How to start a virtual credit card business?

How hard is it to start a branded "user rewards" type credit card business?

• I was interested in using purchasing data to analyze user behavior, but also wanted to provide a "hands off" way to deliver incentives, deals, discounts, etc back to the user... Would starting a purpose-specific credit card be a viable way to do this? Why, or why not? Are there better/faster/cheaper ways to integrate with existing credit card accounts that allow both data gathering and transactions?

• Answer:

  Hard is relative, but in comparison to starting a business across all industries, it's probably slightly harder than average, depending on whether you or someone in your organization has experience in card acquiring and issuing. The difficulty also correlates to how you structure your issuing relationships and how much or little of the program you want to manage. (See my answer for example.) Issuing a new card is a viable way to analyze purchasing behavior and provide alternative rewards to consumers, however you really need to understand the economics of your entire program as, at your core, you'll be a card issuer and competing with the largest financial institutions and aggressive online marketers for market share. You also introduce many limiting factors as your customers have to financially qualify and there is high switching costs. There are alternatives to getting purchasing data, most notably through account aggregation services like or acquiring data providers like Golden Retriever. See also 's