Evanston entrepreneur’s ‘mercy’ card helps the needy
BY SANDRA GUY email@example.com November 30, 2012 3:34PM
Updated: January 10, 2013 2:14PM
If you feel a twinge of guilt in the worst of a Chicago winter when a homeless person begs for food, an Evanston entrepreneur may have come up with an answer.
Jed JohnHope, 30, whose family has seen hard times, is creating a “Mercy” gift card that will let donors feel more comfortable giving the homeless choices rather than a handout.
The so-called Mercy Card will let homeless people pay for meals with a prepaid gift card good at restaurants that take major credit cards.
The cards, previewed at MercyCards.com, are expected to go live in March.
“Technology already exists to automatically deny transactions from a certain class of merchant, so the innovation is really in our custom filter” that restricts purchases to merchants who’ve agreed to work with the homeless, JohnHope said.
JohnHope also continues to work on a system that would let homeless people buy transit cards or fill prescriptions with a prepaid smart card that would prevent less desirable transactions at the point of purchase.
JohnHope, whose mother raised four children by herself and whose sister had been homeless for a time at age 17, noticed several homeless people outside of a local Jewel-Osco grocery store.
He found himself thinking that fewer people carry cash, since so many transactions are now electronic, and wondered what he could do.
“I know people ask themselves as I did, ‘How can I help without knowing how this person is going to spend the money?’” he said.
Sue Loellbach, director of development at Connections, said the Evanston-based social service agency will test the Mercy Card as a potentially valuable form of currency.
The not-for-profit serves about 1,000 people who are either homeless or in danger of losing their homes. Connections helped 150 of those who were homeless move into permanent housing last year, up from about 80 four years ago.
“Food pantry choices are limited, so the Mercy Card would let our clients make their own decisions about some of their food choices,” she said.
Loellbach hopes the Mercy Card will encourage donors, too, since they will know they are giving a tangible and beneficial gift.
“We can tell people who want to provide aid right now that this is a wonderful way to do so,” she said.
Loellbach is heartened that one of Chicago’s tech entrepreneurs has focused on the needy.
“We are usually years behind the tech curve, so this is fun and really encouraging,” she said.
Nearly one-fourth of the U.S. population, or 68 million people, tell surveyors they have used payday loans, check-cashing services, pawn shops or other alternatives to banks to pay their bills in the previous 12 months, according to the Federal Deposit Insurance Corporation.
Banks and financial institutions have developed a variety of prepaid cards to serve as checkless checking accounts, such as Visa, Mastercard and American Express gift cards. Prepaid cards such as the Insight Card let users deposit checks with their smartphones, opt in for overdraft services and sign up for free direct deposit of their payroll checks or federal government benefits, among other things.
The Chicago-based Center for Financial Services Innovation reports the people who resort to emergency funds outside of a bank paid a combined $78 billion in 2011 in interest and fees when they used prepaid cards, online payday loans, subprime credit cards and other financial services. That number is expected to jump to $85 billion this year. The cards themselves generated $1.6 billion in revenue in 2011, up 22 percent from 2010.
“The reloadable, general purpose prepaid card is something we’ve been studying and promoting for a long time,” said Rob Levy, manager, insights and analytics, for the center. “These cards can function as a bank account substitute without check-writing privileges and can be cheaper and more valuable than many of the alternatives.”
JohnHope, a second-year MBA student at Northwestern University’s Kellogg School of Business, came up with the Mercy Card idea after he had just returned from a five-week trip to Europe with a good friend. The two talked daily about how they would create a legacy by making a difference in the world rather than pursuing money for its own sake.
“When I die, I want people to know I was here,” he said. “I want to make money, but I don’t have to give up my freedom to be happy.”
Indeed, JohnHope, a native of St. Croix, Virgin Islands who earned a chemical engineering degree at the University of Delaware, already had a successful career before he decided to get his MBA: He earned a six-figure salary and led a team of 10 engineers, scientists, technicians and administrators for Arcadis, a multinational engineering consulting firm.
JohnHope decided to get his MBA and learn how to run his own business after he spent a summer internship at Morgan Stanley, where he did low-level work from 8:30 a.m. until 2 a.m. the following day, including weekends. He had trouble even scheduling a hair cut.
“I don’t mind if I’m doing really intense stuff,” JohnHope said. “I will probably work just as hard getting Mercy Card operating.”
The Mercy Card innovation emerged from a competition at Northwestern University’s Kellogg School that’s unique on its own: Would-be innovators presented their ideas to the crowd, and those whose proposals were eliminated were allowed to join other entrepreneurs to promote and help develop their technologies on the spot.
The Chicago area is home to 14 incubators and accelerators — nine incubators and five accelerators — aimed at helping startups win mentors, capital and profits.