For Ualá's prepaid card, should we emphasize cashback rewards to drive usage or limit rewards to keep fees low for merchants?

Introduction

The trade-off we're examining today is whether Ualá's prepaid card should emphasize cashback rewards to drive usage or limit rewards to keep fees low for merchants. This scenario involves balancing user acquisition and engagement against merchant costs and sustainability. I'll analyze this trade-off by considering the product ecosystem, stakeholder impacts, and potential outcomes.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking Ualá's revenue model might be a mix of interchange fees and merchant fees. Could you clarify our primary revenue streams and their relative importance?

Why it matters: Helps prioritize user growth vs. merchant retention Expected answer: Interchange fees are primary, merchant fees secondary Impact on approach: Would lean towards emphasizing cashback if interchange is dominant

• User Impact: Based on the prepaid nature of the card, I'm assuming our target users might be underbanked or younger demographics. Can you confirm our primary user segments and their price sensitivity?

Why it matters: Informs the potential impact of cashback on user acquisition and retention Expected answer: Primarily underbanked, price-sensitive users Impact on approach: Would suggest a more careful balance of cashback vs. fees

• Technical Feasibility: I'm thinking our current system might have limitations on customizing reward structures. What's our technical capability to implement complex cashback programs?

Why it matters: Determines the range of cashback options we can consider Expected answer: Basic capability, would require development for more complex programs Impact on approach: Might limit short-term cashback options, influencing the trade-off decision

• Resource Allocation: Given this trade-off's importance, I'm assuming we have a dedicated team. What resources (team size, budget) are available for implementing and managing the chosen strategy?

Why it matters: Affects the scale and complexity of solutions we can consider Expected answer: Small dedicated team, limited budget Impact on approach: Would favor simpler, more straightforward cashback or fee structures

• Timeline and Urgency: Considering market competition, I'm guessing this decision is time-sensitive. What's our timeline for implementation, and are there any upcoming market events we need to consider?

Why it matters: Influences the depth of analysis and testing we can perform Expected answer: Implementation needed within 3-6 months, ahead of competitor launch Impact on approach: Might necessitate a phased approach, starting with a simpler solution