I need to offer credit cards services to a 2000 members strong candidates of my
College fraternity? Any help on how to go about this.

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Request for Question Clarification by webadept-ga on 25 Jun 2002 16:55 PDT

Hi, 

Could you be a little more descriptive on the question? Is this a
store, on the web, or are you getting them a credit card?

webadept-ga

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Clarification of Question by frederyx-ga on 25 Jun 2002 17:00 PDT

I intend to issue these cards to my members, just as banking
institutions do.
Like starting out with a secured account or offering unsecured cards
to those financially qualified. I guess my first question is do I need
to be an established financial institution before I can venture into
this? If so, how do I purse this?

Hi frederyx,

Credit cards such as Visa and MasterCard are issued by financial
institutions who are members of the Visa USA and MasterCard "Card
Associations".

Visa USA:
http://usa.visa.com/personal/about_visa/who/index.html

MasterCard:
http://www.mastercard.com

These Card Associations are membership associations owned by their
member banks. The Card Associations in turn license the member banks
to issue and accept their credit card brand.

So, if you want to do your own card issuing, you would have to become
a financial institution and apply to join one of the Card
Associations.

To form a bank in California, you must apply to:

The California Superintendent of Banks
111 Pine Street #1100
San Francisco, CA 94111-5613
(415) 288-8811.

This is not a simple or cheap process; for example the application
form must be accompanied by a $5000 fee. The process is discussed in
more detail in a previous Google Answers question:

Establish a bank/Obtain a banking license
https://answers.google.com/answers/main?cmd=threadview&id=17117

Once you have formed a bank, you must then set up your processing
systems and persuade a Card Association to accept you as a member. A
company such as First Atlantic Commerce can help you to do these
things:

FAC SecureIssue Overview:
http://www.firstatlanticcommerce.com/secureissue.html

FAC SecureIssue FAQ:
http://www.firstatlanticcommerce.com/si_faq.html

However, I find it hard to imagine that this approach could be
cost-effective for a potential customer base of 2000.

I suggest instead that you approach an existing card issuer with a
view to having them issue an "affiliate card" instead.

This would comprise a card bearing a design specific to your
fraternity. The card issuing and transaction processing would be
handled by the existing bank, but your fraternity would be paid for
the customer base that you have delivered to them. Depending on the
policies of the issuing bank, this could be a payment for each new
customer, and/or a small percentage (typically 0.1 to 0.5 percent) of
the amount spent by the cardholder.

Even though the card would not be issued or processed by your
fraternity, it would "feel" like a fraternity card to its holders.

You can see what an affiliate card looks like here:

The University of Alabama Alumni Association's Credit Cards:
http://ua1vm.ua.edu/~alumni/mcard.html

You may wish to approach California Bank & Trust to be your issuing
bank:
http://www.calbanktrust.com/

According to the following press release:
http://www.nctimes.com/news/081900/k.html
the California Bank & Trust have "four or five affinity cards with
2,000 to 3,000 cardholders".


Google searches used:

affinity "credit card" california
://www.google.com/search?q=affinity+%22credit+card%22+california

"become an issuing bank"
://www.google.com/searchq=%22become+an+issuing+bank%22


Google Answers search:

"banking license"
https://answers.google.com/answers/main?cmd=search&q=%22banking+license%22&qtype=all&btnG=Google+Search


Good luck with your venture!

Regards,
eiffel-ga

I know some financial institutions that would offer this service, but
I need to know, do you live in Canada or USA ?

webdude23-ga

The best thing to do is look at American Bankers Association
(http://www.aba.com). They are the ISO authority for emiting a valid
range of number for credit cards.

I live in the US (California).