How a coin got back into the market

In Hong Kong, more than 6 billion Hong Kong dollars of coins are left idle in the hands of citizens every year and have not returned to the market for circulation. After citizens get coins, they often accumulate them due to the inconvenience of carrying them. Although merchants need coins for change, they are reluctant to accept large amounts of coins for payment due to high counting and storage costs. Three young people, Rong Nan, Liu Gangcheng and Leslie Cheung, aimed at the business opportunities, founded Heycoins, developed coin self-service terminals, and built the "O2O2O" coin business model.

The coins in the user's hands (Offline coins) are collected through the self-service terminal, converted into electronic information (Online information), and exchanged to different channels (Offline shopping), such as exchanged into banknotes, recharged to IC Cards, donate to charities, add value to online payment platforms, or buy vouchers in shopping malls, etc. By recycling, these hidden coin resources are reused.

In February 2016, the Heycoins project joined the Hong Kong Entrepreneurship Team as one of the Hong Kong Cyberport Incubation Project CCMF (Cyberport Creative Micro Fund), and received 100,000 HKD start-up funds from Cyberport. Shortly after being interviewed by "CEConline", Rong Nan revealed another good news. The project participated in the "DBS Social Innovation Program 2016" event held by DBS Bank in Singapore, and successfully entered the top five and received a capital investment of 450,000 Hong Kong dollars.

Designing a win-win business model

During college, when an exchange student friend was leaving, he gave Liu Gangcheng a large box of coins, which he accumulated over the semester of. Holding this box of deposited coins, Liu Gangcheng was at a loss, obviously it was valuable money, but he didn't know how to spend it conveniently. He and Rong Nan found that most of their classmates and friends had encountered similar problems, so they brought in Leslie Cheung, who is engaged in the Internet of Things and software development, to develop a coin self-service terminal together, and designed a business model to put these idle The coin is brought back to the market, regenerating its value so that all partners can benefit from it.

When a citizen's coin is put into the coin machine, an electronic or paper receipt will be generated. With this receipt, you can exchange banknotes, go to online and offline stores to buy goods directly, or recharge into IC cards such as Octopus and bank cards, or donate to charities such as Orbis and Oxfam.

Although the Hong Kong Monetary Authority is implementing a coin collection scheme, the coverage is low, with only two cash registers and limited service hours, overlapping with the working hours of the public. After the business model runs smoothly, on the one hand, it provides convenience for citizens to exchange coins; on the other hand, it can reduce the pressure on the government to mint coins; in addition, it also opens up channels for the cooperation of merchants.

In this business model, profit comes from two parts. First, when users add value of coins to IC cards and exchange banknotes, a certain handling fee is charged to users, because these two services provide users with convenience. In addition, when donating to charities, adding value to online payment platforms, and purchasing or exchanging vouchers for merchants, commissions are charged to cooperative merchants instead of charging users.

In the Internet age that has become accustomed to free benefits, the charging model is still adopted. Will users and partners accept it? Rongnan's answer is that although the free business model is popular with consumers, it does not mean that the quality of the service will be better. "Consumers have different needs. Some focus on price, while others focus on service quality. For example, taxi software, some choose Uber, and some choose Shenzhou. The services provided by these two companies are different, and the prices are completely different. , but each has its own market. Internet business models with different prices have classified Internet companies into different levels, and whether to adopt a paid model or a free model, I think it is necessary to make a decision based on my own business model.”

Market research to verify the idea

The preliminary idea has, whether it is feasible or not, needs to be verified by the market. Team members did a series of market research, gradually turned vague ideas into clear work steps, and constantly adjusted the focus and pace of work.

Initially, they thought of adding value to the collected coins to IC cards such as Octopus, or converting them into vouchers for supermarkets such as Parknshop. Since both the product and business model were in their infancy, merchants took a wait-and-see attitude and had to change their strategy and find another partner. Fortunately, some charities such as Oxfam, e-wallets such as T&G, KISS, etc. have given support and started a win-win cooperation.

When the products and models were further matured, large merchants such as Parknshop joined in one after another, and Heycoins was able to further improve the business model: the merchants' whole-value vouchers were used to exchange the coins in the hands of citizens, and then the coins were exchanged for coins in the hands of citizens. After packaging, transfer to retail stores that are in desperate need of coins.

The initial fee charged to the user is 5%, and later adjusted to charge the single digit of the coins exchanged by the user and the amount after the decimal point, that is, if a user invests 138.8 Hong Kong dollars, then the The handling fee is 8.8; another example is 169.9, then the handling fee is 9.9 Hong Kong dollars. The advantages of doing this are: the more coins you exchange, the smaller the service fee will be; the whole amount of vouchers are used for exchanging, which is convenient and fast; most users find it troublesome and will not count how many coins they have. Habits, so that users accept this way of charging fees.

Whether the handling fee is charged or not, and how much is charged, is not something that comes out of my head, but is determined according to the research results. In the early stage, they precisely positioned users as Hong Kong post-secondary education (higher education) students. In a university dormitory, they spent 7 days exchanging with students to understand the habits of students using coins, their willingness to use services and pay fees. They constantly adjust the processing fee to see what is acceptable to students. In the end, 145 students completed the transaction and all paid the fee. 80% of them pay a 5% fee and 20% pay a 3% fee. After the survey results came out, the fee amount was set at 5%.

"When we have an idea, we will first conduct research or tests to see if the idea is feasible. Only after it is confirmed that it is feasible will we start the next step of research and operation." Graduated from City University of Hong Kong Liu Gangcheng, a marketing major, said, "For a new start-up company, you must do research, and you can avoid a lot of detours."

From the very beginning, Heycoins has paid great attention to its brand image, which is also the reason key to the success of its business model. They're already talking about partnerships with charities, like going to campus for fundraisers. Taking this opportunity, on the one hand, let potential users know more about the coin machine and increase the visibility of the company, on the other hand, it also shows the company's social responsibility to win their trust.

The production of the coin machine is completed in Shenzhen, thanks to the most convenient manufacturing facility in the world, at a cost of only about US$2,000. After the brand is established, coin machines will be placed in shopping malls and supermarkets that are closer to the living environment of citizens, so that they can exchange money easily. Hong Kong has a relatively high density of living, with tens of thousands of people often living in a community. They are not going to put a machine in every community or every supermarket, but to cover the whole of Hong Kong with a point-to-surface and a circle with a radius.

For the future of Heycoins, the team's vision is to diversify the coin machine and develop more functions, such as paying utility bills, telephone bills, and even buying train tickets; The payment platform is convenient for users to add coins to their electronic payment wallet. "But in Hong Kong, the minimum deposit for establishing a payment platform requires 15 million Hong Kong dollars. We do not have the strength to do this for the time being, but these are our One of the possible development directions in the future." Rongnan said.