P2P Currency Opportunity Analysis

Person – to – Person Currency Exchange

Julia KuznetsovCara Nichole Maesano

Valentin Martinez Sepulveda – Team Leader

Stanford Venture Lab 2012 – P2P Currency Exchange App

Stanford Venture Lab 2012 - P2P Currency Exchange App

Introduction

With the rise of low-cost airfare, trains, and inexpensive hotels and hostels, foreign travel has never been more cost-effective.

So why, when it comes to travel money and foreign exchange, are we content to lose sizable amounts just for the privilege of spending our cash overseas?

Of course it's always an option to change your money at an airport, train or ferry terminal. However, these venues often offer the least competitive rate. Currency exchange counters and foreign ATMs can charge you anywhere from 2%-15% for the privilege of changing your currency by saddling you with minimum charges, flat fee exchanges, and handling fees.

However, with some forward thinking we can capitalize on the best foreign currency exchange rates by using the P2P Currency Exchange App offered by our startup.

Stanford Venture Lab 2012 - P2P Currency Exchange App

Our Product Offering:

Our offering, P2P Currency App, is a full-featured website, Android, and iPhone application that enables users to connect with other members of their local community to exchange currencies at the current international exchange rate, without having to pay commissions and flat fees imposed by traditional currency-exchange channels.

We are targeting consumer and business travellers who want to save money by bypassing traditional currency exchange vendors.

Stanford Venture Lab 2012- P2P Currency Exchange App

Opportunity Analysis Strategy:

We created a survey to test the value proposition with peers, family members, and colleagues, and received a statistically significant amount of feedback that has enabled us to strategically pivot our initial product idea. The demographics of our survey respondents were as follows:

81 total respondents to online survey, 5 face-to-face interviews

24% Women

76% Men

24% Women


Opportunity Analysis Results

Geographic Location of Survey Respondents:

88.9% of respondents own a smartphone with monthly data service



Frequency of Currency Exchange for Work/Leisure:

Current Method of Currency Exchange:



When asked about how they feel regarding currency exchange commissions and fees: 79% of respondents answered “ I understand that they have to charge commissions but I think they are usually too expensive,” 21% of respondents answered“I don’t have a problem paying commissions and I think they are usually reasonable,”



When posed the following question to our respondents and we discovered an apprehension we weren’t previously aware of:

John is in London at Tower Bridge and is planning on going to Paris for the weekend. He needs to exchange Pounds for Euros. He’s thinking of exchanging his currency at the airport at a Currency Exchange Office even though he knows he’s going to lose a bit of money due to commissions. Bill lives in London in Canary Wharf. He came back a few weeks ago from a one week trip to Paris. To his surprise he spent a lot less than he had thought. But now he’s stuck with 300 euros. But he doesn’t want to exchange them at the bank because he knows that commissions are high. He thinks he’ll keep them for his next trip to Paris.

John and Bill are informed that a new smartphone application enables for them to insert their currency request and see currency requests from other users in their area thanks to a geolocalisation tool. Bill inserts his request ‘I have 300 euros and want pounds.’ John sees that Bill is in Canary Wharf and is selling 300 euros. They can compare the price of the currency at the spot and it’s just the amount he needs for his weekend in Paris. He decides to contact Bill through the application and offers to buy his 300 euros for the current market price. They decide to meet at a coffee shop near Tower Bridge and exchange their currencies. They are both happy to not have paid any brokers, commissions, or fees for the transaction.

What do you think about this solution?

80.8% It’s a win-win situation! Great idea – No more commissions!9.9% This is a great tool! And it can also enable to meet people3.7% I wish such an application existed because I travel a lot and could be saving a lot!55.6% This seems a bit dangerous. How can you trust strangers, especially when cash is involved?37% It seems like a bit of a hassle for saving so little.


OAP: Major Takeaways

Is this a viable product opportunity? Would users use it?

A majority of users are interested in using our product when it is available. They are attracted to the potential to save money when exchanging currency.

If so, how are they currently solving it and how much do they pay for that solution? Are they interested in your solution?

We discovered that our potential users are currently using ATMs and Currency Exchange counters to exchange currency when travelling, and are interested in saving money by finding a more affordable solution. They would be interested in utilizing P2P Currency once available to save money in the long-term.

Are consumers willing to pay for the solution?Yes, the 5 respondents we interviewed expressed that they would be willing to purchase our app on the iPhone or Android App store if it were to cost $3.99, or to purchase access to our website for the same cost.


Product Direction Pivot as a Result of Customer Feedback

Major Point of FrictionThe majority of the respondents surveyed expressed hesitation regarding the security of the product – including authenticity of the currency and the potential use of fraudulent/counterfeit bills as well as the personal safety of consumers when approaching and leaving the place of exchange.

Based on these expressions of hesitation surrounding the security of the product, we have decided to alter our product to offer a more secure transaction environment. Users will be able to Facebook or Google Connect, which will enable them to, when searching for currency exchange partners, facilitate meetings with friends, family, colleagues, and the friends of trusted contacts, which will act to decrease the chance of fraud and to lift accountability.

We also plan to integrate functionality that enables users to rate completed currency transactions, much like eBay. This way, users will develop a reliability and safety rating over time, which enables others to filter by reliability and safety to ensure safer transactions going forward.


Market Analysis – Initial U.S. Launch

The first market we are interested in penetrating is the United States, as continental Europe, where our team is currently located, utilizes the Euro, a unified currency that is rarely exchanged. The United States, on the other hand, is home to tens of millions of affluent travellers who often exchange currency both for business and pleasure.

The World Tourism Organization reports that in 2010, receipts from international tourism for the United States alone totaled $103 Billion, with over 59.7 million tourist arrivals.

Financial implications: Many major purchases made abroad are made with credit cards because of the risk of carrying large sums and also the added insurance and customer-protection benefits that many financial institutions provide.

Modest Calculation:

If we were to, within three years, encourage a small amount of the incoming American tourist market (10%) to either purchase our app our subscribe to our web service, at a cost of $3.99 , the potential upside would be over $2,300,000.

In conjunction with American users who would purchase the app for their international travel abroad, we suspect this app to quickly penetrate the tens of millions of dollars.


Thank you!

P2P Currency Opportunity Analysis

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