Charge Cards

As carrying cash becomes more cumbersome and attracts security threats with the consistent drop in currency value , Rashmitha believes there exists a business opportunity for the introduction of virtual money in the market place by introduction of a charge card for purchases by employed consumers whose employers would guarantee the credit.

A charge card is a card that provides a payment method enabling the cardholder to make purchases which are paid for by the card issuer, to whom the cardholder becomes indebted. The cardholder is obligated to repay the debt to the card issuer in full by the due date, usually on a monthly basis, or be subject to late fees and restrictions on further card use. In our case, Rashmitha shall be the card issuer as well provider of POS (Point of Sale) devices. The Charge Card is envisaged to occupy the space of corporate Local Purchase Orders (LPO) and corporate loan deduction guarantees for employees to retailers and service providers. Rashmitha shall derive its income from transaction service fees and lease of POS devices.

Operation of the Charge Card

1

RIS shall recruit retailers and service providers (creditors) and register them in its computer system. The creditors shall be issued POS devices for transaction Processing on monthly lease basis.

2

RIS shall engage employers into contract agreements to guarantee payments to service providers on behalf of its employees from payroll for monthly payments to creditors.

3

Employees shall apply for charge cards to RIS through employers as stipulated in the agreements.

4

When making a purchase from registered creditors, the employee’s charge card shall be swiped into the POS device taking cognizance of an agreed credit limit and issue receipts to both purchaser and creditor. Transactions shall be written directly to the RIS database (creditors’ ledger and debtors (employer) ledger). This transaction shall be recorded in real time over a secure connection using GPRS.

5

At an agreed time in the month, RIS shall issue statements to employers for payment within an agreed time span.

6

Statements will also be provided to creditors for their record and reconciliation.

7

Payments from employers shall be used to pay creditors by cheque on an agreed date of the moth.

8

Creditors shall also be invoiced on monthly basis for POS device leases.

9

RIS shall maintain or replace POS devices (including connectivity costs) at no extra cost to the creditors.

Credit Limit

The monthly credit limit will be pegged at % of gross income for employees (to be in line with legal requirements) or an agreed limit, (for corporate charge cards, this will be a fixed limit), less the credit that has been consumed at the time of transaction. Once an employer has paid its liability the consumed credit for each card will be reset to zero. Employers will declare new incomes for employees at each agreement anniversary and limits will be adjusted accordingly.

Charge Card Life

Charge cards will expire at each anniversary and fresh ones issued or in the event of an employee leaving the organization; the card will be blocked on instruction from the employer, or directly by the employer over the Internet. An employee may also block a lost card.

Security and Transparency

Data shall be transmitted in encrypted format to the RIS server over a secure connection using GPRS technology.
The back office system shall be a web based SQL database with multiple layers of access control
Stakeholders, depending on access level, shall be allowed to block lost cards or cards of terminated employees by employers.
Debtors (Employers), Creditors (Retailers and Service Providers) and Card Holders (Employees) shall be able to access their statements in real time over the Internet using secure password controls.
Integrated module

Technical Solution

The intended solution shall be a web based database with GPRS and Internet connectivity to enable real time processing of data, including update of card status by authorized stakeholders and viewing and printing of statements.

RIS Database Server
Database for transaction processing
POS Devices
GPRS Connectivity
GSM Airtime
Data Security (Encryption and PIN)

Prospective Creditors

Retailers (Game Stores, Shoprite, Peoples, Service Stations, etc)
Service Providers (Doctors, Hospitals, Pharmacies, Water Boards, HC, Hotels, Restaurants, Garages, etc)
Insurance Companies (to replace bank debit orders)
Money Lenders

Prospective Employers (Debtors)

Government

Private Sector

Army

Police

NGO Community

Advantages

Secure cashless transaction
Personal security
Convenient and Reliable
Corporates can avoid on (dubious) allowances to employees
May be used anywhere a RIS device is available
GSM coverage available to at least 80% of Malawi to enable connectivity
Card may be used for government and NGO cash transfer programmes to vulnerable
Communities ....etc

Risks

The only notable risk is where a debtor is unable to settle its liabilities. This shall be mitigated however by a perceived requirement for the debtor to provide a Bank guarantee upon signing on as well as insurance cover.

Customer Care

A Call centre shall be provided for the purpose of providing real time support to stakeholders. Apart from the call centre, RIS shall also provide online support using Internet chat, FAQ (available on website) and personalized visits to clients.

Income Streams

Transaction Fee
Service Fee
POS Device Lease