Alicia Syrett, a board member of the New York Angels, said she's concerned about the legal risks the company could face as a credit card service.
But McFarland insists Magnises doesn't carry the same risks that a traditional credit card company would. "The biggest legal advantage for us is that we don't have to take any of the credit risk, all the transactions flow through the bank and our members original credit cards, we're just the brand and network that lives on top," he said.
Meanwhile, Patrick Chung, founding partner of XFund, questioned the start-up's overhead costs and profitability.
"Our entire costs are $70 a year to satisfy each user and all of their events and all of the regular partnerships," said McFarland.
And according to the founder, the start-up's ability to mobilize thousands of members allows them to cash in on advertising fees, and brand partnerships. Magnises' partners currently include Tesla, Virgin and Samsung, "who all pay a licensing or partnership fee," McFarland added.
Since its launch in March 2013, Magnises has raised $3 million in funding from key investors including Lance Weaver, the former chairman of MasterCard, and Bill Gray, former CEO of Ogilvy & Mather.
"We've done $3 million in revenue in our first 18 months," McFarland told CNBC. He expects that the start-up will reach a target of over $25 million in revenue in the next 24 months.