Don’t be fooled, entering a new market has its challenges. Innovators creating new industries find the old adage, “Pioneer, Disappear” all too true. It is nearly impossible to create a new market alone, just ask Friendster. “What’s Friendster?” Friendster was a social network that was put out of business by MySpace until they were crushed by . Likewise, wasn’t the first search engine, remember Alta Vista, Yahoo, Inkomi, Web Crawler and Mamma, no one else does either. Entering a new emerging market is not for the faint of heart. Early pay is one of those markets.
The market for early pay is not only new, it’s extremely large; much larger than one bank or company could handle alone or should enter alone. It is fraught with danger. Having no historic model to access risk, you could be lending to borrowers that have no ability or intention of paying you back on time or at all. You could simply be using early pay to become a cheap PO (purchase order) lender or worse an MCA (merchant card advance).
If you think a standard factoring model can be used to gauge repayment from a debtor, I have one million dollars in losses to prove you wrong. One issue many don’t consider is early pay requires a lender to take 100% concentration in one loan with one debtor, not a smart move for a lender, who is used to spreading risk. There is also the fact that there is no second source or repayment or security to go after if things go south.
Then there is the matter of branding. Large lucrative markets require large capital expenditures to advertise and create a brand to attract the best quality borrowers. How do you get your name out there and attract solid customers? MasterCard and Visa, who in the 1960s, created a worldwide brand were able to do that with the help of bank partners. Hundreds, even thousands of banks joined to advertising the same co-brand taking an unknown product from idea to a worldwide juggernaut.
What are the benefits of joining an Early Pay marketing group like the one started by MasterCard?
The ability to share in marketing, backroom processing efficiencies, and most importantly, the ability to spread risk. Bringing together banks, along with independent financial institutions, to share its brand, platform, business and risk could mean the difference between success, survival and disaster. Joint venture partnerships historically have proven effective in educating new markets, creating efficiencies and spreading risk at a cost each participant can afford.
AeroPay has developed a channel partner program that can transform, enhance and grow your current business.
AeroPay is unlike anything in the industry. We want growth and we are looking for channel partners to enhance that growth. Together with our partners we will populate a new financial landscape by providing buyers and sellers with an unparalleled early pay program tailored specifically for them.