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SmartCard Marketing Systems, Inc. (SMKG-OTCPK) |
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January 2, 2009 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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With A Global Trend Of People Turning From Credit To Debit, SmartCard Marketing Systems Is In The Right Place At The Right Time Offering A Secure, Fast And Easy Way For Businesses To Conduct Payroll, Expense And Other Payment Functions |
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Smartcard Marketing Systems, Inc. was established in 2003 and is a leading provider of prepaid cards, smart stored value cards and payment processing services.
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Interview conducted by: Lynn
Fosse, Senior Editor, CEOCFOinterviews.com, Published - January 2, 2009 Mr. Baillio: “Our primary focus is that we are in alternative financial services. We sell primarily business-to-business and we specialize in financial services to support money service businesses such as check cashers, payday loan companies, as well as other corporations that want to do pay-outs over a wide geographic area; both traditional payroll and other payment services that are not traditional.”
CEOCFO: Would you give us some concrete examples of your customer base? Mr. Baillio: “One of our premier products is a prepaid debit card. We have our own card programs through financial institutions that we sell through resellers to the consumer. Our typical reseller might be a chain of check cashers or a company such as an MLM (Multi-Level-Marketing) company that needs to pay-out commissions or a business that has an affiliate marketing program on the internet and needs to make affiliate payments to people all over the world. They want to be able to do their payments quickly, accurately, and have the money reach their intended recipient securely and in a cost effective manner. Checks have proven to be inefficient, so they would rather to do it electronically and the prepaid debit card is a very good vehicle for payouts of this kind.”
CEOCFO: Tell us about you debit cards. Where they are used and do you offer a software platform for companies to track and manage usage? Mr. Baillio: “We provide debit cards that are issued in a number of jurisdictions. We have a US card, a Euro card and a British pound- denominated card and so we are able to provide cards to people that have international clientele. We also created a platform, which is a proprietary, internet-based application to manage all of the cards that a customer has out in the field, to be able to load them and track balances. It features both an employer or payer facing application as well as a consumer facing application, so that the business can manage their cards and the consumer can see their card balances, past transactions and so on. We have a proprietary payment platform called Velocitymoney.Com that brings everything together for a payer. We also have another platform called Velocitymerchant.Com that allows a merchant to manage their card portfolio.
We’ve also integrated other payments or financial services into VeloictyMoney.com like online bill payment in both the US and Canada. We’ve also integrated a device called the Home ATM Terminal. This is a USB device that a consumer plugs into a USB port on his or her PC that performs an ATM-like transaction. The customer doesn’t have to provide a merchant with his card number, his pin number, his name, or any other information that he doesn’t want to provide. This provides a totally secure transaction that is encrypted to go directly to the customer’s bank account where the money is then transferred to a holding account and then to the merchant’s account within 24 hours; all without having to divulge any card information to anyone. We created a platform through which we integrated several financial services to create one portal that can manage a number of different types of applications for our business customers.”
CEOCFO: Do you find that customers are using more than one of your applications? Mr. Baillio: “Typically, a customer will have a specific need and will not use all of the services. However, it has been my experience, that a customer that starts out with a prepaid card program often will use the VelocityMoney.com e-wallet as well. We have tried to create services to meet the needs of our major clients and we do it in such a way so that we can market them to other, similar clients. Our portfolio of services has grown based on customer needs.”
CEOCFO: Can you give me a sense of the extra opportunity here? Mr. Baillio: “The largest competitors in this space are probably NetSpend and Green Dot Corporation. They have portfolios of many hundreds of thousands of cards and the opportunity is that each active, prepaid debit card generates anywhere between $4.00 and $8.00 per month in fees. The financial opportunity is quite large once a company has a reasonable portfolio of cards.”
CEOCFO: How do you reach your potential customers? Mr. Baillio: “Right now, our company has primarily grown through our press releases and our financial press articles such as yours and through internet searches. We really haven’t mounted what I would call a targeted marketing campaign at our target customer. We have just in the last 9 months emerged from the product development stage into full fledge production stage. We have been servicing customers as we built up our products and platform, but finding customers at this point of our growth stage, has not been the tough part. We’re still filling a backlog of orders for our current clients. Our growth rate right now is 200% to 300% per month over last year, so we are basically just catching up on the orders we have now. At some point, probably towards the second or third quarter next year, we will start marketing directly and we’ll do that by internet search engine optimization and direct marketing through trade shows to the money service businesses that are our target audience.”
