Author Topic: Help keep transfer fees to save the referral system and help Bitshares grow!  (Read 15453 times)

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jakub

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Yes I say look at crypto and relevant competitors, valuable shareholder feedback and possibly a price survey to determine the acceptable upper limits of the transfer fees as a good starting point.
In normal circumstances I would agree with it - we should get in line with our competitors, not try to invent our own way.

But these are not normal circumstances - we have a referral program which we think is brilliant and which is truly unique, no other competitor has it.
And to support this unique referral program we need a unique pricing strategy, one which is driven by the referral program businesses, not by our competitors or our feelings about "acceptable" price levels.

Our referral program is unique -> the pricing strategy needs to be unique as well to match it

In other words, we should either fully trust the referral program (including its ability to figure out the best pricing strategy) or scrap it altogether.
(And when I say  "pricing strategy" I mean both the price levels and decisions how to hide the fees or keep them visible)

@bytemaster, please listen to your sales force (i.e. the referral program businesses), not to a random Joe you meet on plane.
If the sales people say they can sell at these prices (and without hiding them), at least let's give them a chance.
If they got it wrong, they will be the ones who will cry the loudest to lower the fees or hide them.
« Last Edit: November 10, 2015, 07:25:02 am by jakub »

Offline BTSdac

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Offline merivercap

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I think we can think of making p2p fees free down the road and have some merchant identification system, but I think it's a bit early to focus on cost rather than value. Fees help us validate value propositions and identify certain demographics that really need this solution.  It may be that we go after the unbanked/anti-bank crowd who may not be sensitive to fees.  Otherwise most people will use Square cash, Paypal or Venmo for p2p transactions and for now most people are probably happy with those solutions.   We can go after them after we get our foot in the door with more targeted demographics who we'll be solving a real problem for.

Merchants won't really care that much if someone  is a LTM or not.. 20 cents is already cheap.  If there was an easy way to give back 16 cents per transaction after every 10 transactions ($1.60) to a LTM consumer as part of a loyalty program I'm sure merchants will do it and if all merchants did that then consumers will have extra incentive to upgrade.  Otherwise using the LTM as a requirement to participate in the referral program should be enough to encourage users to upgrade.    Lastly in p2p transactions users will recognize there is a 20 cent fee so it's up to the giver/receiver to determine who pays it...people may end up splitting the fee... also if someone likes our system and does enough p2p transactions, the person may be motivated to upgrade and cover the fee when sending his friends money and likewise in the future his friends might reciprocate and cover the 20 cent fees until they decide to upgrade.   

It's probably much easier to keep the transfer fees as they are at 20 cents and come back when we have thousands of actual data points from real consumers and real merchant and as Steve Blank says 'Get out of the building..'  we plan to do that... and a lot of the discussion is probably going to be about 'What is this Bitshares/blockchain thing?'  'How can I trust it?" " How do I buy BitUSD?"  "How do I get out?"  etc and the actual conversations will have little to do with fees. 

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Offline bytemaster

Quote
The fee for the "user to merchant" transaction is paid by the user, so from the merchant point of view, a cut from that fee is an income. (or I am missing something)

The user doesn't see the fee (shouldn't see the fee).  If the user sees the fee, then giving a cut to the merchant is the same as not giving a cut to the merchant and having the merchant charge a higher price.
If the user sees the fee, then the merchant has incentive to create P2P accounts rather than a merchant account.
If the user doesn't see the fee, then and the merchant "pays" the fee then the merchant still has incentive to create P2P accounts.

The only way to incentivise merchant identification is to make it more profitable for the merchant to identify themselves than not.  If they don't identify themselves they (and their customers) pay nothing (P2P fees are 0), therefore the only way to force merchants to identify themselves is to actually PAY THEM (charge negative fees).
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Offline Bhuz

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Considering we cannot share the fee with the merchant as an incentive because that is economically equivalent to simply lowering the fee.
Why you say that is equivalent to simply lowering the fee?
The fee for the "user to merchant" transaction is paid by the user, so from the merchant point of view, a cut from that fee is an income. (or I am missing something)
If the merchant uses that cut to lower the price of the product he is selling, then yes, is equivalent to lower that fee.
But the cut that the merchant would earn, could be used in a different way... just as a plus neat earn, or as a merchant fund for ads his business and attract new consumers --> more earning (ex: give huge discounts every month using the collected monthly fees)

So this gets to the real question, what is the value of a Life Time Membership to end users? The primary value must be Discounts offered by merchants. Merchants would offer every customer who is a LTM a discount on their products proportional to the savings the merchant is getting on fees.

Can we "force" the merchants to make discounts to LTM ?

Because the point was that we can not force the merchant to use a merchant account type, so we probably cannot neither force them to give discounts.

