In late November, Socialwise, Inc. (OTCBB: SCLW), known for their teen-focused brand BillMyParents® prepaid debit cards, announced that they have successfully closed their previous public offering and received an additional $3.4 million in capital. The announcement comes at an interesting moment in history when Teen glam gals are pulling their fee-loaded debit cards off the market, while at the same time many consumers are shifting from credit cards to debit cards as they face tough economic times.
Federal Reserve Governor Elizabeth Duke recently said the recession had made consumers wary of increasing their debt levels through credit card transactions and that the value of credit card purchases in the United States had declined 10% between late 2008 and early 2010. In contrast, although the rate of growth in debit card use slowed during the recession, debit card transactions had not declined.
Socialwise claims to recognize the trend toward fiscal responsibility sweeping across the country as parents not only help themselves, but are starting to educate their children as well. New, prepaid products like BillMyParents, Coca-Cola edo Teen MasterCard, the CARA Companion Card and the MyPlash MasterCards are all consciously marketing to the teen segment and their parents with fee competitive prepaid cards that encourage budgeting and relative financial freedom for Teens.
Jim Collas, President and CEO of Socialwise, Inc. commented:
We have laid down a solid brand awareness foundation this summer and fall in the social media, action sports retail and consumer event spaces with the Teen demographic to create awareness about our teen payment solutions. This round of funding is intended to allow us to fully engage our national marketing and customer acquisition programs for our premium products and to quickly gain momentum in the marketplace.
Socialwise is expected to announce several partnerships with online entertainment companies, pro athletes, social media and consumer events throughout 2011 promoting Teen spending independence.
Is it possible that consumers are becoming more diligent not only in their purchasing decisions, but the instruments through which they purchase? As the Kardashian Kard was revealed to be relatively expensive, exorbitant interest rates paid on credit cards are just as bad if not worse for the balance-carrying average American. Hopefully, as teenagers experience newfound financial liberty, responsible activities such as budgeting and reading fee schedules will become the norm rather than the exception.
Maxim Group LLC acted as the Placement Agent in connection with the Socialwise offering. The complete Form 8-K filed with the SEC is available here.