Resellers will be offered a new way to pay distributors when an industry credit card is launched later this year. The DealerCard service is thought to be a world first and, according to its creator, could revolutionise the way the channel does business.
Moneytech, which bills itself as an independent third-party financial services provider to the Australian IT industry, is already taking applications for its DealerCard but will not go live until more than 2000 primary cardholders (company directors) are signed up.
“We could press ‘go’ once 500 cards have been issued but we think the magic number is 2000,” Moneytech managing director, Hugh Evans, said. “We should be ready to launch by September or October. In addition to the primary cardholders, we are expecting to issue a further three to five supplementary cards per company.
“The card can be customised so users have different access rights but it can only be used to fund product purchases through distribution. You can’t use it to take your wife out to dinner, buy your secretary flowers or put new tyres on your car.”
Resellers will be offered a silver, gold or platinum DealerCard depending on their buying power — a silver card has a credit limit of up to $100,000, gold reaches $250,000, and platinum is reserved for those trusted with even higher limits.
Additional benefits for early adopters will include the waving of loyalty program application fees, reduced fees for supplementary cards and the chance to win one of three DealerCards with $5000, $2500 or $1000 credits.
Evans hopes to have 5000 resellers signed up within the next year.
He said he was currently in discussions with a leading broad-based distributor and would be targeting all of the 65-85 IT distribution outfits in Australia that he estimated had annual revenues in excess of $10 million.
“For them it’s compelling,” he said. “They get their money straight away and don’t have to chase their receivables; the risk is no longer theirs so they don’t have to insure their debt; and, last but not least, it’s another form of payment. It’s a no-brainer.”
The new credit scheme could also provide a useful service to vendors, Evans said, because Moneytech would have information about who was selling what in the channel. This reporting might eventually be formalised into a research service.
“The card will give us some information as to what’s happening in the channel so we can report back to vendors,” he said.
“It is a way of creating channel intelligence rather than giving away trade secrets. No secret information will ever be sold by Moneytech.”
If all goes to plan, Moneytech will eventually introduce financial services covering transactions between vendors and distributors as well as for reseller sales to end users.
“We have targeted the wholesale level first for two reasons — there are lots of consumer credit issues at the bottom of the scale and credit limits are huge at the manufacturing to distribution level,” Evans said. “We want to be off the ground before we tackle them.”
Evans — a well-known channel identity who launched his local career as a sales director with modem manufacturer, Banksia Technology, before co-founding storage distributor Agate Technology in 1991 — has been working full-time on developing Moneytech for the past 18 months.
He said he still loved the IT industry and was keen to stay involved in some capacity.
“I wanted to stay aligned with the industry without having to compete as a distributor or reseller,” he said. “This was a good opportunity to do something within the industry, and for the industry, while remaining agnostic in terms of allegiances.
“Resellers have always had a challenge to fund their businesses efficiently and distributors have always had issues collecting money.”
In addition to writing business plans and conducting research into the security and technology behind the card, Evans needed to secure substantial backing — $2.5 million to make the business operational and a cool $250 million in card funding.
“The biggest stumbling block has been limited resources,” he said. “It’s a challenge for a bank to set up a new credit card but it’s a mammoth task for one person — funding the business, setting up the systems, designing products, overcoming all the snags. I’ve worn out 17 pairs of shoes visiting bankers.”
Evans is now looking into the possibility of providing other financial services, including superannuation and income protection.
And although the DealerCard project is still in its infancy, he is already looking into opportunities outside the IT industry. Evans said he has had a strong lead in the building trade and had also fielded enquiries from the healthcare and liquor industries. “It’s a final link in the chain allowing suppliers to know when they are going to get paid,” he said. “Simplicity is the key.”
How it works
* Credit card service expected to go live by October
* Resellers offered silver, gold or platinum according to buying power
* Additional benefits to be offered as a carrot to early adopters
* A total of 5000 dealers expected to sign-up within the next 12 months
* All distributors with annual revenues of $10 million also targeted
* More financial services planned for this and other tiers of IT industry
* Further details from