can say, 'OK, I think it's time we should try lower fees'. As I don't want to be arguing in 3 months & at a $5 million CAP that it just needs more time.

As for the bet on the two ways of thinking, I think B for Non US and Western European customers definitely, they are sensitive to a dollar in fees given their lower incomes and I'm lead to believe from forum feedback that Chinese banks and online services make many of their fees appear free to the end user.   

Nope. The assumption was that both A and B spend over $100 per month on online payments (roughly 10 online payments a month) so they are similarly well-off, regardless of their geographical location.
So a potential difference in price sensitivity might only stem from cultural background. But this is highly unlikely as $0.75 (=$1.00-$.25) is objectively a small amount if you are rich enough to spend over $100 to buy things online on a regular basis. 

Also for US and Western European customers given that many purchase fees are often hidden and that as I mentioned PayPal and Uphold two moderately relevant examples, advertise free basic transfers as a key selling point.

Hiding fees is not the same as lowering them - so this is a different topic.
Personally I am against hiding fees (for ideological reasons) but this is irrelevant here.

The assumption was that both A and B spend over $100 per month on online payments (roughly 10 online payments a month) so they are similarly well-off, regardless of their geographical location.
So a potential difference in price sensitivity might only stem from cultural background. But this is highly unlikely as $0.75 (=$1.00-$.25

It doesn't change my answer but roughly 10 purchases at $0.15 vs. $0.05 the difference is $1.00 ($1.50 - $0.5)

Also the critical difference is you're making a purchase in that example, not just a basic transfer. Similarly to how traders are happy to pay a fee when their order is filled, customers are more happy to pay a fee when BTS is used to help them make a purchase and at a cheaper price than competitors. However just sending the tokens back and forth doesn't seem to justify a high transfer fee based on industry examples and forum feedback thus far.

Edit: Unfortunately distinguishing between merchant accounts seems to be no easy task according to BM above.

[bytemaster]

There are two businesses here:

1. Payments
2. Exchange
...

What about differentiate the Payments business in
A: user to user (lower fee nexto to 0, if not 0 at all)
B: user to merchant (higher fee)

There will be need of a new account type for merchant, with different setting on fees.
And maybe also some pros attached to this new type of account...

Would be this feasible ?!

If there was a merchant account it would be identified by the relative number of times it received funds compared to sending funds. It would be trivial to work around by creating new accounts frequently.

That is the problem with decentralized solutions, it becomes very hard to discriminate.

[jakub]

You made me spit out my coffee 'Who are you to know'  lol. https://www.youtube.com/watch?v=7LyfwHYB8xw  (Putin Laughing)

I didn't say I knew $0.15 was more than customers are willing to pay for basic transfers. I was saying you can't follow a line of logic that says we need to charge X for a product to make the referral programme lucrative and generate network effect. As if X overprices the product then it won't work.

We've already discussed the various ways of determining prices. Atm the approach seems to be keep them high for a while so that it can be tested.

I'm glad I've made you laugh
And I'm even more glad that finally we have something we seem to agree: we both don't know if $0.15 is more than customers are willing to pay for basic transfers. It might be too much but maybe not.

So we have these two statements:
(a) We don't really know if $0.15 exceeds our online consumers' tolerance level.
(b) We do know that $0.15 (or maybe $0.10) is the minimum for the referral program to work effectively.

Therefore, by combining (a) & (b) and using nothing else but rational thinking, we can safely come to the conclusion that we should stick to $0.15 for a while and give the referral program a chance to prove itself.
If you agree with (a) & (b) and still arrive at a different conclusion, then I rest my case.

As for the bet on the two ways of thinking, I think B for Non US and Western European customers definitely, they are sensitive to a dollar in fees given their lower incomes and I'm lead to believe from forum feedback that Chinese banks and online services make many of their fees appear free to the end user.   

Nope. The assumption was that both A and B spend over $100 per month on online payments (roughly 10 online payments a month) so they are similarly well-off, regardless of their geographical location.
So a potential difference in price sensitivity might only stem from cultural background. But this is highly unlikely as $0.75 (=$1.00-$.25) is objectively a small amount if you are rich enough to spend over $100 to buy things online on a regular basis. 

Also for US and Western European customers given that many purchase fees are often hidden and that as I mentioned PayPal and Uphold two moderately relevant examples, advertise free basic transfers as a key selling point.

