Mastercard draws on its partnerships to attract small businesses

Mastercard hopes to tap into existing partnerships and clients from multiple business lines to combine services in a single menu for small to mid-sized businesses, a market where fintechs have made great strides over the past few years, enough to draw extra attention from established companies.

“It’s not just about providing access to the ‘five things’ these businesses want, but providing it in a way that’s easier and simpler,” said Amnah Ajmal, executive vice president of core products for North America at Mastercard.

Mastercard this week launched a small business program for Business and World Elite clients that includes discounts for Intuit’s accounting and tax products, as well as incentive marketing for recruiting and T&E.

The small business market was long caught between consumers and large corporates for payments and financial services, leaving and opening for companies such as Stripe and Square, which offered alternative connections for small businesses to adopt digital payments, either via smartphone hardware in Square’s case or an API hookup for online payments in Stripe’s case.

Both of these companies have since diversified, playing more pressure on each other, other fintechs, and established financial services companies and payment networks.

Stripe is adding authentication as a way to build myriad business services with a base of open banking compliance and the company’s core API that enables businesses to accept payments online. Stripe, which has a valuation of more than $22 billion, has also invested in Rapyd, a fintech that opens a path to the gig economy, local payment processing, e-commerce and financial inclusion.

Square is bolstering its ability to deliver digital invoices in Europe, and is nudging toward offering more general banking to its mostly SMB client base. The market is also attracting newer challengers as well as larger financial institutions such as JPMorgan Chase, which acquired WePay to pair small business payments with wider financial services.

There are also blockchain companies such as MonetaGo that are building invoice and risk management technology to serve small businesses.

This environment creates pressure for large companies, since many of these fintechs position themselves as alternatives to traditional payment and financial services rails. Mastercard’s own collaborative report with CB Insights, What to Watch for in Fintech in 2019, makes a particular note of small businesses being underserved by “established players” while digital challengers have seen a surge of investment.

In the past year, deal concentration has moved toward fintechs that serve the operations side of small businesses, with pain points including obtaining accounts,receiving cards, expense management and payments. Mastercard and CBInsights mention Revolut as an example, noting the European fintech now offers small-business bank accounts.

Mastercard is attempting to counter the diversification of other companies through tax, accounting and a “business assistant feature” that provides access to recruiting companies, gift purchases, and securing meeting rooms.

It’s adding risk management, with access to identity theft resolution experts and mobile phone insurance. There are additional incentive discounts to Monster.com, Shell Avis and others.

“Merchants have to pay taxes, they have to do receipts, they have needs that depend on a seamless digital experience or a one-stop,” Ajmal said.

Some of these features, such as automatic financial incentives and mobile phone insurance, are similar to a program Mastercard launched in April that was more focused on consumers, using partnerships with merchants to set up automatic discounts and other rewards.

Both the consumer and small-business programs aim to remove steps to trigger ancillary benefits or services, or remove the need to establish distinct relationships or accounts.

“We want to make sure there are no extra steps required to redeem benefits,” Ajmal said.