August 12, 2014 at 5:22 pm #64457John SchuppParticipant
I posted this on I-Atn and didn’t get a lot of comment. Maybe here will be better.
Like a lot of you, I accept the Car Care One credit card. I
have always been a little shocked at the discount rate,
especially for the 1 year interest free promotion; but what
really sticks in my craw is the lack of ability to customize
the cards with my logo (I strongly believe in branding) and
the fact that cards issued at my store can be used anywhere
is also a big irritant. I want customers tied to me!
So, eight years ago I decided to issue my own credit card.
As it turns out, this is a much harder task than you would
think. I had to find a way to pull credit reports on
applicants. I had to find a way to manufacture the plastic
cards but hardest thing was finding a software package that
would keep tract of all the account balances, print
statements and keep track of the interest and fees.
Such a software package did not exist, so wrote my own. I
now have software that runs my credit card operation that
web based. My two shops use the software to take payments,
make sales and issue cards. My customers have 24/7 access to
their accounts and can make payments online as well as print
So how has it worked?
Since I started I have had $1,249,608 in sales on the credit
card. $ 180,445 in interest and fees and have written off
$62,695 to bad debts. I am currently owed $171,684.
I am convinced that ½ of the above sales would not have
happened without the credit card. There are no processing
fees and I get to decide who get credit and who doesn’t.
Now for the WWYD part.
I am quite happy with my credit card as it stands, but
recently I was approached by another shop owner who would
like to do the same thing. He wants to license my software.
This is something I never considered. How would you charge
for such a thing? What would be a fair price? Is this even a
good idea? What does this do to my competitive position in
the market place if everyone around me suddenly had their
own credit card too? Are there any pitfalls you can foresee
and what could I do about them?
I realize that you may need more information to answer the
WWYD question. I’ll answer anything you want to know.
I need guidance — Help me Ob Wan Kenobi – you are my only
Raytown, Missouri, USAAugust 12, 2014 at 6:54 pm #73668Tom HamParticipant
Wow. I’m really impressed. On to WWYD…How much? A percent of all of his sales on the card, maybe 1.0, 0.5, 0.25?Or a five figure amount. Or both. Need a lot more detail to get more specific.I like the idea in general. In the long run I suspect you would bank more than keeping it to yourself.I don’t see it being a big competitive factor. The card is one piece of the big puzzle that attracts customers to you. Plus, you are way ahead of anyone who starts to offer it now. I suspect the hit to your sales would be negligible.I hope something in my reply helps in some way. Thanks for sharing an outside the normal idea just to show us that we can use our imagination to try new things.
Tom - Shop Owner since 1978August 13, 2014 at 9:50 am #73672John SchuppParticipant
Thanks for the comment Tom,
I forgot to mention that this other shop owner is nearly 1000 miles away from me. I don’t know him personally. He stumbled upon my website by accident. His question is causing me to consider the licensing of the program as a business to widely distribute the software. My wife thinks I’m nuts because she does not believe I will find anyone as “crazy” as I am. Of course she thought I was crazy for opening a shop rather than working for a steady paycheck.
A few questions
What percentage of shop owners could you imagine would consider issuing credit to their customers?
Are the benefits of having your own credit card obvious, or would extensive explaining be necessary?
How much of an impediment would the additional administrative duties (i.e. issuing statements etc) be and would offering services, such as statement production be a good idea?
Would this idea be more appealing to urban shops who may have a larger base to draw from or to small town shops who may have previous experience in granting credit to the locals?
What kind of support do you think would be necessary?
ThanksAugust 13, 2014 at 6:08 pm #73673Frank Scandura IIIParticipant
Great idea, I would think if your going to license this you need to be familiar with and compliant with the needed federal regulations.
I also think you can get many shops to take advantage as well.
We use the Bosch credit card program and this does put our name on the credit card, with zero risk on my park – Here is the link to our website for you to look at: http://www.frankseuropeanservice.com/
The application is on the first page
Frank M Scandura IIIAugust 14, 2014 at 12:02 pm #73674Tom HamParticipantJohn:
When you show a shop owner how much he can make from doing this, I think quite a few may sign on. Some retailers net more profit from their private credit card than their product or service.When you are going to present just about anything to an independent shop owner, it is going to require a fair amount of explaining.Regarding administrative and support – I have no idea.It should appeal to just about any shop if properly explained. If a consumer has a “John’s Auto Repair” credit card in his/her wallet, the natural inclination is to go there first.
Tom - Shop Owner since 1978November 16, 2015 at 3:11 am #74211asenathMemberLike a lot of you, I accept the Car Care One credit card. I have always been a little shocked at the discount rate, especially for the 1 year interest free promotion; but what really sticks in my craw is the lack of ability to customize the cards with my logo (I strongly believe in branding) and the fact that cards issued at my store can be used anywhere is also a big irritant. I want customers tied to me!So, eight years ago I decided to issue my own credit card. As it turns out, this is a much harder task than you would think. I had to find a way to pull credit reports on applicants. I had to find a way to manufacture the plastic cards but hardest thing was finding a software package that would keep tract of all the account balances, print statements and keep track of the interest and fees.November 16, 2015 at 6:42 pm #74212pbrennanMember
I think it’s a great idea. Here are some considerations I can think of right off the top of my head:1. Federal regulations: I know credit cards are highly regulated. Are you compliant with those?2. Technical security: Are you taking payment through your software? Is it PCI compliant? Do you have bank-level security?3. Software development: Who developed the software? Who hosts it? Is it built to scale to many many users? Who will continue developing it & maintaining / supporting it? My suggestion would be to partner with a software development firm, since this isn’t your expertise. But REALLY do your homework before partnering with one.4. Scaling: It’s a business like any other, and will require your time to help it grow.5. Credit Risk: Does the owner take this risk? What other tools other than FICO does an owner have through your software to make a credit decision?I think it’s a great idea, though – and would appeal to a lot of shops (and other service businesses). I agree with Tom – I would license it, say starting at 3% of sales tiered by volume, and their interest rates would cover credit risk & the cost of the software. The program sells itself compared to car care one.December 1, 2015 at 1:14 pm #74216stevebflMember
While I like the ingenuity and risk taking involved, I personally would never consider it. Too much unknown risk based on dealing in a enterprise with no training or experience. It might be worth learning, but since there are already very good mechanisms to offer financing as a customer service I can’t see investing the time or the money. The original story where there was over a million in sales and $180,000 in interest never finished the story enough to know whether there wasn’t a huge long term loss. As it was left there was a $63,000 guaranteed loss against that $180,000 profit with $171,000 outstanding. Sounds like a lot of investment which at the point of the story showed no profit with a possibility of a huge loss. That’s a lot of investment and risk to gain the extra sales.
The same increased sales can be encouraged using the Bosch card program with no risk. My business has always been fixing complicated cars. I cashed in my chips as a winner, but if I were still investing I would still invest in what I know. I know customer service sells, but I’ll use proven vendors and place my risk on things I know about.December 10, 2015 at 4:26 pm #74221Andrew TobiasParticipant
I think your biggest problem and liability is going to be support of your program. This person is going to use it in ways you didn’t think about, know about, or anticipate. Wait until the OS upgrades and crashes your program. You’re going to get calls when it doesn’t work blah blah blah.Just my 2cents.Btw, I’m very impressed in your operation.
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