Hiding fees is not the same as lowering them - so this is a different topic.
Personally I am against hiding fees (for ideological reasons) but this is irrelevant here.

[Empirical1.2]

The two businesses are  fairly independent.  High transfer fees will not impact the Exchange business and High exchange fees will not impact the payment business.

...whatever the fees are set to are unlikely to impact the decentralized exchange business.

Yunbi may prove to be the exception. But why then did they actively seek to set their BTS withdrawal fee lower and advertise it as a benefit unless they felt high transfer fees impacted their centralized exchange business?

• Lowered the withdrawal fee to 10 BTS!

they get 80% back of their tx fees anyways. that's why the can do it.

Yes... I understand that.

The point is if the high transfer fees didn't impact their exchange business they'd charge the standard transfer fee and keep the difference.  But obviously they feel their exchange users care about transfer fees so they pass their LTM discount onto the customers and make their revenue from trading fees instead.

do you know that for sure or is this just another assumption? yunbi is only operatively working since a few days, they're far behind every other working exchange. that's why there's a need for promotion in my opinion.

Possibly, we'll have to wait and see. That's why I also said Yunbi may prove to be the exception. But my 'assumption' is we'd see Chinese exchanges like BTC38 if they upgraded,  lower the fee because their customers might be sensitive to it based on the feedback I've seen and Yunbi's actions which as you say might just be a promotion.

[Empirical1.2]

Similarly if you're charging more than customers are willing to pay for basic transfers everything after is moot.

Who are you to know that? How do you know that $0.15 is "more than customers are willing to pay for basic transfers"?

You made me spit out my coffee 'Who are you to know'  lol. https://www.youtube.com/watch?v=7LyfwHYB8xw  (Putin Laughing)

I didn't say I knew $0.15 was more than customers are willing to pay for basic transfers. I was saying you can't follow a line of logic that says we need to charge X for a product to make the referral programme lucrative and generate network effect. As if X overprices the product then it won't work.

We've already discussed the various ways of determining prices. Atm the approach seems to be keep them high for a while so that it can be tested.

Imagine two customers:

Customer A way of thinking:
I've spent over $100 this month for online shopping and I can't be really bothered too much whether I've paid $1 extra for the transfer fees or just $.25 extra. This makes no f** difference me.

Customer B way of thinking:
I've spent over $100 this month for online shopping but wait a minute..., what? I am now really pissed off that I needed to pay $1 extra for the transfer fees. If it was $.25 that would be fine but $1? No way. They f*** me by $0.75. I'm not gonna use it any more.

And now tell me, @Empirical1.2, how much would you bet that in a random sample of 1000 people you would find more B-type customers than A-type customers?

Apparently PayPal can, that's why they don't charge for basic transfers to friends and family. "Send or receive money between friends and family and we won’t charge you anything,"

PayPal does it because it can and because it does not do any damage to their core business or referral program.
And PayPal doing this does not mean that if it was not free, people would not do it. So there is no logic in your argument.

Looking at what others in the payments and BitAsset business such as PayPal or Uphold charge for similar products and services is obviously relevant &  I believe I've seen you reference the fees other services charge for trading when it suits your argument.

As for the bet on the two ways of thinking, I think B for Non US and Western European customers definitely, they are sensitive to a dollar in fees given their lower incomes and I'm lead to believe from forum feedback that Chinese banks and online services make many of their fees appear free to the end user.   

Also for US and Western European customers given that many purchase fees are often hidden and that as I mentioned PayPal and Uphold two moderately relevant examples, advertise free basic transfers as a key selling point.

[Bhuz]

There are two businesses here:

1. Payments
2. Exchange
...

What about differentiate the Payments business in
A: user to user (lower fee nexto to 0, if not 0 at all)
B: user to merchant (higher fee)

There will be need of a new account type for merchant, with different setting on fees.
And maybe also some pros attached to this new type of account...

Would be this feasible ?!

[fav]

The two businesses are  fairly independent.  High transfer fees will not impact the Exchange business and High exchange fees will not impact the payment business.

...whatever the fees are set to are unlikely to impact the decentralized exchange business.

Yunbi may prove to be the exception. But why then did they actively seek to set their BTS withdrawal fee lower and advertise it as a benefit unless they felt high transfer fees impacted their centralized exchange business?

• Lowered the withdrawal fee to 10 BTS!

they get 80% back of their tx fees anyways. that's why the can do it.

