Credit worthy: venture capitalist Georges Elias found a good idea nestled in a bad plan. He struck out and bought it to tap into wireless Internet sales.

GEORGES Elias paid his way through USC doing construction and remembers how nervous his customers felt about paying up.

"Most people still didn't want to write you a check," he said. "They were like, 'What if you wash off the ink and clean out my bank account?'"

More than a decade later, those same questions dog Elias, chief executive of West L.A.-based Creditel Corp., developer of a portable credit card processor that transmits information by wireless Internet connection.

"The first thing customers want to know is if it's safe," he said. "And with all the fraud and identity theft out there who can blame them?"

Creditel's PowerSwipe snaps onto a cell phone, encrypting credit card information as it's swiped before it ever reaches the phone. That step allows the product to offer an added layer of security by rendering ineffective programs that could illegally capture data. "We use the same system that's used by bank ATMs," Elias said. "It's very secure."

To date, the company has landed deals that make it available to users of Motorola phones and Nextel wireless services, and Elias said talks are under way to roll out the product to other providers.

PowerSwipe was tested during the last Super Bowl, at San Diego's Qualcomm Stadium, and Nascar concessionaires use the devices as they hawk refreshments.

It is also in the midst of nationwide tests by cable, utility and alarm businesses, said Elias, who declined to name the companies.

PowerSwipe has gained a following with small businesses, too, from pizza franchises to shuttle Services. "Now anywhere Nextel gets me a signal I can make a sale," said Brenda Maroney, who with her husband Randy use the device at their Norco horse and cargo trailer company, Rarin' To Go. "When we go to rodeos and shows we're able sell equipment and trailers right there. It's really boosted my business," she said.

Lean beginnings

Elias, 37, worked his way through USC, graduating with a degree in finance in 1992. He quickly set up his own real estate management business before joining ESI Inc., a Canoga Park venture capital and turnaround firm, in 1999.

It was there, in 2000, that an idea came across his desk for a company that wanted to make devices to conduct credit card sales over cell signals.

Its founders insisted the device act as a standalone product. Elias thought it was a crummy idea; cell technology changes often and people change their phones frequently. Instead, he felt a device that clipped onto a cell phone and used a wireless Internet connection would offer greater flexibility and speed.

So in September 2000, he established a partnership with financier and real estate investor Robert Assil and attorney Helene Pretsky and took over the company, paying the originators of the idea $1.7 million for the rights to their intellectual property. (Assil now serves as executive chairman and Pretsky general counsel and vice president of business affairs.)

As soon as the new business got started, they retained engineers to develop the card-swipe device. The company has since sought out equity and debt financing, but its principals would not say how many rounds or how much has been raised.

It took about a year to develop a prototype. Finding customers to buy into the device came more quickly. Instead of manufacturing on their own, Creditel signed a technology licensing and co-marketing deal with Motorola in July 2002.

"If we wanted to take this to the market quickly, we needed some big partners," Elias said. "Otherwise we needed a quarter-million dollars to do this on our own and when I checked the ATM we didn't have anywhere near that much in the bank."

Creditel followed the Motorola deal with a June 2003 contract with Nextel for exclusive use of its network and a distribution deal with Motorola.

The PowerSwipe retails for $199, and Motorola packages the device with a cell phone for $250. Nextel charges $12 a month for the service plus 15 cents for every transaction, with the three companies splitting the monthly fees and transaction charges. A $199 Creditel printer, about the size of a pack of cigarettes, rounds out the offerings. Receipts can also be e-mailed or faxed to customers.

"It's little bit more expensive (than a regular set-up) but if you're a mobile worker, your options are limited," Elias said. "As plumbers, we would take customers' credit cards and read them over the radio to someone back at the office, and you don't know who's listening in to that. This way the whole process is secure."

As of last week, about 1,000 units have been sold since the devices' November roll out.

Already, the company is adding new features to the PowerSwipe, including a global positioning system so employers can monitor employees and see where sales are being made. Another in development will include a camera that can be used for bar code reading and taking images of checks, which could then be deposited electronically.

"Our devices are already becoming more and more sophisticated," Elias said. "We just keep expanding the services we provide."

PROFILE

Creditel Corp.

Year Founded: 2000

Core Business: Wireless Internet transaction devices

Revenues in 2002: $0

Revenues in 2003: $900,000

Employees in 2002: 16

Employees in 2003: 26

Goal: To increase the number of units skipped by a factor of 10 by the end of the year

Driving Force: Delivering new services to small- and medium-sized businesses and making transactions easy and secure