The point to add that fee income to merchant was just to make them willing to use a merchant account (since we cannot force them), because it will give them some advantage. (more earning or free fund for ads/discount, or anything else)
« Last Edit: November 09, 2015, 08:52:53 pm by Bhuz »

jakub

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Who are the professional referral program businesses? I'm only aware of Max Wright, who has both referral programme experience and good knowledge of BitShares. While I value & heavily weight his opinion in these matters it is just one.

Whoever they are, they are the ones who are in the best position to find the sweet spot for the pricing strategy as they realize this:
- if the price is too high, I earn more but the product is harder to sell (but at the same time the probability of LT upgrade is higher)
- if the price is too low, I earn less but the product is a bit easier to sell (but at the same time the probability of LT upgrade is lower)
So they have a natural incentive to come up with the best price not only for them but for all of us.

Currently we have Max Wright but you are right that finding a perfect consensus among multiple referral program operators might be difficult due to regional and cultural differences.

But maybe this is a simple solution to keep everyone happy: those of referral program operators who think the product is overpriced (and thus too difficult to sell) can always offer to prefund their newly acquired customers with their own money and this way compensate them, at least initially, for the steep pricing. This way they will lower their profits but will be able to sell more.
« Last Edit: November 09, 2015, 08:14:34 pm by jakub »

Offline SpiritofJefferson

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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 ?!

Well if we were to put a transaction cap per day on individual accounts (which I think bytemaster listed as a possible alternative), we could encourage merchants to buy lifetime memberships. The transaction cap per day should be reasonable so that everyday users can send, say, up to 10 transactions a day. If a merchant were to do more than that they could upgrade their membership to do more transactions a day. In the meantime though, I feel like we should focus on the exchange first and keep transaction fees for a while and adjust accordingly, but in the future we could for sure differentiate them in some similar way.

Offline bytemaster

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.

What about driving merchant to create and use merchant's accout type instead of normal one?
For "driving" I mean make the merchant account better than the normal one (from a merchant point of view ofc)

We should try to think and identify some particular features that almost all merchant would like to have, something that they need or that can be profitable for them also, and attach these features to the merchant account type.
I am sure we could find something like that...

As you already said, we could discriminate the new account type by
1. the number of allowed received transaction per hours/days or what fit best
or 2. relative number of received compared to sent
Edit: making a cap limit to the normal account, and unlimited to merchant

How prevent the problem of merchant using several normal account instead?
-thanks to the pros features they would get with the merchant type of account

For example the "high fee" for "user to merchant" transactions could be divided into 20%network - 60% referrer - 20% merchant (values only for example, idk what could be the best division)
The point is to redirect a small part of that fee to the merchant itself, making the merchant account type profitable.

The merchant at this point could even use that little earn to bring new costumers to him.
-He could deduct that fee from the price of the product he's selling
-or even collect the fees's monthly income to give huge discount on some products and attract new costumers

This could be a feature that merchant could be willing to have/use...we just need some others like this that make the merchant account very attractive for merchant!

Would love some thinking and discussion about all of this

Considering we cannot share the fee with the merchant as an incentive because that is economically equivalent to simply lowering the fee.  It boils down to simple economics, if we want merchants to self-identify they must be compensated. This means a new expense on the network. We cannot simply lower their fees or everyone would identify themselves as a merchant.

So lets consider the simple case of paying merchants.

1. A merchant must receive funds an order of magnitude more than they send funds (and have a diversity of accounts that they receive funds from)
2. Any account with a merchant profile is generating business for the network and should be rewarded along with the referrer of those users

The only way to reward both the referrer and the merchant in this case is dilution because the transfer in the P2P case is free. So the only problem that needs to be solved is the one of people "mining" by having fake merchant accounts.

One way of preventing "mining" is by only counting purchases by lifetime members. In this case, the lifetime membership fee would need to be divided among the following players:

1. Network
2. Registrar
3. Referrer
4. Affiliate
5. Merchants

Because an attacker can arrange for all of his accounts to qualify for 2, 3, and 4 the cost of a LTM for an attacker is only 1 and 5. If they are an attacker attempting to claim most of 5 for themselves, it leaves only 1.

In other words, we want merchants to incentivise users to upgrade to a lifetime member. The part of the LTM fee that goes to merchants would be a pool that is divided proportional to what percent of LTM accounts utilized each merchant.

So this gets to the real question, what is the value of a Life Time Membership to end users? The primary value must be Discounts offered by merchants. Merchants would offer every customer who is a LTM a discount on their products proportional to the savings the merchant is getting on fees. 

My conclusion from this is that the network should take 33% merchants should take 33% and referrers should take 33%. 

At the end of the day the Merchant is the one that wants to incentivise payment via BTS.

I am done rambling, not sure I have solved the problem.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline Empirical1.2

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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.

