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Cash Machine 6#
In the Cash Machine concept, the customer pays upfront for the products sold to the customer before the company is able to cover the associated expenses. This results in increased liquidity which can be used to amortise debt or to fund investments in other areas.
Examples: Iconic Cases
How they do it: When a merchant accepts a payment via PayPal (e.g. for his E-Commerce shop), the funds are first collected from the customer’s PayPal balance or credit card. Only after PayPal asserted that the payment is genuine and it received the funds from the customer, the payment is ”deposited” virtually in the merchant’s account. Subsequently, the merchant may then transfer the funds to his regular bank account. Both merchant and customer balances lead to PayPal holding an immense amount of funds ”virtually” on his platform, before the funds are at a later stage liquidated or transferred away from the platform.
Learn more about PayPal →
How they do it: Amazon Web Services offers pricing for it’s computing pricing on an annual, pre-paid schedule. These so-called ”Reserved Instances” provide customers with a significant discount (up to 75%) compared to On-Demand instance pricing.
Learn more about Amazon Web Services →
How they do it: Lufthansa flights are paid right away when they are booked, although the actual flight is in several days, weeks or months time. This allows the company to utilize the liquidity it gets from the prepayments and also finance their capital expensive operations (e.g. plane maitenance).
Learn more about Lufthansa →
How they do it: Netflix’ subscription customers pay their monthly fee upfront. This give the company increased liquidity to operate their business and acquire additional users.
Learn more about Netflix →
How they do it: American Express developed the traveller’s cheque in 1891. It is a business model innovation based on the Cash Machine pattern. It emerged from the problem faced by American Express’ own employees who travelled abroad and had difficulty obtaining cash in a foreign country.
Learn more about American Express →
Below, the top industries for the pattern "Cash Machine" are displayed, in order to get insights into how this pattern is applied across different industries. We've collected data from 10 firms using this pattern.
Top Industries
E-Commerce
27% of firms using pattern
27% of firms using pattern
Information Technology
9% of firms using pattern
9% of firms using pattern
Services
9% of firms using pattern
9% of firms using pattern
All Industries
Below, the pattern "Cash Machine" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.
Top Co-Occurrences
Leverage Customer Data
3 pattern co-occurrences
3 pattern co-occurrences
Two-sided Market
3 pattern co-occurrences
3 pattern co-occurrences
E-commerce
3 pattern co-occurrences
3 pattern co-occurrences