While debit cards have been accessible to small- and medium-sized businesses (SMBs) with business checking accounts, they’re not among the most heavily leveraged tools in the entrepreneur’s toolbox. Some businesses may have declined the option to get a debit card with their business account, and those that did get one may have it tucked away somewhere safe without plans to use it much.
Visa and Vantiv would like to change that, and they have a pretty simple plan: Give SMBs a reason to get — and use — debit cards by making them the access tool for faster settlement payouts. And by faster, they mean instant.
“If you think about how [settlement payouts] are made today, at worst, it is checks, and at best, it’s ACH, which still takes a couple of days,” said Vantiv’s SVP of Product Scott DeAngelo in a recent conversation with Karen Webster and Visa’s Head of Push Payments, Cecelia Frew. “So, our thought, together with Visa, is: How we could give those SMBs a better option?”
That better option is FastAccess Funding, which was launched last week. SMBs who use Vantiv as their merchant acquirer are able to receive their settlement payouts instantly via Visa’s push-to-card platform instead waiting one to three days, as is typical today.
DeAngelo noted that when Vantiv looked at its merchant customer base — primarily restaurants and retail — it became obvious that settlement windows that align to a Monday through Friday, nine-to-five schedule just didn’t work for a large segment of the market. Restaurants, in particular, do their big business on evenings, weekends and holidays, which left SMBs waiting days to access their cash flow. That meant they also had to wait days to make essential expenses, like payroll or replenishing sold inventory.
Keeping Integration Easy
FastAccess Funding, DeAngelo said, is as easy as providing them with a debit card number. That’s it. No point-of-sale (POS) integrations or time spent setting up a new process.
For those merchants who have their cards tucked safely in the back of a desk drawer, Visa’s Cecelia Frew noted, it’s just as easy (or even easier) to use those card numbers as it is to find bank routing and account numbers. And for those who don’t have debit cards, the opportunity to funnel SMB payments instantly into bank accounts could be the best incentive.
“We did some research on consumers who don’t have a debit card,” Frew explained, “and we found that if a consumer understands the benefit of using one to better access funds, [they] are more likely to get one in order to take advantage of that benefit. We think we will see something similar with small businesses. For those that don’t have one or who have put theirs away a little too securely, this could be the reason they make the effort to use it to unlock the convenience that it offers.”
DeAngelo said that Vantiv has heard the same thing from their SMB customers, 60 percent of whom were very interested in this kind of program. Fifty percent said they would make an SMB payment processing choice based on its availability.
For banks looking to get closer to their SMB customers, push-to-card programs like FastAccess Funding could become an important cornerstone in building those relationships, giving rise to new solution sets and business models to fuel SMB acquisition and usage. Getting fast access to their money might also be the working capital proxy those businesses have been wanting from their banks, Frew noted, as they benefit from a new tool to better manage their cash flow that also rewards them for purchases made with the card.
“We’re thrilled to have Vantiv first in market with this product,” Frew said, acknowledging that she expects more interest across the acquiring and banking ecosystem in this SMB push-to-card capability.
When Vantiv and Visa designed the service, their target business profiles included restaurants and bars, as well as small retailers with a focus on weekends, evenings and holidays. DeAngelo and Frew pointed out that they’ve also seen interest ranging from personal services providers (think fitness trainers, hair salons, spas) to the trades (plumbers, electricians, small contractors) and even urgent care clinics.
“They’ve all come out of the woodwork expressing the same demand for instant access to cash flow,” DeAngelo said. “There is a lot of the market out there where waiting through a weekend or two or three days just isn’t working for them.”