Purchasing items by check or credit card
has become so commonplace in today's society that most people don't even think
twice about the technology involved. But, for millions of Americans, these brushes
with modern money resources are non-existent. Even the act of using an ATM is
outside their daily lives.
It is believed that up to thirty million people
in the United States fall into this category. A section of society referred to
in the economic world as the "Unbankables."
These are people with low
incomes who just don't have the funds to maintain a bank account. Hard working
Americans, who earn a living, but live from paycheck to paycheck, week to week,
in a world of high check-cashing fees and poor credit.
The negative impact
of this phenomena not only affects that segment of society involved, but can also
represent a tremendous loss to the banking and credit community because of their
failure to reach those potential customers.
anything that can be done about this problem? The people over at VIPeCommerce.com
think that they may have found a solution. It's a simple idea with a high tech
twist. If they are right, they will not only provide the comfort and convenience
of a credit card or bank account to anyone regardless of income level, but they
also just might change the way society as a whole thinks about how they use and
We go to _____________ for the story.
Just about every financial transaction conducted in the United
States crosses through a service of computers, and over a network of wires and
cables. When you use a credit card to make a purchase, what happens?
The merchant swipes the card through a scanner that send information
via telephone wires from place to place, for computer to computer, until the data
reaches its destination and is evaluated. A message is then sent back through
the same system to accept the purchase.
What about when you write a check?
That check goes to the merchant's bank. The information is then shared between
banks over the telephone lines. At the very least, it goes from the merchant's
bank to your local bank to a central bank, then to a mainframe computer, and ultimately
funds are transferred via those same lines of communication.
Billions of tiny pieces of information go back and forth over these privately
owned networks of communications, from computer to computer, 24 hours a day, over
miles and miles of wire and fiber optics.
to any ATM will give you the names of some of the computers that own these private
networks. Names like "Cirrus," "Star," and "Visa." Companies that make money by
charging a fee for every transaction that goes through their network. It's the
price of doing business in America. But is there another way?
Yes. If VIPeCommerce.com has anything to say about it. Using a new processing
platform, they see the Internet as a cheaper alternative. Simply put, those tiny
pieces of information can now bypass the normal networks and operate outside the
system by going straight to one website with all the information.
may sound like a "21st" century approach to an old problem, but this idea is as
old as business itself. Cut out the middle-man and pass the savings on to the
How can the consumer get access to your service?
Answer: It's very simple. Here's how it works. You're in line at the supermarket.
You pull off a plastic card from one of the "j" hooks near the candy and bubble
gum. At the register, you pay the cashier the amount you want to put against the
plastic card and it's loaded with your funds.
plastic card will now operate like a debit card, drawing funds against a newly-created
money account. Within seconds, your money is given to you at the time of activation.
Individuals without bank accounts will no longer have to carry all their cash
around with them. They can store it away until it's needed, or access it through
plastic purchasing and ATM withdrawals.
How is this plastic
card different from a normal checking account debit card?
have managed to remove some of the hassles associated with banking. Since it's
all prepaid, there is no credit risk. This means there's only a minimum balance
of $5.00 to handle to be maintained. Which is easy for lower income families.
Also, since all the information is stored on the website for easy access, it doesn't
travel over those extraneous networks. As a result, there are none of the extra
fees normally associated with the services we offer.
What is the "payroll to plastic" program?
Answer: Using this processing
platform, employers can, if requested, directly deposit a paycheck into a worker's
plastic card. So, on payday, those without a bank account do not need to first
go somewhere to cash that check at a cost of two to five dollars of that employee's
Is there any advantage for the employer to utilize
this "payroll to plastic" program?
Answer: In addition to being beneficial
to the worker, it can also save the employer a little money. Currently, the average
employer spends an estimated $1.50 or more on every processed check. That's the
money involved to purchase the materials, to physically write up the check, and
to deliver that check either by mail or by hand. Thus, if an employer switches
over to this payroll method, he saves an average of 70 cents for every employee,
Are the merchants willing to adopt this new
Answer: Yes, there's already interest from some of the top
retailers in the United States for the simple reason that our processing platform
with our plastic cards is not as expensive to operate and maintain as the credit
card and traditional debit card products that are already in place, being used
What are some of the expenses of traditional
credit cards for the merchants?
Answer: Currently, for the ability to
honor credit cards, merchants must pay an additional fee of 2% on the sales price
for every item or service charged, plus an additional 10 to 25 cents per transaction.
On top of that, the actual credit card "swipers", the machines used to scan the
cards, cost about $40 to $80 a month to lease per unit. And let's not forget that
each swiper must have its own dedicated telephone line, which costs money to install
How is your processing platform less expensive?
Answer: There are no transaction fees to the merchant for accepting our plastic
cards, if they connect directly to us via the web. The Internet appliances used
to swipe the cards can plug into a single Internet access point. Whether you are
a small business owner or a corporate giant, you will save money with this processing
VIPeCommerce.com also feels that this breakthrough
in technology may have ripple effects around the world. It could even bolster
economic growth in other countries, for example it would be up to $250 million
more dollars a week pumped into the Mexican economy each week, or $7.8 billion
a year. Wow. For Business World News, I'm _______ reporting from Chesterton, Indiana.