In today's rapidly evolving world of financial technology, companies like Sparados have developed unique revenue models that extend beyond traditional subscription-based income, leveraging transaction fees and currency conversion profits.
Subscription revenue: A smaller but fundamental revenue stream
For many fintech companies, the subscription model serves as the foundation for revenue. Typically, subscription revenues for companies like Sparados, which offer financial management solutions, come from usage fees and account fees. However, subscription income accounts for only about 20% of total revenues. While traditional SaaS (Software as a Service) companies heavily rely on subscription fees, Sparados supplements its earnings through other, more profitable revenue streams, enabling them to maintain low subscription prices and attract a larger user base to their platform.
Transaction volume fees: The main revenue driver
One of the key sources of revenue for Sparados is the income generated from transaction volumes. In a standard transaction, the full amount goes through an acquirer before being distributed among the various parties involved in processing the payment:
Acquirer: The acquirer processes the payment for the merchant. They keep a portion of the transaction and forward the remaining amount to the payment network.
MasterCard or Visa: In transactions processed through major payment networks like MasterCard, the acquirer passes a portion of the fee to MasterCard, which also retains part of the funds and then passes some on to the issuing bank.
Issuing Bank: The bank that issued the card to the user receives a part of the transaction fee and pays the technology provider, such as Sparados, that facilitates the transaction.
Sparados earns its revenue from transactions through this chain. The percentage of earnings can vary significantly depending on the type of transaction. For domestic transactions, Sparados earns around 0.2% of the total transaction volume, while international transactions yield higher rates ranging from 0.5% to 1.2%. Revenue from transactions constitutes approximately 45% of Sparados' total income, serving as a solid profit driver and motivating the company to support users in executing transactions worldwide.
Currency exchange fees: Profits on international transactions
Sparados also generates revenue from currency exchange fees applied when users make purchases or transfers in foreign currencies. Currency exchange fees account for about 28% of the company's income. When users conduct transactions in a foreign currency, Sparados charges a fee for converting the funds to the currency required to complete the transaction, allowing the company to profit from international spending.
Additional revenue sources: ATM fees, One-time fees, and customization services
In addition to subscriptions, transaction fees, and currency conversion, Sparados earns revenue from various one-time fees, ATM withdrawal fees, and customization services for its platform. ATM fees account for about 2% of the total income, while one-time fees and charges for customizing products make up approximately 5% of the overall revenue. These smaller streams of income provide additional value for users while contributing to the company’s overall financial performance. By offering customization, ATM withdrawals, and unique features, Sparados can provide flexible and tailored solutions for users who seek more than just a standard package. These fees also cover the costs of operating and maintaining the platform, helping Sparados keep subscription prices low.
Maintaining low subscription costs: The advantage of a diversified revenue model
Since subscription revenue constitutes only a small fraction of total income, Sparados can afford to maintain low subscription fees, enhancing the platform's appeal to budget-conscious users. The diversified revenue model allows Sparados to attract a broad user base with affordable subscriptions while relying on transaction fees, exchange fees, ATM fees, and other ancillary charges as primary sources of income.
By providing key services such as card management, currency conversion, and international transactions, Sparados encourages users to frequently engage with the platform, increasing transaction volumes that ultimately generate their revenue.
Summary: A strong and resilient revenue model
Sparados exemplifies a modern fintech company that utilizes various revenue sources to build a profitable and stable business model. By combining subscription fees, transaction volume fees, currency exchange fees, ATM fees, and one-time fees, Sparados ensures a consistent stream of income while keeping subscription prices low for users. As the company continues to grow, its diversified revenue model serves as a solid foundation, enabling effective competition in the fintech market and adaptation to changing market conditions.
