Global Fintech Interview with Sushil Prabhu, CEO and Chairman at Dropp

Please tell us about your journey into the micropayment technology industry?

In early 2000, I architected and launched a Peer-to-Peer payment platform for one of the top retail banks at the time. Since then, over the last 17 years, the founders of Dropp have developed a wide range of FinTech products for large investment banks and early startups as founders of a FinTech solution firm called OpenCrowd. Dropp is a spinout from OpenCrowd. In the last five years, our focus is building distributed ledger technology (blockchain technology) based payment products.

The concept of micropayments has been around since the late ’90s but in the last couple of years, a few factors have made micropayments a real need and feasible both in terms of technology and economics:.

• Significant growth in the digital economy: Over the last 20 years, digital services usage has increased exponentially across many industries, from media to cloud data to health. Post-pandemic, the use has even grown further. With the steady launch of new services, the world population is now even more comfortable with digital services ranging from video conferencing, e-learning, video streaming services to new experiences like virtual visits to the doctor. Digital life will continue to dramatically expand and will impact almost all aspects of daily living. We expect with the new demand a steady launch of new digital services purely out of necessity, let alone convenience. This will lead to a significant opportunity for technologies that support efficient monetization and low-friction acquisition of digital services by consumers.
• Consumer Need: Despite the tectonic shift to digital, there has been limited innovation in the monetization of digital services. A typical digital merchant either offers services to customers on a subscription basis or, in many cases, for free while displaying ads that provide a poor consumer experience. Privacy is increasingly becoming an issue. Both business models have reached a saturation point. Consumers are either overloaded with subscriptions, with many households just can’t afford them, or at least multiple subscriptions for similar services. We at Dropp believe that a “Pay-Per-Use” model, where customers only pay for what they use, can be a more appealing proposition. Most of us would love to read a news article for 20 cents or just watch an episode for 50 cents without committing to a long-term plan. As we analyzed this need, we came up with hundreds of use cases where consumers would love to buy in small portions. We believe there is a mega opportunity in this economy of micropayments.
• Technology matured: Distributed ledger technologies made payments easier as the ledger is specifically built to track the transfer of value and ownership. But in many distributed ledger technology or blockchain platforms, the transaction cost is very high, and the throughputs are anemic, making it impractical for microtransactions. Our initial motivation to build the platform came out of our development partnership with Hedera Hashgraph. A unique public distributed ledger network that is known for very low latency, high throughput, and low transaction costs. Many of the attributes of this network exactly match the requirements of micropayments. Right after the launch of the Hedera network, we started our work on the initial concept in early 2020. We saw the need for a micropayment platform built for mass adoption to leverage the security and transparency of distributed ledger technologies but should hide the complexity.

Most popular payment systems are meant for big-ticket items. They are not cost-effective for payments under $20, specifically under $5. They become economically infeasible for merchants to offer goods under $5.  The few micro-payment platforms out in the market are built on blockchain technologies are meant for payments in cryptocurrencies. We envisioned a service that the general population could use for everyday small value purchases, not just crypto fans. We designed a platform built for both Fiat ($USD initially) and Crypto.

We created the initial concept and shared it with some of our contacts in the media, payment & telecommunication industry and received immediate confirmation that the need is real and the service will appeal to business owners and consumers. You know the concept is appealing when weeks and months after you share it with someone, you keep receiving emails and texts about a new use case for micropayment. At that point, we knew we had a good concept.

Since then, we have been in execution mode. First, we launched the alpha version on DragonGlass in April 2021 to enable Cloud Data API monetization. And then, recently, in June, we launched a beta version open for merchants to sign up.

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How did you cope with the disruptions brought by the pandemic? How did you leverage technology to stay on top of your product development roadmap during the peak of the pandemic months?

The initial proof of concept was developed by the end of March of 2020. But since then, all of us have been working remotely. As the product is purely digital and we have been users of AWS cloud almost since 2008, the transition for many of us has been a little easier. But it was challenging in the beginning. We underestimate the amount of brian storming that takes place during a product design. Our goal was to build a payment rail both for FIAT (USD) and Crypto, providing full transparency but ensuring that the consumer transactions are private. And the end-user experience has to be very simple to use for consumers and merchants. These were some hefty goals. Achieving these design goals on daily video calls was exhausting.

In general, in my opinion, it is challenging to have free-form idea generation sessions on a video call. But in our experience, working remotely was very effective when running daily standups, design sessions, and just having quick general meetings. We used several platforms to emulate sessions that we would normally have in person in the office. We use products like Github repository, Google drive, Hangout, Digital whiteboard, etc. But what worked for us is being a little more structured with documenting,  prototyping, a lot better planning and very regular meetings. Later in the pandemic, a smaller team would meet in person almost every six weeks to discuss broader aspects like the product roadmap, marketing strategy, etc.

Our daily standups, checkpoints, issue resolution sessions, etc, ran almost like clockwork with no commute issues. One thing to be said about working remotely: all our working sessions would start on time, and as many of our sessions were recorded, it was easier to revisit past discussions.

Could you tell us the latest trends in the Pay-per-Use model and how it is influencing the global VOD and Live content streaming industry?

The digital economy experienced exponential growth during the pandemic, with many videos, news publications, and music services benefiting from tremendous subscriber growth.  It was expected that this growth would slow down post-pandemic as we transition back to some degree of normalcy, but clearly, subscription fatigue was setting in even before this accidental surge in use. The core issue is that even if you can afford multiple subscriptions, there are only so many services that one can subscribe to. Most consumers are overloaded with subscriptions, and why pay for something that you don’t use that often. Many consumers want to pay only for what they use and then subscribe to a service if they use it regularly.

