When we launched Kwedit Promise three months ago, we believed it would enable honest people who did not wish to use credit or debit cards to make on-line purchases of digital content without plastic. By doing so, not only would we empower consumers, but in a typical free-to-play/use experience where perhaps 2% of the audience ever makes a payment, we believed we could have a material impact on publishers' revenues, as well. It was all great in theory... we just didn’t know if it would work.
Two great entrepreneurs out of PayPal, George Lee and Yee Lee, had tried a similar concept called EZIOU previously and experienced repayment rates in the single digits, so we crossed our feathers and launched on Feb 3, 2010.
In the subsequent three months, we’ve processed Promises and payments from users across multiple on-line properties, and seen some fascinating results that we’re excited to share.
To date, over one-third of Promises have been repaid. That means when we divide the total value of repayments by the total value of Promises made since launch, we get a fraction that is greater than 33%. That fraction was just over 26% when TechCrunch reported it on March 12, and it continues to rise.
Why is it rising? Because Kwedit Promise successfully enables only honest consumers to make significant Promises. Consumers who fail to repay their initial small Promises get blocked. Only those who repay can make increasingly large Promises. Over time, larger Promises by honest actors overwhelm the smaller Promises that are not repaid.
Here’s more detail: a little less than 20% of initial Promises are repaid, but those Promises are small. Second Promises, which are larger, are repaid at a whopping 72% rate, and repayment rates on subsequent larger Promises are even higher.
This pattern yields a fascinating result: the bigger the Promise, the *higher* the repayment rate!
What’s equally fascinating is that similar patterns emerge across different properties serving different demographics.
Here are some other interesting facts: although most of our partners allow users 2 weeks to repay their Promises, 22% repay on the first day (!) and 66% repay within the first week.
And, although almost all users who repay their Promises do so within the allotted time, our ability to remind consumers has led some consumers to repay long after their due dates: one consumer finally repaid a Promise after 69 days!
Finally, all evidence suggests that Promises are made by users who were not previously using other payment methods. As a result, it’s clear that Kwedit Promise delivers new revenue to publishers.
Our detractors (and competitors) will conclude that the 80% who failed to repay their first Promise learned a bad lesson by “getting something for nothing”. Not surprisingly, I disagree. Those defaulters lost access to a system that is clearly valued by honest consumers.
With three months of data, it’s clear that Kwedit Promise works: it identifies and empowers the subset of players who have had the will and resources to make a payment, but have simply lacked a mechanism for doing so. We’re proud to serve them and the publishers whose goods they’re now able to purchase.
Quack on!
Danny Shader
