SurgePays Inc (SURG)

[traderdogzz]

SurgePays Visa
Another life-enhancing product for the un-banked or under-banked is the SurgePays Visa card. This is an $11 billion industry.

SurgePays Visa Card

SurgePays Visa is a re-loadable Visa card. You load the card with money and use the Visa network even if you don’t have a bank account or a credit rating. Most people are familiar with re-loadable cards but this one comes with a twist.

The card acts more like a checking account than a traditional re-loadable card. For example, you can access your account through an app and even transfer funds to family or friends. You can also upload your paycheck with a simple click of your cellphone camera.

These services are taken for granted by most of us who have a bank account. But consider what life is like for the estimated 8.4 million who are unbanked in the USA. Or the 18.7 million under-banked, who have a bank account, but still seek services such as check cashing from outside the banking system.

No more waiting in long lines to cash your check at Walmart
Not having to pay the $4-$8 check cashing fee
Surge will earn revenue from this model in multiple ways including interchange portions of the merchant transaction fees, nominal monthly fees, ATM withdrawal fees, convenience fees and interest from monies on deposit. I don't know how much they will make but 1% seems like a reasonable fee by my 'back of the napkin' estimation method.

What sort of profit potential does this have? Let’s look at one scenario.

Assume 1 million cards are used as an alternative checking account
Assume a paycheck of $2000 every month
$2,000/month x 1 million = $2 billion in transaction value
1% of that could be retained through the various fees
$240 million per year in gross profit
If this scenario should play out, the 9.55x multiplier on gross profit would add $2.3 billion of market cap to the company. That is a staggering amount that is 50x the current share price. One million people using the cards in this fashion would add $25 per share to the price. And these products are not just for the unbanked or under-served. I can imagine the younger generation adopting these services since the fees are not that much different than a traditional bank.

What are the risks?

Surge’s profitability is directly tied to people using these cards more like a checking account and less like a gift card
If that happens, the features of this pre-paid Visa might be copied by other cards
The success of these cards depends on educating people about how to use the cards as an alternative checking account as well as distribution
Speaking of distribution, how does Surge intend to sell the products directly to the target demographic?

https://seekingalpha.com/article/4238650-surge-holdings-unknown-story-high-potential-growth