CEOCFO: Do you see Europe as a big area for you? Mr. Baillio: “Absolutely. In the US market, many competitors have come and gone during the last three or four years. There’s been a huge shake out with considerable consolidation and from a competitive sense the US market is very crowded. By contrast, the European market is open territory as is the Canadian market.”
CEOCFO: What sets your product apart? Mr. Baillio: “Our services tend to be a boutique sort of approach where we are able to offer a tailored solution for a money service business or a reseller. We help create a competitive advantage in their particular niche as opposed to a generic, off the shelf solution where you have to conform your business to their solution. Our advantage is that we have the tools and the technology. When you are smaller, you’re quicker and more responsive. We are able to create a solution for a payment service company that will give them a competitive advantage in their particular market niche.”
CEOCFO: What is your revenue model; is it by transaction? Mr. Baillio: “Yes, we are essentially in the transaction business. Whether it’s a purchase, money transfer, bill payment or ATM withdrawal, we make fees based on transactions.”
CEOCFO: Your transactions have gone up month-after-month! Mr. Baillio: “Yes, our transactions have gone up month-after-month, and as I alluded to earlier, we have just begun. We are still at the very early stages of our growth curve. You can see in our press releases that our transactions are almost doubling every month. Obviously, we can’t expect that same growth rate forever, but we see a very lucrative growth curve ahead of us over the next year. Interestingly enough, the economic climate today is actually driving our business because people who’s credit is hampered on the consumer side, who can’t get or use a credit card, are turning towards debit. That is a global trend that we are benefiting from, the move from credit to debit. It is something that is occurring in the market naturally. I think 2006 was the first year debit transaction actually outnumbered credit card transactions. Therefore, we have several trends that are behind our particular business model that are benefiting us.”
CEOCFO: Do you see people moving towards prepaid cards even when they have the ability to use traditional methods, as security is increasingly a concern? Mr. Baillio: “It’s true. We see more and more of that. We’re finding that travel agencies are particularly interested in offering prepaid cards to create the ability for people to pay for expenses on a trip who don’t want to risk exposing their major bank account or credit card when they travel. So they’ll get a prepaid card for their trip.”
CEOCFO: What are some of the challenges that you see as you go forward and how are you ready? Mr. Baillio: “The challenges that our industry faces are going to be due to regulations. Everyone in our industry has geared up and is complying with anti-money laundering and Patriot Act requirements that govern the prepaid card industry. There seems to be a certain faction that wants to increase regulation. I think the banks don’t like competition, so they’re trying to regulate the prepaid card companies like a bank. There’s a possibility in the future of more bank-like requirements and regulations on the prepaid industry that will restrict some of the free-commerce atmosphere that currently exists in the prepaid market.”
CEOCFO: Why should investors be looking at SmartCard? Mr. Baillio: “The bluechips have been taking quite a beating. We’re in a market that’s growing and a company that’s growing. Our stock is sub-penny at the moment. I think that the various financial analysts that I read are looking for growth industries as temporary alternatives. Until the world economy kind of shakes out a little bit and settles down, there are still opportunities for capital growth in the junior stocks that are out there. Our company is in a good position for stock value appreciation and I think it’s a bargain.”
CEOCFO: What should people reading about SmartCard remember most?
Mr.
Baillio: “The
thing to remember most is that SmartCard is a payment facilitator that
tailors solutions for its clients. So, when businesses need a payment
solution for rebates, commissions, incentives or for moving money SmartCard
would be the right choice.” |
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“Yes, our transactions have gone up month-after-month,
and as I alluded to earlier, we have just begun. We are still at the very
early stages of our growth curve. You can see in our press releases that our
transactions are almost doubling every month. Obviously, we can’t expect
that same growth rate forever, but we see a very lucrative growth curve
ahead of us over the next year. Interestingly enough, the economic climate
today is actually driving our business because people who’s credit is
hampered on the consumer side, who can’t get or use a credit card, are
turning towards debit. That is a global trend that we are benefiting from,
the move from credit to debit. It is something that is occurring in the
market naturally.” - Bruce Baillio, MBA |
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