Industry Analysts Watching BillMyParents as Firm Targets Substantial Teen Market Growth

In early 201, BillMyParents, Inc. (OTCQB: BMPI.OB) (OTC.BB: BMPI.OB) changed its name from SocialWise, to better reflect its business focus.  The Southern California based company, which provides payment solutions to teens, young adults and their parents through its SpendSmart MasterCard is betting big on targeting one of the most desirable and stable spending demographics, the teen market...

In early 201, BillMyParents, Inc. (OTCQB: BMPI.OB) (OTC.BB: BMPI.OB) changed its name from SocialWise, to better reflect its business focus.  The Southern California based company, which provides payment solutions to teens, young adults and their parents through its SpendSmart MasterCard is betting big on targeting one of the most desirable and stable spending demographics, the teen market. 

BillMyParents' recently re-vamped management believes that they are the only pre-paid card services company solely focused on the special needs of teen payment solutions and their parents.  This focus has the potential to be one of the fastest growing segments of the pre-paid card industry.  The pre-paid card industry is a $300 billion industry, and is expected to grow to around $400 billion in 2013.   

Wall Street has been hearing more about the firm the Company brought on their new CEO, Michael McCoy who joined the firm after leaving from his position as President of Wells Fargo's credit card division.  Since Mr. McCoy has taken the helm he and his team have brought on board a strong team of industry experts to steer the company through an anticipated high growth strategy set to take place starting now and playing out over the next few years. The management team is back by a highly experienced early-stage investment team lead by Board of Directors member Isaac Blech, who put his single largest upfront investment into BillMyParents, Inc.  Companies in which Mr. Blech has been a founding shareholder now have a combined value of over $35 billion.  These companies include Celgene Corporation and ICOS Corporation.

Since McCoy's arrival, management has been busy rebranding the company, building the current tool set for the card, and running various beta programs.  By the end of 2011, the company had completed the stress testing of their card systems, and fully staffed, trained and implemented their customer services department. 

While business execution is critical, it appears the management team at BMPI is focused on quality and service too.  Already the company has won several awards, including the industry's Paybefore Awards Best in Category Winner for Best Youth/Student/Campus Pre-Paid Program for the SpendSmart MasterCard. 

The firm is currently ramping up several key marketing efforts which some industry observers believe could propel them quickly over the next 12-24 months.  BillMyParents' goal is to have 1 million card users within the next 24 months and 3 million card users by the end of 2014. 

Todd Ablowitz, president of Double Diamond Group, LLC, a payments industry consultancy based in Colorado thinks BillMyParents must overcome a couple of  key stumbling blocks in order to succeed.

"Despite recent regulatory changes affecting prepaid cards, the market is experiencing impressive growth -- particularly for open-loop prepaid cards, like BillMyParents, that can be used almost anywhere that accepts credit or debit," explains Ablowitz. "A lot of this growth is being driven by government and businesses that are using prepaid cards to load benefits, payroll and promotions. However, growth is happening in other prepaid sectors as well. 

"With teen buying power topping $200 billion, by some estimates, it's definitely an attractive target market.  However, a number of prepaid providers have yet to crack the code on effectively capturing the teen market.  Since the number of children and teens with mobile devices is on the rapid rise, increased prepaid functionality tied to mobile may be one key to gaining long-term traction within this segment."

With light fees, compared to most other pre-paid cards, BillMyParents should still manage to generate strong revenues.  With a monthly fee of $3.95 and a low load fee of $0.75 per load, as well as ATM fees and use fees from vendors, analysts estimate revenues per card between $8 and $12/month.  At one million users in 24 months the revenues for the Company could be between $8 million and $12 million per month or $96 million to $144 million per year. 

Potential investors are also paying attention to the fact that several pre-paid card companies have been acquired for a value of between $400 and $1,000 per user. 

Should BillMyParents successfully hit their goal of 3 million users by the end of 2014, a projected take-out valuation of between $1.2 billion and $3 billion may be surmised.  Since the teen market is highly desirable, and the data revenue could be substantial, those factors could come into play during any take-out scenarios. 

The Company currently has a market-cap of around $39 million at the current valuation, with a potential upside to $3 billion over the next several years.

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