You say:
Let's set the price at a level acceptable by customers (in our unprofessional opinion) and if the referral program businesses say they don't have enough incentive to operate, so be it. Our judgement regarding pricing overrules the referral program businesses' judgment as they are not smart enough to realize that they won't sell much because the product is overpriced.


Yes I say look at crypto and relevant competitors, valuable shareholder feedback and possibly a price survey to determine the acceptable upper limits of the transfer fees as a good starting point.


And I say:
Let's set the price at a level recommended by the referral program businesses (in their professional opinion) and let's give them a chance to access whatever customers they can. If after a while they come back to us saying they can't sell because the product is overpriced, we will lower the price (but we will also lower their financial incentive) and we will see if it helps.

Who are the professional referral program businesses? I'm only aware of Max Wright, who has both referral programme experience and good knowledge of BitShares. While I value & heavily weight his opinion in these matters it is just one.

I've also said fine keep it high then...

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.


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.
Describe to me why would I want to "send the tokens back and forth" for other reasons than shopping, if I'm an online consumer (not a trader).

Just like on PayPal to 'Send or receive money between friends and family'
Or just for inter-account transfers.  (moving and transferring your money between your various accounts) like on Uphold  'Move and hold your money. Instant and free, for any member, anywhere.'

I'm also not advocating 'free'. I'm just pointing out that in crypto, BitAsset competitors and even PayPal, basic transfers usually have a low/free fee so relatively speaking $0.2 may be high.

Anyway, I think I've said as much as I can here for a while.

« Last Edit: November 09, 2015, 07:31:21 pm by Empirical1.2 »
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jakub

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(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.
OK, find me one referral business operator on this forum who supports your way of thinking.

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.
Describe to me why would I want to "send the tokens back and forth" for other reasons than shopping, if I'm an online consumer (not a trader).

Offline tonyk

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...., low payment fees will not help boost the exchange business nor will low exchange fees help boost the payment business. ..

Good you understand that!

And this is one of my several major points, up this thread!

Lack of arbitrage is the problem, isn't it. And this 'should' solves it.

Offline Bhuz

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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.

What about driving merchant to create and use merchant's accout type instead of normal one?
For "driving" I mean make the merchant account better than the normal one (from a merchant point of view ofc)

We should try to think and identify some particular features that almost all merchant would like to have, something that they need or that can be profitable for them also, and attach these features to the merchant account type.
I am sure we could find something like that...

As you already said, we could discriminate the new account type by
1. the number of allowed received transaction per hours/days or what fit best
or 2. relative number of received compared to sent
Edit: making a cap limit to the normal account, and unlimited to merchant

How prevent the problem of merchant using several normal account instead?
-thanks to the pros features they would get with the merchant type of account

For example the "high fee" for "user to merchant" transactions could be divided into 20%network - 60% referrer - 20% merchant (values only for example, idk what could be the best division)
The point is to redirect a small part of that fee to the merchant itself, making the merchant account type profitable.

The merchant at this point could even use that little earn to bring new costumers to him.
-He could deduct that fee from the price of the product he's selling
-or even collect the fees's monthly income to give huge discount on some products and attract new costumers

This could be a feature that merchant could be willing to have/use...we just need some others like this that make the merchant account very attractive for merchant!

Would love some thinking and discussion about all of this
« Last Edit: November 09, 2015, 07:05:55 pm by Bhuz »

Offline bytemaster

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.

You say:
Let's set the price at a level acceptable by customers (in our unprofessional opinion) and if the referral program businesses say they don't have enough incentive to operate, so be it. Our judgement regarding pricing overrules the referral program businesses' judgment as they are not smart enough to realize that they won't sell much because the product is overpriced.

And I say:
Let's set the price at a level recommended by the referral program businesses (in their professional opinion) and let's give them a chance to access whatever customers they can. If after a while they come back to us saying they can't sell because the product is overpriced, we will lower the price (but we will also lower their financial incentive) and we will see if it helps.

This is a great summary.  The people who should be setting prices are those who are building businesses and trying to attract customers.  If someone can create a business that convinces people to pay $0.20 for transfers then that is a huge win for everyone. If they conclude that despite all of their marketing no one will pay that, then they will need to come up with a new business model.

Lower fees will not generate new users on its own. No incentive, no advertising, no users.

The proper question to ask is how does BitShares incentivise adoption and investment in marketing and user acquisition. 
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

jakub

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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.

You say:
Let's set the price at a level acceptable by customers (in our unprofessional opinion) and if the referral program businesses say they don't have enough incentive to operate, so be it. Our judgement regarding pricing overrules the referral program businesses' judgment as they are not smart enough to realize that they won't sell much because the product is overpriced.

And I say:
Let's set the price at a level recommended by the referral program businesses (in their professional opinion) and let's give them a chance to access whatever customers they can. If after a while they come back to us saying they can't sell because the product is overpriced, we will lower the price (but we will also lower their financial incentive) and we will see if it helps.