Hi, from what I understand your question is with respect to the programme fees earned by Zaggle and whether that they bear the CoF
I’m directly quoting the mgmt from this quarter concall on what they said wrt the programme fees
To your second question, what is the program fee and platform fee. Platform fees largely are
software fees that we charge as the SaaS fees. On the program fees, a very large component of
program fees is the interchange that is generated on every card swipe. It also includes some
incentives that we get from banks and networks like Visa, Rupay, Mastercard, etc., for the
volume of spends that we generate.
Since Zaggle is in the business of spend management they help the employer who is issuing the credit card to their employee for various kinds of spends be it food, travel, leisure etc the particular card issued by zaggle would help the employer to track the spends by each employee more intuitively and also catch any bogus transactions which is not the case with a non-zaggle credit card.
Earlier the management has clarified that they earn about 90% of the interchange that is generated on every card swipe.
Now within this programme fees line they have a cashback & incentive line item as explained by mangement in the first screenshot that you have attached. This cashback line item is actually this prepaid component that they talked about earlier. So from what the management has said it is safe to deduce that zaggle bears the cost of these cashbacks and other incentives given to the employee on swiping of their cards, this encourages the card holder to spend more thus generating more programme fees for them.
Now, I don’t think this component is big enough to consider it as a NBFC so to say and since these cashbacks and incentives are I believe seasonal in nature and might as well be reduced in the future once the company has a bigger customer base.
Disc: invested, biased.
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