Product Line or Service

CardSelect’s product allows customers to access a secure online network to personalize their own all-purpose payment with multiple loyalty programs from preferred vendors. It will combine loyalty programs from different vendors connected to one payment card and makes the ALL IN ONE card reality, thus only one card is required for payments and loyalty. CardSelect also offers and services loyalty programs for participating merchants. Customers benefit from better record keeping and less cards in their wallets, while banks benefit from more transactions per credit card. CardSelect is operating the network and will generate revenue from the acquisition of new card accounts for banks and merchants. Additional revenue will be generated from advertising, merchant incentive programs and database marketing. 

Technology/Proprietary Rights

Company was awarded for its product with a US patent for personalizing and issuing payment cards via the Internet in 10/1999. The first phase of an international filing showed no opposition and is proceeding through the approval process.

Market Opportunities

In 1999, 3.5 billion credit card offerings were mailed in the US, with a response rate of only 1.2%. A study of Morgan Stanley Dean Witter projects that 30 % of card accounts will be acquired through the Internet in 2004. Until recently, cards have only been pre-defined and most do not fit customers buying patterns. According to VISA and MasterCard sources, there is a strong indication that customized cards will win widespread support from member banks and consumers. CardSelect’s product is well positioned to take advantage of this market opportunity and could win acceptance in the card market by consumers similar to priceline.com. The major market for CardSelect’s product is the US market, however further business opportunities are in Europe and Japan. Revenue projections are $62 millions in year 5 and $267 millions in year 10.

Marketing/Sales and Distribution

CardSelect’s acquiring of new consumers will be done through participating merchants, such as groceries, video rentals, car rentals, hotels, etc. Merchants offer their loyalty card program through CardSelect’s network. Consumers gain the advantage of combining accounts on one card and a convenient viewing of statements online. Sales and Marketing will focus on partnering with existing big merchant acquirers, thus keeping advertising and marketing costs low. Only limited advertising for product awareness and consumer education will be necessary to spend on the Internet.

Manufacturing

IT services will be outsourced to infrastructure companies, although ownership will remain with CardSelect. CardSelect will provide cards to consumers upon an automated approval process with issuing banks or merchants. Based on CardSelect’s patent, manufacturing files will be generated automatically and sent to an established card manufacturer who will process the card and ship it to the customer within 24 hours.

Competition

CardSelect is enjoying a noncompetitive market so far. Getsmart.com or other Internet lenders are business models that allow online credit card applications from a predefined selection of cards, but they cannot really compete with CardSelect’s product, which provides customized payment cards. CardSelect positions itself as an independent multiple vendor choice agent, while banks with the same business model will always offer limited choices and face the problem that they all want to sell their own credit card.

Investment Objectives, Milestones

CardSelect’s revenue and profit opportunities are enormous. In order to achieve the goals of CardSelect, the company is evaluating outside investment opportunities and possible partners. Until now, the owner invested approximately $150.000.00. For the next round of financing the company seeks $2.38 million of institutional investments. CardSelect’s financial forecast anticipates profits in year three and a return of investment by year four. $725,000 is needed within the next 6 months to launch the BETA site and $1.65 million is required during the following 6 months to provide full services thereafter.

According to a marketing study, 30% of card acquisitions will be generated through the Internet in the year 2004. CardSelect is confident of reaching a market share of 4% in 2004 of the card acquisitions through the Internet, which results in a 1.2% overall market share. Averaging these numbers with an acquisition value of $75.00 per credit card, $15.00 per other payment card and $5.00 per loyalty card account results in revenues of $62 million in year 2004 and 268 million in year 2009 for CardSelect.

History

Since its inception in 1997, CardSelect International has generated a steady revenue stream by providing a broad range of consulting services to organizations within the global banking, telecommunications and card industries. Independent of these client projects, CardSelect developed the concept of a personalized “All In One” credit card, which consumers could apply for and customize themselves over the Internet.

In October 1999, the company received a United States patent for its “Gateway Apparatus for Designing and Issuing Multiple Application Cards”. In January 2000, CardSelect was incorporated in the state of Delaware and established offices in the Great Valley Corporate Center, Malvern, PA and is now focusing all of its efforts to launch the new product.