Online ticket payment processor Picatic has the business model of a museumits customers are expected to pay, but the amount is at least partly up to the patron.
If clients pay only the 2.9% Picatic levies for Visa or MasterCard payments, the company makes no money, since this is the same fee Picatic pays to its own processor, Global Payments. Picatic urges customers to volunteer an additional amount to use its services.
"It may be zero, or more than the industry average, the option is on their side," says Jayesh Parmar, CEO and co-founder of Picatic.
Picatic's FairPay pricing imitative allows clients to pay what they want after their events are completed. Picatic has shed application fees, startup fees, transaction fees and service fees. Except for payment processing charges, all other charges are replaced by what amounts to a bonus paid by the event organizer.
The company's other services include an online event editor that allows organizers to promote events online and provide a means to pay for tickers. It also offers a crowdfunding option.
Picatic plans to allow PayPal payments in the near future, though Parmar did not disclose the base price it would charge for PayPal transactions. Picatic processes ticket payments, then distributes the funds to the event organizer, deducting the amount the organizer wishes to pay on top of payment processing fees.
The typical rate for contractors who provide a similar range of services is about 2.5% of the total revenue brought in by the event, along with a base rate of about $1 per ticket. Parmar did not disclose what Picatic generally gets from clients using FairPay, which it introduced this month. The company's strategy is to build repeat businesses with event organizersand to appeal to the event organizer's own sense of fairness.
There is a risk to Picatic that an organizer will pay nothing beyond payment processing fees, though Parmar is betting on the good will and satisfaction of Picatic's clients.
"If we help them have success it isn't just one event, but many events if we can get into a partnership and they come back to us," says Parmar.
The appeal of Picatic's model is it doesn't give event organizers the impression they are being nickel-and-dimed, says Nicole Sturgill, a research director at CEB TowerGroup.
"The organizer can look at what they got out of the event, how much they made and how much they want to give," Sturgill says. "It's not like the person buying the ticket is deciding what he or she is going to pay."
The risk of not being paid at all is mitigated since Picatic mostly works with other businesses, Sturgill says. "There is a level of responsibility there, it's a business relationship between Picatic and the client," she says.
The optional fee model has been used elsewhere in financial services. Green Dot, a prepaid card issuer, this year began testing a mobile bank account that lets customers decide whether to pay a monthly fee.
"Green Dot is slightly different in that they are going after consumers with a bank account instead of a business audience," Sturgill says. "Green Dot was not only getting rid of service fees, they were also offering a 'pay what you want' fee. They rolled that out in January and I've not heard much from them since on that."
The Green Dot bank account has "thousands" of users, said Brian Ruby, a spokesman for Green Dot, who added the program should come out of testing by early July. He would not disclose specific numbers.