How to start a virtual credit card business?

How to Start Your Own Credit Card Offer Business

• Answer:

  Credit card offering is a form of lending by the card issuer. Credit cards are mostly issued by banks and non-profit credit unions that are either federally- or state-chartered. Non-depository finance companies such as GE Money issue credit cards as well. There are also credit cards that bear merchants' names, such as Visa cards from Target and Chevron. Commercial companies and universities can co-brand credit cards with card issuers. Such cards include the Amazon-Chase Visa and cards from airline-bank partnerships. Many credit card marketing companies are also part of the credit card offer business through gathering card applications and turning them over to a card issuer. Difficulty: Challenging Instructions Choose among various options for credit card offer business. Forming a bank or credit union may not be feasible to many people. But you can relatively easily set up a non-depository finance company with a single business line of offering credit cards. If you are already a commercial business, you can partner with a card issuer to co-brand a credit card that bears your business's name and logo. Or you can work under a credit card affiliate program to promote the card issuance, process applications and get paid a fee by the card issuer. Fulfill any registration requirements, partnership responsibilities or affiliate obligations. To register as a finance company, contact the appropriate state agency in charge of financial institutions as listed in the Google Directory and obtain a finance company license. If partner with an existing card issuer, sign a partnership agreement to co-brand a credit card. If you choose to be a credit card marketer, sign up with a credit card issuer and specify in the contract, among other things, the fee structure of per-application or per-credit card approval. Launch the credit card program. As a card issuer, in order to process credit card transactions, you must become a member of the card-payment networks, namely Visa, MasterCard, American Express and Discover, depending on the type of card you have planned to issue. As a marketer or co-brander, your credit card offer program focuses on securing initial applications and subsequent approval, rather than managing ongoing transactions. Set up a website that can handle all the promotion efforts and encourage potential customers to sign up. Tips & Warnings Tip: For an existing business, it would be an additional benefit to apply and create a finance subsidiary that could combine the credit card issuing with the marketing of the company's current products or services. Tip: The business that co-brands a credit card receives payments from the card issuer depending on the number of cards issued and their future uses, and avoids any direct credit card regulations as a non-card issuer. Tip: During the transaction process as illustrated in a credit card transaction demonstration on creditcards.com, a card issuer charges interchange fees out of the card purchase amount from the merchant and share them with the card network. Warning: Because consumer and business lending are government-regulated, only licensed and registered financial institutions can legally make loans to customers. Target and Chevron have set up the Target National Bank and Chevron Federal Credit Union, respectively, for the issuance of their namesake credit cards. Warning: In the case of credit card issuing, the capital used to fund credit card lending can be demanding on an average finance company. Banks that offer credit cards often use the financial market to securitize credit card receivables and sell them to investors.