Yes... I understand that.

The point is if the high transfer fees didn't impact their exchange business they'd charge the standard transfer fee and keep the difference.  But obviously they feel their exchange users care about transfer fees so they pass their LTM discount onto the customers and make their revenue from trading fees instead.

do you know that for sure or is this just another assumption? yunbi is only operatively working since a few days, they're far behind every other working exchange. that's why there's a need for promotion in my opinion.

[Empirical1.2]

The two businesses are  fairly independent.  High transfer fees will not impact the Exchange business and High exchange fees will not impact the payment business.

...whatever the fees are set to are unlikely to impact the decentralized exchange business.

Yunbi may prove to be the exception. But why then did they actively seek to set their BTS withdrawal fee lower and advertise it as a benefit unless they felt high transfer fees impacted their centralized exchange business?

• Lowered the withdrawal fee to 10 BTS!

they get 80% back of their tx fees anyways. that's why the can do it.

Yes... I understand that.

The point is if the high transfer fees didn't impact their exchange business they'd charge the standard transfer fee and keep the difference.  But obviously they feel their exchange users care about transfer fees so they pass their LTM discount onto the customers and make their revenue from trading fees instead.

[jakub]

Similarly if you're charging more than customers are willing to pay for basic transfers everything after is moot.

Who are you to know that? How do you know that $0.15 is "more than customers are willing to pay for basic transfers"?

Imagine two customers:

Customer A way of thinking:
I've spent over $100 this month for online shopping and I can't be really bothered too much whether I've paid $1 extra for the transfer fees or just $.25 extra. This makes no f** difference me.

Customer B way of thinking:
I've spent over $100 this month for online shopping but wait a minute..., what? I am now really pissed off that I needed to pay $1 extra for the transfer fees. If it was $.25 that would be fine but $1? No way. They f*** me by $0.75. I'm not gonna use it any more.

And now tell me, @Empirical1.2, how much would you bet that in a random sample of 1000 people you would find more B-type customers than A-type customers?

Apparently PayPal can, that's why they don't charge for basic transfers to friends and family. "Send or receive money between friends and family and we won’t charge you anything,"

PayPal does it because it can and because it does not do any damage to their core business or referral program.
And PayPal doing this does not mean that if it was not free, people would not do it. So there is no logic in your argument.

[fav]

The two businesses are  fairly independent.  High transfer fees will not impact the Exchange business and High exchange fees will not impact the payment business.

...whatever the fees are set to are unlikely to impact the decentralized exchange business.

Yunbi may prove to be the exception. But why then did they actively seek to set their BTS withdrawal fee lower and advertise it as a benefit unless they felt high transfer fees impacted their centralized exchange business?

• Lowered the withdrawal fee to 10 BTS!

they get 80% back of their tx fees anyways. that's why the can do it.

[Empirical1.2]

The two businesses are  fairly independent.  High transfer fees will not impact the Exchange business and High exchange fees will not impact the payment business.

...whatever the fees are set to are unlikely to impact the decentralized exchange business.

Yunbi may prove to be the exception. But why then did they actively seek to set their BTS withdrawal fee lower and advertise it as a benefit unless they felt high transfer fees impacted their centralized exchange business?

• Lowered the withdrawal fee to 10 BTS!

[bytemaster]

There are two businesses here:

1. Payments
2. Exchange

The two businesses are  fairly independent.  High transfer fees will not impact the Exchange business and High exchange fees will not impact the payment business.

Likewise, low payment fees will not help boost the exchange business nor will low exchange fees help boost the payment business.  I guess technically, there is some overlap of migrating users onto the platform.

So if we were to completely remove the Exchange from the system, how would we grow as a Payment network?  We would have to charge fees on transfers. 

Setting those fees is more of an art than science, but whatever the fees are set to are unlikely to impact the decentralized exchange business.

[Empirical1.2]

@carpet ride
How do you get merchants to begin with?

You only get merchants if you have some users.

How do you get users?

Only if you have network effect.

How do you get network effect?

By creating an effective referral program. An effective referral program will attract marketers and wallets that live from the referral fee. If you remove that from the equation, how do you gain network effect? A referral program on 2% of the traders will not have as much transaction as on 100% of the users, I presume.

