FORT LAUDERDALE, Fla. — Offering credit cards to small businesses could afford credit unions some real revenue opportunities, but they will have to make some changes to their card policies to take advantage.
That's according to John Yarley, senior business leader, Visa commercial products, Visa Inc., who said CUs face many challenges in this regard, due to inefficient card acceptance practices, limited awareness of cost benefit of card payments versus other payment methods, limited understand of card payment benefits, difficulties integrating cards into small business payment processes, and the perception of increased or additional fees.
By the end of 2007, there were 26.8 million small businesses-defined as having annual revenues of less than $25 million.
"Small business owners are highly motivated," Yarley said. "They view themselves as being self-reliant and as risk-takers. What they are looking for is to manage cash flow, control business, and they need convenience."
Yarley said there are several business payment trends, including: moving to products and services that attract lifecycles of the business (such as expansion), cross selling is extremely important, loyalty programs, online products and services, invoice-base spending, and security continuing to be top of mind. "We're seeing credit unions having a real advantage right now-credit unions know members need more than a bank."
As for 2009, security will continue to be a core concern for small businesses. And loyalty strategies should replace rewards programs for credit unions hoping to obtain or retain small business members, Yarley noted. "Twenty-five percent of small businesses still use personal cards for business expenses," he said-stressing the existing opportunity for business cards.
Michelle Shoop, senior director, credit products, FIS, who co-led the session with Yarley, said that due to the economy's outlook, lending is down and people are tightening their standards.
"Lenders are pulling back on lending to small businesses," she noted.
"Small business owners need you more than ever. They need your help," Yarley advised credit unions.
To help, Visa is focusing on three elements, Yarley said: retaining and growing existing base, enhancing spending ability, and delivery strong value. Visa also features security, liability waivers and easier record keeping, he said.
"What does it take to launch a business card and is it expensive?" Shoop asked. "Not that much different than a consumer card. And risk-management strategies should be followed just as they are for any lending activity."
