At 01:32 PM 10/23/2002 -0500, [EMAIL PROTECTED] wrote:
the only possible problem with this is ...... isn't it rather "getting rid of" credit cards?!?Hey JP, in the traditional credit card world those very same people are also unlikely to have that much in their bank account when it finally gets seized. :-) Yet Mastercard continues to serve them.
You're essentially saying "the issuance of credit cards currently is a bloody shambles, with an IG credit card, it would have to be much tighter"
Most people are such scum financially (sorry, people of the world!) that they CAN'T EVEN get together such an in-advance amount.
So maybe there's a sweet spot you can find in the probability curve. We'll give out unsecured cards to scum and charge them enough interest to compensate for the 30% of scum who default on us.
That interest rate, by the way, may be significantly lower than the 24% usury demanded by MasterCard now. Perhaps our company is so efficient that we can actually make scads of money giving unsecured cards with a 15% rate to scum with a 30% default rate!
Or not, as the case may be. In which case we let MasterCard have the scum market and they can continue to clip them for 24%. Meantime we take the solid citizen market by storm.
Partially! So why can't we thrive on those people too? :-) Why can't we be bottom-feeding scum suckers just like the big guys? :-) Let's clip them for 15% and do them a favor in the process!Indeed, that's exactly what CCs thrive on right?
(It's a bit like those "check cashing!" businesses that are in every small town ... "cash your pay check 2 days ahead of time for only 12% interest!" ... and other such businesses that cater to the walking financial shambles that is the populace....)Those are profitable businesses. They love every schmuck who walks through their doors.
In fact, perhaps what you're REALLY saying here is the slackness of credit cards AS IT EXISTS would probably have to be done away with altogether if everything was based on IG and not USD :OSOME of the slackness perhaps. Or maybe we just look at it this way:
And that's --- good!
1. MasterCard makes money at 24% on unsecured scum cards with a default rate of 30%
2. JPCard makes money at 15% on unsecured scum cards with a default rate of 30%
OK, let's do it! Bring on the scum!
I think the main thing I'm trying to do is address "Danny's Dilemma" head-on. I state it as a sarcastic question:
"Why would a purchaser pay a premium to a market maker to purchase hard money just for the privilege of making payments that he cannot repudiate?"
The answer is: no reason whatsoever.
The second part of this issue is what we might call "E-Gold's Envy":
"Why is PayPal so damn successful?"
Frankly I don't think the issue of repudiable payments enters most people's minds. All they know is this: hey wow all I have to do is open a PayPal account, link up my credit card, and I'm off to the races!
That's it -- the entire extent of the thinking of well over 10 million PayPal customers.
So why would those people use the JPCard? Because instead of paying 19% on their existing credit cards, they can get the same benefits with a JPCard at only 9%! The only catch is this: they have to pay a small premium to a market maker to acquire e-gold. :-) But just think of the interest savings!
PLUS, once they get into the game they'll start to find more people with e-gold accounts and they'll start trading with each other directly. Eventually people won't have to go to a market maker, they'll simply EARN some e-gold directly!
In fact, they could freakin' LINK their JPCard INTO their PayPal account!! So we totally co-exist. In fact, we end up WISHING PAYPAL SUCCESS, if you can imagine that.
Or maybe we do a "digital only" credit card (just a number -- no plastic) so that initially you can only use it online. That way as we get off the ground and raise capital we have extremely low fulfillment expenses -- we don't have to contract with Total Systems to print and mail plastic! That may actually turn out to be OUR ENTIRE BUSINESS -- we could just perpetually offer a no-plastic, no-paper, no-post-office online credit card with a super-low rate of just 5%.
SO, instead of trying to convert the scum market into a disciplined bunch of hard money people, you should instead focus on exploiting their weaknesses to your advantage! That is, ASSUMING the business model can truly work. The question of course is simply this: is there money in it?
But of course, I don't have to tell that to JP, of all people!
-- Patrick
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