For many businesses, the best way to grow is to reach new customers. The Internet has been an invaluable platform to help businesses acquired new customers worldwide at reasonable costs. It's also a great equalizer since it levels the playing field for small businesses against larger competitors. As a result, we see more and more traditional businesses begin to offer their products and services through the Internet.
Once a business decided to go online, it opened itself up to endless growth opportunities. There are also a vast amount of tools that can assist a company to effectively conduct its business online. One of the most critical and necessary tools is online payment processing.
Commerce Online Inc.
Commerce Online Inc (www.800Commerce.com) is positioned to become a market leader in both online and wireless merchant payment solutions. Through its alliance partner network, CMIB offers a full spectrum of secure and reliable transaction processing solutions using traditional, Internet Point-of-Sale (POS), e-commerce, social networks and mobile (wireless) terminals. The Company's electronic payment processing suite of services will enable clients to accept all major credit cards, in store or online, debit and ATM cards as well as ACH check drafts for payment.
Primary Payment Processor for Medical Marijuana Dispensaries
In an effort to keep these collectives within the guidelines of CA Proposition 215 and SB 420, the Commerce pre-paid debit/stored value ID card will offer a unique cash alternative to these regulated dispensaries.
Under new legal guidelines to be issued by the Obama administration, authorities no longer seek prosecution of medical marijuana users or suppliers as long as they conform to state laws. CMIB is aggressively capitalizing on this presently untapped and much needed medical solution.
Fourteen states presently allow some use of marijuana for medical purposes. California is unique among those for the widespread presence of dispensaries - businesses that market and sell marijuana. Presently, there are an estimated 300,000 to 400,000 medical marijuana patients in California and the figure is rapidly growing. There are also about 700 medical marijuana dispensaries now operating in California that openly distribute the drug.
Most of these operations only accept cash as well as pay cash to suppliers to the collectives, subjecting operators and collective members to theft, unregulated and potential criminal activities.
CMIB is the only company presently handling this sector of business with respect to the payment processing and loyalty card. Medical Marijuana Inc. (OTC: MJNA.PK) has a POS system but it does not have the loyalty and payroll card for suppliers that CMIB offer.
CMIB's pre-paid/ID card may be loaded through a PCI compliant gateway, Internet, POS system or PayPal. The card could be used as a member's photo ID which also contains the member's name, medical ID number and membership expiration date.
Each card CMIB issued will generate $4.00 to $10.00 per patient each month. The Company expects to have at least 30,000 patients by the end of January 2010. This will translate to $120,000 to $300,000 in monthly revenues for CMIB.
Medical marijuana is the most searched term on Google each month with over a million page views and Commerce Online is highly listed. We expect this sector to experience explosive growth as more movements are made toward the legitimization of medical marijuana and CMIB stands to directly benefit.
Products and Services
The Commerce Online suite of e-commerce products and services include:
- Private Label Gateway
- Credit Card Acceptance
- Debit/ATM Card Acceptance
- Phone/Mail Order
- Internet Processing
- Gift and Loyalty Cards
- Check Services
- Wireless/Mobile
- EBT
- Web Development and consulting
- ACH
- Equipment & Supplies
- Social network engines
In August, CMIB signed a merchant processing and Independent Sales Organization (ISO) agreement with Direct Technology Innovations (DTI). DTI is an ISO/Merchant Service Provider for the First National Bank of Omaha, JP Morgan Chase Bank, Fleet Bank, Wells Fargo Bank, N.A., and Best Payment Solutions. The company is presently listed with the Top 25 payment processors within the United States with over $2 billion in payment processing annually.
The Company also recently signed a reseller's and ISO agreement with Secure Financial Network (OTCBB: SFNL) for its payment gateway. The agreement allows CMIB to offer private label agreements for credit card, ACH, Check 21 and wireless processing services.
CMIB also has an exclusive Agreement with 561 Media Inc. to offer web design and social network engines as well as consulting services for its international online clients. Commerce Online will offer web services, shopping cart and payment processing integration and hosting. Through its wholly owned certified B2B directory 800Commerce.com, CMIB will provide corporate websites, hosting merchant accounts and online marketing through Google, MSN and Yahoo for low cost recurring monthly fees.
Recurring Revenue Streams
The Commerce Online Payment Network is marketed under reseller agreements with various ISOs and VARs (Value Added Resellers) who sell CMIB's products and merchant services to end customers worldwide.
Revenues are generated from monthly and per transaction fees. In addition to First Data Networks, a total of 13 platforms are integrated within the Commerce Online Network including Vital, First Data Networks, Payment Tech, Heartland and Valutec.
It is the goal of CMIB to be processing close to $100M through merchant services in its first year.
Projected Revenues
www.800Commerce.com will provide packages for business starting at $149 per month, which will include credit card processing, a corporate website, web hosting and emails, and online marketing. This will provide revenues to CMIB through the recurring charges of $149.00 a month per each client contracted for. The Company's goal is to have at least one thousand clients contracted with the portal in its first year providing over $1M in revenues.
Industry Overview
The US credit card processing is about a $10 billion industry. The major companies include First Data Corporation, Total System Services, Global Payments, and Bank of America's BA Merchant Services. The industry is highly concentrated with the top four companies account for 40 percent of industry revenues.
When it comes to consumer purchases, plastic is in, paper is out. Credit and debit cards, along with other electronic payment methods, are growing in popularity for their added convenience, greater security and ease of use compared to cash on-hand. Retailers must keep pace with these trends, while making sure to control costs and encourage sales by providing a range of electronic processing options. As a result the market for credit/debit card services is expected to grow from $49 billion in 2006 to $85 billion in 2010. eCheck/ACH services are projected to rise from $13 billion to $19 billion over the same time period. (Source: McKinsey & Co. Payments Practice; figures from 2010 are estimates.)
Ground Floor Opportunity
Of all merchant services companies operating in the United States, less than 10% have wireless payment methods installed. CMIB can soon establish itself as a leading provider of wireless and online merchant payment acquisitions. The company benefits from:
- Competitive pricing model
- VISA certified and fully compliant credit/debit card and bank-grade electronic payment platform
- Experience in integration with large volume merchants and banks across North America
- 24/7 customer support
- Next generation mobile payment solutions.
An example in the vast potential of the market is when CyberSource Corporation (NASDAQ: CYBS) acquired Authorize.Net in November 2007 for $700M. At the time, Authorize.Net was a payment gateway provider with only 190,000 merchant customers.
CMIB anticipates exponential growth in 2009 and beyond, and would evaluate a lucrative buy-out situation in the future given the opportunity to further increase shareholder value.
CMIB has the right infrastructure in place as well as partnerships to capture a huge market share of the rapidly growing multi-billion dollars payment processing market. In addition, the rapidly growing medical marijuana sector will present CMIB with huge growth opportunity as the Company is the primary payment processor in this space. Keep an eye on this company with aggressive growth potential. The stock has been trading in a range and could break out any time.
About Commerce Online Inc.
Commerce Online Inc. (www.800Commerce.com) is positioned to become a market leader in both online and wireless merchant payment solutions. The Company offers a full spectrum of secure and reliable transaction processing solutions using traditional, Internet Point-of-Sale (POS), e-commerce and mobile (wireless) terminals in conjunction with Industry Alliance Partners. The Company's Alliances provide electronic payment processing suite of services enabling merchants to accept all major credit and debit cards, as well as ATM cards and ACH check drafts for payment whether a retail, service, mail-order or Internet merchant. As an industry leader, Commerce Online is dedicated to delivering comprehensive services, such as merchant account activation, gateway connections, Web development and social network engines to a worldwide client base.
