Big Idea – One Card

I want to start a business. Usually that statement evokes one of two responses:

1. Why don’t you?
2. So do it!

I respond similarly for both:

• I have a ton of business ideas that I think are viable and could be lucrative, but I don’t love them, and can’t imagine dedicating myself to them at this point
• I don’t have or don’t want to risk the cash that would be necessary to start the business

Those that know me, know that I’m a big proponent of transparency, and in that nature I’m going to risk riches by posting a few of my Big Ideas for businesses here for the world (honestly I get about 10 visitors per day to the site…) to read.

I’ve mentioned before that I believe there to be an opportunity to revolutionize postal service by implementing a scan & email alternative in order to slash physical transport of mail therefore smashing down costs.

Another idea that I’ve been kicking around for a long time is that of revolutionizing wallets – specifically all the plastic within them. I mean ALL the plastic within them.

UPDATE: Cool! I just used PlanCruncher to create a simple business plan for One Card (pdf).

Here’s a list of all the plastic in my wallet right now:

• Driver’s License
• Old Student ID (for scamming student discounts out of various vendors)
• Debit Card
• Credit Card 1
• Credit Card 2 (I would imagine that many people have more than 2)
• Hotel Room Key
• Frequent Flier Card (I actually have about 15 of these things, but only one in my wallet at this moment – the rest are in my brief case)
• Grocery Store Discount Card (grocery store clerks finally cracked down and stopped letting me use one they had handy)

That makes 8 cards currently in my wallet. On each of them is a magnetic strip that contains some amount of information about me.

Other people have different / more cards:

• gift cards
• employee id & office security access cards

Here’s the crux of the business idea – sell a card that allows people to compress all of these cards into one card. When you open an account with a credit card / bank, get a room at a hotel, sign up for a frequent (flier / diner / shopper) account, join a club, etc. you would be able to add that information to your “one card”. Maybe via a magnetic strip reader that you hooked up to your computer via usb, maybe via a web interface that you could access with your iphone…

How to Make Big Bucks!

I think there are a few ways to generate revenue in this business.

1. Subscription Charges
2. Credit / Interest
3. Vendor Transaction Charges
4. Vendor Credit Account Manager
5. Arbitrage
6. Concierge
7. Analytics

Subscription charges

This seems to be the simplest and cleanest way to generate revenue. The idea being that you charge “one card” holders some amount per year. Basically this is emulating a credit card annual fee.

Credit / Interest

Again, emulating current credit card revenue channels, grant “one card” holders a line of credit and charge interest greater than the cost of capital on their balance.

Vendor Transaction Charges

Noticing a pattern? In the same manner as credit card companies, charge vendors a percent of every transaction.

Vendor Credit Account Manager

Here is a new revenue channel idea! Sell a service to small businesses whereby you allow them to use your account with each of the major credit card companies (visa / mc / amex / etc). Scale a large enough network of vendors and earn profit by offering these vendors transaction rates lower than they are able to get from the cc companies alone.

Arbitrage

This is my favorite – albeit possibly the most far-fetched idea. It mostly centers around gift cards and affinity points / miles. Let me illustrate the idea using a possible scenario:

Christmas Day – John gets a $50 Best Buy gift card and loads it into his “one card” account

December 26 – Sue charges a $100 Best Buy purchase to her “one card” account

December 26 – “one card inc” pays best buy with john’s $50 gift card and $50 cash transfer

December 26 – “one card inc” bills Sue for $100 cash

Eventually – Sue pays off her $100 balance, and “one card inc” accrues interest on the $50 that came off the top from John’s gift card

Eventually – John uses some / all of his Best Buy gift card credit and “one card inc” loses the ability to accrue interest on the cash paid by Sue

Possibly – John never uses some / all of his gift card, one card enjoys accruing interest forever!

Inevitably – Retailers (e.g. Best Buy) would revolt! You’d be stealing their game! This arbitrage is exactly what they do! This arbitrage model would be hitting them from both sides: gift cards would be redeemed much sooner, and in full. A friend well versed in the retail industry tells me that gift cards on average still have 30% of their value after one year.

Also – run a similar scheme with frequent flier miles!

Concierge

Back to the old credit card revenue stream model – offer “one card” holders a service to purchase anything through “one card”. Ideally “one card” adds value beyond what is available through other channels – faster service / delivery, access (e.g. tix to sold out events), cost (e.g. through scale – credit card companies are doing this now with services such as credit monitoring).

Analytics

Credit card companies are trying to do this now, but seem to really suck at it. The idea is that as a hub of consumer activity, you would know a LOT about consumer preferences and tendencies, and that this knowledge is valuable. The key would be making it saleable beyond the junk mail machines that are currently at work. For example, waive the card holders’ annual fee in exchange for them linking their facebook / foursquare / etc. accounts to their “one card” account thereby adding an additional layer beyond pure purchasing and demographic info. Or allow customers to pay off their balance through viewing (targeted) advertisements on their account webpage.

In Response to the Haters:

Here are a few of the arguments commonly puked out by haters when I tell them this idea:

• What if you lose the card? You’re screwed!
• Actually, if you lose your wallet with all 8 cards in it you’d be screwed. Do you have all 8 card issuer phone numbers on speed dial to cancel quickly? I bet if you only had to make one call you’d be happy.
• While you try to build a credit card transaction network large enough to make this profitable, one of the big players will smash you!
• Indeed this is one of my fears, but if you launch with a compelling enough value proposition, I think you could carve out a nice segment then put up targeted fights with the big guys… or maybe even sell out to a big guy and hit the links!
• Credit cards are a dead media! Haven’t you ever heard of “cube”????
• YES!!! One thing I would love more than going from 8 to 1 pieces of plastic in my wallet would be going from 8 to 0! If you created “one card inc” you would be exceptionally positioned to transition to “consolidated accounts and virtual payments inc” – I promise
• Retailers / airlines / etc. would never allow the arbitrage idea
• Maybe not verbatim in the manner that it was presented, but what if as “one card” you gave Best Buy $50 gift card plus $50 cash plus $x for the gift card acceptance enticement. So long as you were confident that you could earn greater than $x in the interest, it’d still be worth trying. Perhaps eventually “one card inc” could become a “gift card administrator” with strategic partnerships with retailers.