Video streaming firms will increasingly have to explore alternatives like “Pay-As-You-Go” or “Micro-Subscriptions” or other innovative monetizing methods. The concept of unbundling and offering services on a pay-per-use model is still not mainstream. Subscription and Ad based services are still dominant.  In the US, a few streaming services provide a combination of subscription and pay-per-use options. For example, Roku offers pay per channel option. Then there are other firms like Fandango, Vudu, FlixFling, Mubi that offer a combination of subscription and pay-per-use options. Internationally, specifically in Asia, “pay as you Go” is becoming more common. In India, cable networks offer you the option to subscribe to just one channel.

Since the post-pandemic population is now even more comfortable with digital services, we can expect a steady launch of new services, ranging from podcasts and augmented reality to new video streaming services. These service providers will aim for the same consumer that can only afford so many subscriptions. A micropayment-based “Pay-As-You-Go” service could be that alternative for merchants wanting to acquire new customers and stop the subscriber churn.

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Tell us more about your B2B interactions. What kind of IT infrastructure does a company require to benefit from Micropayment technology investments fully?

The merchant will not need any additional infrastructure to enable micro-payments than what they currently have to support other payment methods like Stripe or Paypal. To implement a service like Dropp, they will have to insert a snippet of code on their website and a snippet on their server. The code on the website is meant to invoke the Dropp digital wallet when a customer decides to pay using Dropp. The code on the merchant server communicates between the customer and the Dropp payment platform. The entire communication is based on a secure protocol that we created called “Promise to Pay”. The messages are based on a public-private key infrastructure to ensure authentication and security of the payment transaction.

For merchants who want to innovate further, the options are limitless with micropayment. For example, services can be offered at a  micro-subscription level (a four-hour pass to watch all the movies you want) or provide an episode of free but let the consumer pay to watch in 4K. We offer sample codes and additional services for merchants who want to get creative as they provide new services.

The micropayment platform takes care of scale, security, privacy, and settlement of the funds, etc. In many ways, it is like another complete payment service with full transparency offered by leveraging distributed ledger networks.

How should Content streaming companies of various sizes cope with the growing security hazards associated with payment applications?

Security and privacy are two big pain points in the market. Many a time user accounts get hacked at the merchant’s site. Hackers get access to details of credit cards and other personal information. In the platform we designed, the consumer is in complete control. All their details remain private in their secure mobile wallet or a desktop plugin. No details of the consumer are shared with the merchant. There are no passwords etc., to be hacked. The end-user has a secret key in his wallet, and only they have access to it, and only they can change or recover it. No transaction can be authorized without the approval of the end-user. By eliminating a central point of storage, we have significantly reduced the risk of a security breach.

What is the most contemporary benchmark for Online Buying experiences? How does Dropp enable customers to get more from their subscriptions?

A seamless or frictionless buying experience has always been a need. This need becomes more critical in a micropayment experience because these are small value transactions made throughout the day by consumers on an ad-hoc on-need basis and in most cases for immediate consumption. The entire experience needs to be almost instantaneous similar to clicking on a website link. Any friction or additional steps to complete the transaction has a high potential for abandonment.

We designed Dropp for digital users to purchase items without sign-ups or registration. Literally, in two clicks, the first click being your selection of the purchased item and the second being your consent. We also provide the option of making a merchant your favorite to enable a single-click purchase where the funds are taken automatically from your wallet. At any point, you can check your balance and your last transactions in the wallet. In a typical scenario, a user browsing the internet comes across digital content that they are interested in. The user can click on the blue “dropp” icon next to the article, which will initiate the payment to the merchant giving them instant access to that article or video.

Tell us more about PPU options available in the market? How do these meet the data protection / data privacy guidelines, especially in times of end-to-end campaign management?

There are many options widely available when it comes to micropayments. A few merchants have built custom solutions to batch transactions and settle at the end of the day to save on transaction fees. Some merchants take the hit on the transaction fees, hoping customers would make larger purchases and offset the losses. Then there are micropayment solutions like Brave and Satoshi pay that are more geared towards using crypto currencies or tokens. There are also solutions like Blendle that are specifically geared towards buying premium publications by subscribing to their service.

Privacy is becoming a real need. We maintain privacy by keeping the buyer’s identity private. The transaction is transparent on the distributed ledger, but the buyer’s identity is hidden. We collect very little information from the consumer. The consumer is in complete control. They manage their data, secret key etc. The consumer information is not shared with the merchants.

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Your favorite podcast / webinar that you have listened to in recent times:

I listen to Blinkist, these short summaries of books. My most recent read was “Activate your Brain” by Scott Halford.

I listen and read articles from Chris Lockhead a well known podcaster and blog writer. He has a publication called “Category Pirates”. He writes about creating new categories in the market and not just products.

This one article from him is very inspiring  https://categorypirates.substack.com/p/why-native-digitals-people-under because when it comes to micropayments, it really is a new category and is very much needed to make the digital economy more inclusive, more affordable, and increase participation from the general population.

Tag a person in the industry whose answers you would like to see here:

Netflix founder: Reed hasting

NY times CEO: Meredith Kopit Levien

Founder of Roku: Anthony Wood

Thank You, Sushil, for answering all our questions. We hope to see you again, soon.