The Internet payday loan market is the fastest growing segment for the payday loan industry with opportunities growing globally. With over 224 million Internet users in North America alone, and approximately 2/3 of the population on the Internet, this represents the new frontier of growth. Given that 68% of North Americans have a connection, it is reasonable to assume that 34% of existing payday loan consumers have an Internet connection.

Opportunity

                                  USA                Canada Industry Revenue          6,000,000,000292,500,000 Industry Loans                  133,333,3334,500,000 Customer Potential          13,333,333750,000 Population                  330,000,000        30,000,000 Percentage Users          4%        3% Pop internet use          67%        67% Target Group %                  34%        34% Potential Internet Customers     4,466,667        251,250 Avg. Fees                  $45.00$65.00 Potential Internet revenue  $2,010,000,000USD     $163,312,500CDN

The key to future success is to take advantage of Internet marketing, reduced overheads and automation requirements. Software systems, integrated ACH programs, SVCs (stored value cards) and driving loan leads into your inbox will be critical.

With opportunity come pitfalls. Outsourcing leads can be a potential problem. Lag times between applicant and receipt could be enough that the customer has already been underwritten and accepted by an operator generating their own leads. Data entry of leads could result in errors in banking, or other critical info affecting results.

Another pitfall is not having automated payday loan ACH. Integrating ACH payments into a program and allowing for due and overdue accounts to be managed within one system reduces error and costs. Rather than exporting or data entering overdue accounts into a third party system, an integrated system increases accuracy and efficiency.

The future for payday advance holds the prospect of auto-underwriting. Customer applications will pull a series of verification services to determine historical defaults, SSN authentication, job propensity indicators, ABA and account verification. Only exceptions would be emailed to an underwriting team. The former applicants would immediately be funded through the daily ACH/ SVC processes.

Current Payday Internet lending models can reduce overheads costs as much as 80%, including rent, labor, telephone, etc. True auto underwriting could reduce them further. As in any industry approaching maturity, low cost producers (such as Wal-Mart) emerge as leaders. Other sectors such as banking, insurance have taken advantage of Internet/Call center solutions to achieve these cost savings.

We can only anticipate that the Payday Advance industry is poised to follow in the footsteps of these other industries as Internet and Call Center opportunities expand.

existing revenue base expected to be growing at less than 5%

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