Credit unions have a long, successful history with consumer credit cards. And as more credit unions consider expanding into business credit card services, they’ll be thankful to find a number of ways to enter the field with a minimum of pain and fuss.
“Over the past two years we’ve seen a great opportunity for credit unions and small businesses to get into the credit card market,” says Catherine Yox, senior product manager at PSCU Financial Services. “For credit unions, it’s a matter of looking for a new revenue stream. For small businesses, besides being able to manage and leverage credit, this is a way to have a closer relationship with a financial institution they already trust.”
In fact, Yox says PSCU saw 10% growth last year in its clients’ business credit card portfolios. “The biggest atraction credit unions hold out as credit card issuers is their lower rates,” she says. “Their involvement with small-business credit card customers opens the door for them to cross-sell insurance, car loans, and other services.”
Many vendors that provide business card programs are facilitators, not underwriters. “We don’t do underwriting,” says Mitch Raymond, senior vice president of credit products for Vantiv. “Otherwise, we perform every other aspect: authorization, fraud management, incentives management, customer service—including disputes and charge backs—billing, and even collections.
“We handle all of the blocking and tackling,” he continues. “Our expertise is in setting up and managing a program.”
PSCU’s Small Business Payment Solution, a suite that includes credit and debit cards and online banking, is one program that offers a soup-to-nuts array of services.
“We offer it to businesses that have up to 100 employees, with either company or individual billing options, based on an overall credit line,” says Yox. “For instance, a company may issue 10 cards among employees, each with a $1,000 limit based on a company credit line of $10,000. Business members using the accounts can ask their credit unions to reallocate credit limits whenever necessary.”
Yox, like Raymond, stresses that PSCU isn’t the card issuer. “We’re the processor and provider that enables a credit union to get a small-business card program underway.”
Vantiv’s business card program offers all of the features of its consumer package, which 760 credit unions nationwide now use. “We bring expertise and scalability to the arena,” Raymond explains. “Most clients use us to set up both types of programs—consumer and business.”
He cites “commercial functionality” as a selling feature of business card programs. “That means shared credit lines. These [include] the ability to consolidate several employee accounts onto one bill, allow purchase control and tracking, and offer reporting on card activity.”
Raymond says proposing a custom-designed business card program often creates sticker shock for credit unions. Therefore, “we don’t start with a blank slate, so clients don’t pay for development expenses. We arrive with a proven modular system in place and keep costs to a minimum.”
The availability of ready-to-go business card programs is sparked by credit unions’ increasing interest in the commercial market. “Credit unions are asking how to serve the business credit card market and how deep to go into it,” he says.
To answer those questions, Vantiv offers “Portfolio Optimization Services,” a relationship management program that examines, among other things, what the client aims to accomplish.
“Once we understand what that is, we bring risk management expertise, marketing optimization, and portfolio management services to the table,” Raymond says. “The only learning curve that falls solely to the credit union is underwriting and ongoing monitoring.”
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