Fintech: Free to Paid Model Communication Strategy

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Case Studies - Fintech Brands: Free to Paid Models Part One

TeachStreet is a US-based platform that began offering teaching and classroom support and then expanded to offering financial structures that moved from free to paid at the end of the 2000s. Monese is a UK-based challenger bank that was forced to alter a free service to include fees when used beyond a certain threshold. A thorough exploration of information in the public sphere failed to uncover two well-explored cases US-based fintech that underwent a transition from free to charged services. Some older sources and a UK case study was required to provide the two case studies below.

Case Study: TeachStreet

  • Seattle-based TeachStreet is an online teacher and classes-oriented payment platform that transitioned from free to paid services.
  • A link can be found here.
  • Free model: TeachStreet began as a small platform with free services and then grew into a paid platform.
  • Communicating with the customers: The founder outlined 5 lessons from the transitions with examples from TeachStreet's case:
  • Outcome: Free street succeeded in the transition and grew, eventually being purchased by Amazon.

Case Study: Monese

  • Monese is a UK based "challenger bank" that offers a range of services from debit cards to credit services to savings accounts.
  • A link can be found here.
  • Free Service: Monese maintains a wide range of services including free debit cards.
    • One checking model offered free financial services up to a certain number of uses and then switched to a charge model.
    • Monese observed that users would often use the free services up to the limit and then stop using the accounts altogether.
    • Monese chose to phase out this charge model in exchange for a "free" checking account set clear limits on free services before levying fees, but without altering the customer's account type.
  • Communicating with the customers: by setting clear limits on customer privileges and reducing confusion in the pricing and the extent of the services offers before charges set in the bank regained trust and recovered.
  • Outcome: Monese is now growing and offering new services while fostering and preserving a strong revenue stream from both free and premium debt card customers.

Research Strategies:

Your research team found many case studies of companies that offered both free and paid services and explored strategies for managing a conversion from one to the other. More than one of these case studies included US fintech that offered the free services for a limited time before transitioning customers to paid services. However, in all of these latter cases, the companies had made the upcoming transition clear to customers before the free services began. It was our understanding that these examples would not be of use in this examination. When we sought examples of fintech companies performing this transition later in their growth, we found no well-documented examples that were both US-based and that had been covered by recent sources (as a general rule, your researchers attempt to focus all research on sources published within the last 24 months.)

Our research began with market research and business press sources ranging from Markets and Markets and IBIS World through Fortune and Business Insider. When those failed we looked at case-study-centric publications including those cited in this brief, but excluding older and non-US case studies. Finally, we explored less traditional sources for case studies such as business advice and consultancy sources and academic reviews of fintech companies. None of these research strategies revealed appropriate case studies.

At this point we expanded the scope of our research, looking at non-US case studies in the belief that the European fintech environment may not be too different from the US market to allow parallels to be drawn. This strategy yielded the UK example of Monese cited above.

Finally, we altered the scope of our research again and discovered the well-explored and lesson-rich case of the TeachStreet transition. Although more recent documentation of the transition does not seem to exist in the public sphere, the older sources offered many useful insights into the company's successful transition from free services to paid services.