Every new business that is serious about getting traction needs to figure out a user acquisition strategy. In a similar way, every new business (in the consumer internet space) that is serious about monetization needs to figure our a Wallet-acquisition strategy.

Wallet-Acquisition and Recurring Revenue Models

Every business seeking a revenue model has, at least, one segment of members in its ecosystem who will be paying the business. This monetizer segment could be some/all of the users, developers, ecosystem partners (e.g. paying for API access, etc.) or third-party advertisers.

When the monetizer is on a self-serve model (e.g. User on LinkedIn, Advertiser on Google AdWords), removing barriers to the transaction is critical to creating a repeatable model of billing.

To create a sustainable revenue model, especially in the case of consumer internet, startups need to figure a wallet-acquisition strategy. This essentially involves acquiring the monetizer’s payment details and creating a recurring charge model around that. Some examples of a recurring charge model include:

1. Subscription SaaS models

2. Credit card on file allowing for a one-click checkout, e.g. App Store, Amazon.com

In all these cases, having the wallet details (credit card, online wallet integration etc.) makes the payment decision and process frictionless leading to higher conversions to repeat payments/purchases. Owning a user’s wallet also helps a business command a greater transaction cut.

Creating an initial hook to give up the wallet details

This is probably the most difficult part of wallet acquisition. Wallet acquisition is not just about putting a set of features up there and creating a form to capture details. It requires:

1) Structuring a very clear and tangible incentive for the user to part with payment details

2) Creating the right levels of control for the user over her wallet information

3) Allaying security fears


Getting users to part with their payment information, especially for recurring deductions, is a challenge for most startups, and they typically create hooks and incentives for the users.

Facebook and Google give away free advertising credits to new advertisers to get their wallet details in. LinkedIn targets active users with an upgrade to a premium account with the first month free in exchange for the all-important payment details.

In a similar manner e-commerce, businesses offer incentives to users to get the first transaction done, have the credit card and email address on file and send notifications on an ongoing basis for repeat transactions, with the advantage of one-click checkout.


This is especially true in certain cases where the price or payment schedule is automated:

1) Recurring billing: In the SMB/Consumer SAAS space, billing is self-serve and recurring. In such cases, payers are more comfortable surrendering their payment details when they feel they have adequate control over changing or terminating payment schedules.

2) The actual price is unknown: In automated bidding mechanisms (AdWords, auction sites), the payer needs to have the right level of control to ensure a cap on price (e.g. maximum keyword CPC that an advertiser is willing to pay) as well as outflow (e.g. daily budget).


There is no easy win here. For some, simply having the right logos on your site makes them feel fine, for certain others, nothing short of a respected brand name can make them feel comfortable. This is a real challenge for early stage startups with an unknown brand. Cases like Blippy don’t help their cause either.

Getting incentives right

Incentives usually do not make sense unless you have a wallet acquisition strategy. Startups often make the mistake of offering incentives to create awareness and incite usage. However, if there is no wallet-acquisition tied into the first purchase, the user may not return for future transactions (especially in a heavily contested category). Unfortunately, e-commerce businesses are often valued (early stage VC) on a multiple of their transaction activity and resort to offering incentives to bump up transactions without any clear model for wallet-acquisition.

Wallet-ownership means good business

Apple and Amazon have built hugely successful recurring revenue models through wallet acquisition. Apple, today, has the highest number of stored consumer credit cards details for any company globally. Microsoft, itself, despite having been in the consumer business for all these years never acquired wallets till the launch of the Xbox. One of the reasons behind Microsoft buying Skype was the large number of wallet details that Skype had for its premium users. Clearly, wallet-acquisition is an important aspect of creating a recurring revenue model. Facebook realized it needed a wallet-acquisition strategy to monetize well on the mobile and not be dependent on the payment systems of Apple and Amazon and partnered with Bango to get access to payment accounts of consumers via their tech bills.

Every business loves a recurring revenue model, and a wallet-acquisition strategy is crucial to executing one.

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