Erika Halter, president and CEO of BankCard Solutions, has an eye for opportunity. In the late ‘90s, her frustration with the electronic transaction processing industry led her to establish BankCard Solutions. More recently, her shock at the amount of money the major players in the daily deal wars are making - and taking out of Chattanooga - prompted her to create a local money-saving enterprise. Like Groupon and Living Social, CLASSeCASH offers subscribers everything from pizza to horseback riding lessons at significantly reduced prices.
But Halter is not keeping all of the spoils for herself; rather, she’s giving half of the profits CLASSeCASH earns to local schools in a bid to set her endeavor apart from the major players.
The Hamilton County Herald sat down with Halter to talk about CLASSeCASH, her vision for the company, her passion for education and her apparent appetite for taking on The Man.
Tell us about BankCard Solutions.
We started BankCard 15 years ago in Chattanooga with not one penny. I had to carve the company out of stone. Most of the people in the electronic transaction processing industry are hardcore business people; it’s highly competitive and not very romantic. But I saw its potential. It’s easy to do better in the industry because of the lack of customer appreciation.
I started BankCard Solutions out of pure, inundated anger at the lack of customer care. Credit card companies see everyone as a drop in their bucket, and they couldn’t care less if someone is bent out of shape. But when something goes wrong, the merchant is in the hot seat, and they’re talking with someone who couldn’t care less.
So because of that philosophy in the industry, I thought, “There’s a market share here. I’m going to things differently.” That was naive at the time, but it’s paid off. It’s been difficult, because when you try to compete with enormous companies, and you’re a tiny bean trying to make money, it’s not easy. But over time, we built a strong portfolio of customers, and now BankCard Solutions has an A+ rating with the Better Business Bureau, which in the electronic transaction processing industry is virtually impossible.
What sets BankCard Solutions apart from the larger companies?
Our customer care. We’ve built a strong business based on customer service.
How did you come up with the idea for CLASSeCASH?
Many of my BankCard merchants were involved with Living Social and Groupon, and I know how my merchants make money and market their business, so being a vicious shopper myself, I was attracted to it. Then I found out that merchants are giving 50 percent off their services, and then they get only 50 percent of what the deal makes.
I’m a nerd, so I started making spreadsheets and tracking the deals, and I could see at the end of each deal how many they had sold and for what price. And since I knew what Living Social and Groupon were paying the merchant, I was able to do some math, and I was stunned at how much money they were making. I thought, “People in Hamilton County are spending that much money?”
Why do merchants do these deals if they have to give away a big chunk of what they would normally make?
They do it for new customers. If you spend several thousand dollars on media advertising, you don’t necessarily get the customer. With this, you get paid up front, and you get new customers you would not have had. So you pay for your advertising as the customer walks through your door. That makes sense to me.
How much money are we talking about?
(Halter pulls a printout of a CLASSeCASH spreadsheet and points to a column in which she calculated how much money Living Social made in Hamilton County the week of January 22, 2012. Highlighted in yellow at the bottom of the screen is the amount of money CLASSeCASH would have donated to local schools if it had made the same amount of money – nearly forty thousand dollars.)
What would you have done with that money?
We give away 50 percent of our profit. Let’s say we sell one thousand coupons for twenty dollars. The merchant gets ten thousand dollars minus returns, chargeback fees and 2.5 percent processing. CLASSeCASH receives ten thousand dollars. Of that, CLASSeCASH pays approximately two thousand dollars to local schools. And the merchant decides where half of that money goes. They get to pick the school, whether it’s a local public, private or home school association. The buyer pickers where the other half goes. When you buy your deal, there’s a drop-down list, and you pick the school to which you want the money to go.
If we had gotten Living Social’s numbers in Hamilton County, we would have been able to give local school nearly forty thousand dollars that week. People don’t understand the enormous amount of money we’re talking about.
CLASSeCASH makes money, too.
Of course we make money, too. It’s a win-win situation. I’m not doing this because I’m Santa Claus; it’s smart businesses. It will help the schools, and it will help us. In this economy, businesses have to be creative and offer something no one else is. Since schools desperately need money, why not create a situation in which everybody wins?
Is there an added benefit for the customer?
Why would I buy a deal from Living Social when I could buy from CLASSeCASH, and some of the money would go to local schools? Also, unlike Living Social and Groupon, our coupons have no expiration date, so there’s no rush.
Why did you set the donation level so high?
Because I believe in the math. There’s plenty of money for me. If they’re making thirty-nine thousand a week, I’m making thirty nine thousand a week. Getting to that point is hard, though.
How much money have you given to local schools?
The schools have made about one thousand dollars since we launched. We mail checks to the schools on the 15th of every month.
Do you know how the schools have used the money?
Yes. In addition to picking a school, you can pick a sub-department at a school. For example, if a football club wants to have its own fundraiser, it can have a subheading on our drop-down list, and all of the money will go to that event. I pick Tyner Academy because their soccer coach called me and said, “I need a soccer goal, but I don’t have any money.” So whenever I make a purchase on CLASSeCASH, it goes to Tyner’s soccer team. I sent them a nice check last month.
So you use CLASSeCASH?
I buy things all the time. Who doesn’t want a deal that comes right to your smartphone, and all you have to do is hit “Buy?” I love the convenience.
Why schools?
I was born and raised in South Africa, and I’ve always looked at the U.S. as the country that’s on the cutting edge of knowledge. We didn’t have televisions until 1975. I can relate to 100-year-old people in this country because we didn’t even wear shoes to school. We would sit in big circles and talk about what happens in the United States of America. It was every child’s ultimate place. “In the United States of America, black people live among white people!” The United States was the standard bearer. And that comes with education - how open-minded you are, and how accepting you are of other countries and cultures.
To me, education solves the biggest problems in the world. So, my passion is that every child gets educated to the ultimate degree, and I get totally depressed when I think about how we’re a first world country, but our schools can’t afford books and pens and the most basic things, let alone the technology and the other things we should have.
What are your plans for CLASSeCASH?
If it works in Chattanooga, there’s no reason why it can’t work in other cities. I’m a long-term thinker, so we’ve already done the planning for that. If we pull this off, the employment and moneymaking potential for Chattanooga is huge. But that’s another day. For now, we’re trying to get customers and merchants to understand that they can be part of a movement that’s going to make a difference in this city.
Visit classecash.com to view recent deals and sign up for the daily email.