Payments Leader

Don’t Treat SMB Credit Card Clients like Consumers – by Jennifer Gardner

May 10, 2018

Jennifer Gardner, FIS | Senior Vice President, Credit/Debit/Fraud

Not every aspect of running a small or midsized business (SMB) is glamorous. That’s why many small business owners use credit cards to make their company’s purchases. After all, monthly credit card statements make it easy to keep tabs on all spending costs.

The problem is that many small businesses rely on personal credit cards instead of bespoke business/commercial credit card for expenses. This may have started out as a rational decision when in startup mode or because an entrepreneur may worry that opting for a card designed for businesses may lack the advantages that come with personal credit cards. Whatever the reason, many small businesses operate without a credit card designed to meet their specific needs.

How can financial institutions address this imbalance and encourage small businesses to enroll in commercial credit card programs?

The Wrong Tool for the Job

Many banks fail to make a big enough distinction between commercial and consumer credit card clients. Consequently, they are not effective at marketing and selling commercial cards to small business clients. The knock-on effect is that many small business owners keep using personal cards, and then incur the challenges and consequences that come from managing business credit with a vehicle not suited to their needs.

So why is this so important? If both cards represent a line of credit for making purchases, transferring balances or making cash advances, what makes commercial credit cards a better choice for businesses?

First, business credit limits are usually higher as businesses tend to make more money and spend more money than consumers do. Second, expense management reporting tools help them better manage their business and provide better oversight of their company spend. Depending on the type of commercial card, business owners also may have access to richer data, such as level two and level three addendum data. If that wasn’t enough, the cards also have rewards geared towards businesses and their purchases – office supplies, computer hardware and software, phone services, etc. – rather than rewards that apply to consumer spending categories like restaurants, grocery shopping, travel and so on.

Small businesses might not enjoy the same consumer protections – although most issuers extend the same coverage as a courtesy. And finally, business credit cards can come with additional perks for business owners such as sophisticated management tools to help you stay on top of your business expenses.

Changing the Conversation

Financial institutions, especially smaller community banks and credit unions, need to do a better job at marketing their small business card programs. Even though small business owners make branch visits more frequently than any other customer demographic (often, more than once per week), discussion of additional products is typically only when the business owner enquires. These regular branch visits are ideal opportunities to deepen relationships and, therefore, improve the likelihood of maintaining a solid relationship as the small business evolves into the middle market.

Improving the uptake of business credit cards is vital for long-term growth and revenue. For card issuers, the business credit card brings much better interchange and encourages higher average ticket sales. Business clients that are still locked into personal credit cards are easy pickings to move up to a business credit card – no need to cancel the personal card, keep both relationships for a more mutually beneficial relationship.

Make it Rewarding to Change

For business-owner clients, a bespoke commercial credit card gives better expense tracking, typically higher limits than personal cards and better business-specific rewards. Having a business credit card can also help SMBs build business credit ratings; if they use their card responsibly, they could improve their score and get lower interest rates in the event they need to take out a business loan.

Getting a business credit card also gives clients access to more signup bonuses such as incentive bonus points for spending a large amount in the first few months. Consider allowing customers to combine reward points across multiple cards so they can accumulate rewards even quicker by combining a business card with a personal one.

Business for Business’s Sake

Business owners may be able to use a personal credit card to run a business, but business cards are often a better choice when they offer benefits and rewards programs that were created with business owners in mind. Clearly, some business owners use a personal card as their business card without a problem, but if they have employees, are planning to grow or anticipate needing access to a higher line of credit or a loan in the future, a business credit card could be a better option.

Business credit cards are simply a better tool to help make small businesses – and their finances – run smoother than ever.


Jennifer Gardner

FIS | Senior Vice President, Credit/Debit/Fraud

Jennifer is the Product division lead over Credit, Debit and Fraud products. With over 25 years of experience in the financial services industry, she has held previous roles in accounting, finance, marketing and product management. She relishes in the energy provided by creatively approaching problem solving for clients and consumers and removing complexity to achieve speed to market.