DEXIT

1
DEXIT A MARKETING OPPORTUNITY

• Easier than cash, faster than debit

2
Content

• DEXIT the company
• Concept Technology and Benefits
• Demand
• Competitors
• Company concerns and the final decisions
• Target market
• Product
• Revenue
• Promotion

3
Dexit the company

• Formed as new company in 2001
• Started as private, became public in 2004
• Bell Canada as partner in 2004
• Get a stake in Canadas low-value cash
  transactions
• Deciding how and who to target with their service
• Before/After approach

4
Concept and Technology

• To provide easy fast payment through RFID
  technology
• Over the counter small cash payments.
• Tags held by consumers
• Readers on merchants counters
• Wireless link between reader and tag
• Withdraw money from consumers Dexit account

5
Benefits

• Benefits for merchants
• Lower cash-handling costs (both theft and
  shrinkage)
• Reduce line-ups
• Turn walk-aways into customers
• Reduced need to check for counterfeit money
• Benefits for consumers
• Faster than credit cards
• No more messing with coins
• Can track their transactions online

6
Demand

• Two prior attempts had shown an interest from
  both consumers and merchants
• Mondex and Scotiabank
• Canadians among the worlds heaviest users of
  electronic payment systems
• 350,000 retailers in Canada accepted payment via
  IDP in 2001
• 17,6 million monthly IDP users were counted in
  Canada in 2001

IDP Interac Direct Payment
7
Demand
Interac Direct Payment Transactions by Province
(in millions)

• Ontario (ON), Quebec (PQ) and British Columbia
  (BC) top three markets
• Toronto (ON) Accounting for close to 30 of their
  provinces respective debit transaction market.

8
Competitors

• Retailers that issued their own proprietary
  payment cards or gift cards
• Credit and Debit card issuers
• More towards Dexit than Dexit is towards them
• ExxonMobil Speedpass (1997) and Oyster (the new
  and developed)
• Both using RFID

9

• Company concerns and the final decisions

10
Product - Thoughts

• Confident on using RFID
• Consumers too accustomed to using cards?
• Key chain fob or other kind of gadget?

11
Product - Decision
12
Target market - Thoughts

• Target national or in a specific geographic area?
• Target group of individuals who were comfortable
  with newer technologies (Like the Dexit tag)?
• Who where the heavy users?
• Better for low-value transactions
• Target merchants based on the demographics and
  lifestyles of the consumers?

13
Target market - Decision

• Small target area within Toronto
• Targeting areas with a high consumer-to-merchant
  ratio
• Hospitals
• College campus
• Subway stations
• office towers
• Various take-away food and convenient shops
• Target a younger consumer base (students)
• Pendlers on their way to work (potential heavy
  users)?
• Should they have target another area/group?
• Public transportation
• Taxi
• Parking

14
Revenue model - Before launch

• Decision for finding revenue
• Merchants
• Transaction fee and how much?
• Set subscription fee?
• Consumers
• Fee for each transaction?
• Willing to pay if cost is transparent?

15
Revenue model - Solution

• Fees from merchants, based on a percentage of the
  transaction value.
• Consumers pay 1.5 each time they allocate new
  funds to the Dexit account.
• Licensing fees from organizations (royalties).
• Interest rates on prepaid accounts
• Income from sales of Dexit point-of-sale
  terminals, RFID tags/readers

16
Partners in crime

• In mid 2004 Dexit partnered with Bell
• Bell have exclusive rights to market and sell in
  Canada
• Getting access to Bells relations to 500.000
  merchants
• and 15 mill. customers.
• Leads to lower marketing costs
• Sales and Marketing costs having gone from almost
  1.5 million
• in Q2 2004 to less than 600.000 in Q2 2005)
• Licensing of system to other organizations

17
Promotion - Before launch

• Limited marketing budget
• Push or pull?
• Posters, TV, radio, newspaper, Webpage
• Hire sales force?

18
Promotion - Solution

• Posters in the geographical area of service
• Subway station, side of busses.
• Special offers using Dexits webpage
• Marketing surveys for existing customers
• Ineffective webpage (show the bugger)

19
SWOT - Not Forgot
STRENGTH Reliable system Propriety system B2B and B2C target market Bell (strong partner) Fast transactions High entry cost WEAKNESS Webpage not consumer-centric High consumer acquisition cost Expensive hardware for merchants High entry cost
OPPORTUNITY Licensing of system (Royalties) Possibility to port the system to online sales Profit by substitute the cash market with e-cash so big competitors dont see it as a threat Investors THREAT Adoption conservatism (Like Euro in DK) New entries Not yet reached critical mass (lack of awareness) Other technologies (mobile phones)
20
Wrap - Up

• The status of Dexit, today, is still uncertain.
• Only gained 20.000 consumers over the last 2
  years
• Only gained 460 new merchants since launch
• Many investors
• Their license agreements with Bell
• First-mover advantage in Canada
• Will they survive on the market?
• Have they done it right?

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