PayCo
Practice this advanced profitability case interview question from Deloitte in the Technology sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
This is a well-structured financial modeling case that tests a candidate's ability to synthesize multiple data sources, perform basic financial analysis, and develop strategic recommendations. The case emphasizes the importance of focusing on risk-adjusted opportunities rather than raw market size, and requires candidates to identify sunk costs and think critically about assumptions.
Your role on the PayCo engagement is to develop the business case for commercializing PayCo’s contactless technology
- Which market and transit vertical should PayCo target as a first priority?
- What is the profitability of the “TAP” technology? Specifically, will PayCo break even on commercializing “TAP” in less than 5 years?
- Would you recommend that the client pursue the commercialization of this technology?
Clarifying Information
Business Context:
- PayCo is a global credit card company with revenues over $5B in 2010
- PayCo has developed proprietary contactless payment technology called “TAP” for transit applications
- The transit vertical (subways, trains, buses, taxis) is identified as a growth opportunity since it is generally cash dominated
- A key challenge is whether transit authorities will implement this new technology or stay with current systems for fare collection
Data Provided:
- Exhibit 1: Country-level data (US, England, Japan), Subway System Data (NYC, London, Tokyo), and Buses Data (NYC, London, Tokyo)
- Exhibit 2: NYC Subway Forecast Data with transaction projections and TAP Assumptions for revenues and costs