Payday Loan Lending Profits, Pitfalls and Prophesy

Toronto, Ontario July 10, 2006

For immediate Release

Payday Loan Lending Profits, Pitfalls and Prophesy


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. http://www.cashx.ca


Industry Revenue in the United states is estimated at 6,000,000,000 and Canadian revenues are expected to be 292,500,000. Industry Loans in the US are
133,333,333 while Canadian loans approximate 4,500,000
Cash-X estimates customer potential at 13 million in America and 750,000 in Canada, This represents 4% usage in the USa and 3% usage in Canada. With over 2/3 of North Americans on the internet it is safe to assume the Payday loan comsumer has at least 50% of the average internet usage. This translates into 4,466,667 potential internet customers in the USA and 251,250 in canada. Averge Loan fees are $45.00 In the US and $65.00 CDN reulsting in potential reveues of$2,010,000,000 USD and 163,312,500 CDN.

The key to future success is to take advantage of Internet marketing, reduced overheads and automation requirements. Software systems, integrated ACH programs, SVC’s (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% http://www.cashx.ca
·