I would say one of the ways to start to gain merchant adoption is to get picked up by payment processors. As I mentioned earlier in the thread, expanding processor, Coinify might be a good start, they accept 16 blockchain tokens including BitUSD competitors NuBIts and TetherUSD. https://news.coinify.com/coinify-merchants-can-now-accept-16-blockchain-currencies/

As for the rest of your reasoning, I disagree. That's like saying we need to charge $20 for cups of coffee otherwise the referral program won't work and we won't generate network effect. Unfortunately people won't pay $20 for a cup of coffee, so everything else falls apart. Similarly if you're charging more than customers are willing to pay for basic transfers everything after is moot.

Can you imagine a person who can afford to make 10 online purchases a month and at the same time cannot afford $1 to pay for transfer fees?
Why are we so fixated to satisfy this non-existent customer? Just to maintain the perception of being cheap?

Apparently PayPal can, that's why they don't charge for basic transfers to friends and family. "Send or receive money between friends and family and we won’t charge you anything,"

There's clearly a difference in the market between sending tokens back and forth and doing something more useful with it like making a purchase/currency conversion etc.

In an ideal world you would do what payment processors do (including crypto payment processors) and make distinctions between merchant accounts and individual accounts.

Then when customers do something useful to them like make a purchase, they will pay a larger fee, which will often be hidden in the purchase price (which will still be cheaper than competitors)

Uphold (previously BitReserve) which has 'supposedly' done >$0.5 Billion transfers this last year on their centralized BitAssets advertises "0% Free & Instant. Move, convert and hold your money. Instant and free, for any member, anywhere."
https://uphold.com/


BitAssets though are at least a useful product so there is some argument for charging higher transfer fees for those.  I would consider increasing the transfer fee for a specific BitAsset, like BitSilver/BitGold to $0.3. By your theory that would incentive wallet providers and referrers to promote BitSilver more than other BitAssets and if customers are price insensitive in that range then BitSilver should gain network effect very fast.

In my opinion, we still need a sizeable transfer fees, not nescessary 20 cents, but it should be at least 5-10 cents so a wallet provider has an incentive to run its business.

Yeah, I understand that it can't realistically be much cheaper than 5 cents at this stage.

[jakub]

I think that adding the referral system to the trading fees is a good idea, so the referral can earn money when one of their referred users trades. However, in the realworld  only maybe 1-2% of all users are active traders, the rest are casual users.

Please tell me, if the transfer fee is set to next to zero - what is the incentive for a wallet/payment provider to refer new users?

Casual users (98% of the userbase) are only interested in using their wallet to transfer money around, much like Paypal. They use their wallet to pay Merchants.

Under the new system, it's almost impossible to sustain a wallet/payment provider business. Only 2% of all referred users by this wallet provider are traders, the rest will only use the "money transfer" option.

In my opinion, we still need a sizeable transfer fees, not nescessary 20 cents, but it should be at least 5-10 cents so a wallet provider has an incentive to run its business.

Also, under the current system, people have an incentive to buy a lifetime upgrade, and the referral gets parts of this too. The fee must be high enough that the user is still incentivized to buy their LT upgrade.

How will we get main stream users when there's no incentive to run a wallet/payment service for the common users? I'm not talking about traders.

lowering transfer fees below $0.10 -> there is no incentive for LT upgrade for non-traders -> the referral program's incentive becomes weak -> our offer for merchants becomes less attractive -> merchants are not interested -> SmartCoins are useless because there is not much you can buy with them

In other words, we reach these two "goals":
- we deprive ourselves of an income stream
- we undermine our core product (i.e. SmartCoins) and our core incentive scheme (i.e. the referral program)

And all this just to satisfy this imaginary customer group: people who do online shopping on a regular basis but cannot afford to spend $1 a month for transfer fees.
How can we devise our pricing strategy if we have not put any effort into defining who our target customer is.

Can you imagine a person who can afford to make 10 online purchases a month and at the same time cannot afford $1 to pay for transfer fees?
Why are we so fixated to satisfy this non-existent customer? Just to maintain the perception of being cheap?

[mindphlux]

@carpet ride
How do you get merchants to begin with?

You only get merchants if you have some users.

How do you get users?

Only if you have network effect.

How do you get network effect?

By creating an effective referral program. An effective referral program will attract marketers and wallets that live from the referral fee. If you remove that from the equation, how do you gain network effect? A referral program on 2% of the traders will not have as much transaction as on 100% of the users, I presume.