Why is a prepaid credit card valuableI am a retired banker. The value of this product is high. A prepaid credit card has one feature that is crucial to a low income holder. NO BOUNCED CHECK FEES.
When I managed a retail branch, we made most of our money from bounced check fees. A mistake in a checkbook register or no attempt to keep track can be a financial disaster. One mistake and the wrong check bounced and it starts a cascade of fees that can be hundreds or even thousands of dollars before it's over.
Prepaid cardholders don't have to worry about that. So the money they get from work or the government can be spent on essentials not bank fees.
No qualification. That is huge. With the record number of bankruptcies, there are many wage earners with decent paychecks that have lost their credit card privileges.
Everything in our society runs on plastic. So this is a product that can be used by millions of potential customers for everyday financial needs. Very few businesses don't accept credit cards. So you can take care of almost anything with a prepaid card. The few items per month can be handled with a money order or bill pay.
The monthly fees are competitive with bank checking account and NO possibility of running up bounce check fees.
So I think this is a huge market that is complimentary to the existing Selectcore customers, who are already using prepaid phone cards. I think the time is right for a huge expansion in this market segment. But it is going to be competitive. So that is the rub. Selectcore appears to be in the right sector at the right time.
Can they execute a successful game plan to sign up tens and then hundreds of thousands of customers?
How will they do it? How will they finance it? Can they penetrate the market sufficiently before the big boys figure things out?
The mention of RedDot and Netspend are conspicious examples of the potential but Selectcore is a long ways from a buyout at billions of dollars. However they do have a large customer base that is using their other consumer products. If they can create brand identity and get those customers to use their Iridium Card, Selectcore could be a BIG winner. Lots of questions but the potential is BIG. We need numbers of active cardholders. That is the metric that will be important going forward. $300 to $600 per active cardholder account. That is how these companies are valued. 50,000 cardholders X $300 = $15 million 100,000 X 300= $30 million. So we need a lot of cardholders to make this company really valuable because it's already valued near those levels.
Will be interesting to see how the company plans to attack this sector.