- Posted by Flexiti Financial
- On April 7, 2015
Posted on securebuzz.ca
Using speed and ease of the cloud to finance consumer purchases.
Despite its reputation for conservative financial policies, Canada is one of the most advanced countries with contactless payment. It’s almost ubiquitous. The USA is far behind, only adopting chip and PIN equipment this year.
It was in 2012, while an executive at Sears financial services division, that Peter Kalen noticed a lot of SMBs had stopped sales financing over time – no more “Don’t pay for a year” and “0% interest.”
“Consumers not having yet bounced back, I thought that didn’t make sense,” he said. “We did so at Sears and were successful. Sears did an outstanding job promoting its credit card. A quick and easy application process led to high approval rates.”
The dearth of retail financing came when institutions like Wells Fargo, GE Money, HSBC Finance and Citi Financial, didn’t perform well in the USA and retreated from Canada, leaving SMBs without any choice for underwriting financing.
When financing a retail purchase a customer is typically handed a brochure to complete, upon which the information is input by the salesperson. Sometimes the app is faxed, and the customer told to walk around the store for a couple of hours while the financing department makes a decision.
Seeing the market void left by retreating institutions and knowing the importance of speed and ease to the application process, Kalen saw an opportunity he had to grasp.
“I decided to replicate on the credit side the best of what a good retailer was doing,” he said. “Especially with items like water heaters, HVAC units, furniture, and home improvements, a phone-in base is still common today, which to me is still 19th century.”
He’s now CEO of Wellspring Financial, which is equipping SMB retailers with their own virtual credit cards.
Retailers are given a Google Nexus 7 tablet, chosen for its proven CPU, battery life, portability, and overall robustness.
“Salesperson logs in,” Kalen said. “Everything is secured with Air-Watch and is in the cloud. We can track activity by salespersons, who ask customers for their driver license and a major credit card. They scan the bar code on the driver license to populate the application.”
The credit card is scanned to match up with the credit bureau information, to avoid mistaken identities.
“Because that goes with PGP encryption, it took a lot of effort to work with Equifax and other credit partners. The new companies are who fraudsters go after, thinking their systems are weak. We’ve battened down the hatches. Everything goes into that secure server where all the decision making happens.”
Once customers confirm demographic information, they input their income, without having to tell the salesperson how much they make. Within 5-10 seconds they receive a response.
The entire event can happen in three minutes securely, without plastic in your wallet.
“Wellspring is a Bullfrog powered company trying to save paper,” said Kalen. “You have to ask for a receipt, because we’re defaulting to paperless. You don’t get a plastic card… you get a QR code in your inbox. Security questions are set up, which are asked for again when you bring in your QR code. You can show it to us on your phone, or print it.”
The result is a Wellspring Financial card at say, Joes Furniture. It’s usable only at that merchant.
From a merchant standpoint everything is a closed loop within the Wellspring Financial network. Everything is housed at a PCI-compliant data center with a partner that handles credit card data.
“We’re unique with speed, ease, and cool factor as well,” Kalen said. “We’re working with merchants left behind by those departing banks.”
To spread use of its new virtual credit card, Wellspring has a salesforce on the ground.
“We firmly believe speaking directly with these merchants is a great way to get to know them,” said Kalen. “Most are catchable on Wednesday morning when doing bookwork. It’s also an area most people in this space don’t invest in… they typically have a call center. Our primary view was to have a salesperson park in a plaza lot and work their way through. The Canadian market is smaller and Canadians are chummier.”