For small businesses (SMBs), access to capital — and credit — smooths cash flow and drives growth.
High-spending SMBs? Well, the logic follows that they are investing in operations and day-to-day spending to spur top lines (and their own growth). While business credit cards are on offer from any number of issuers and payment networks, smaller firms have expenses that come in tandem with the goal of scaling, such as traveling to new clients or suppliers, or buying inventory in advance of sales that have yet to take place.
The base of SMBs is large (30 million strong in the U.S.), and underpins a hefty chunk of economic growth. It’s been estimated that the small business share of GDP tops 43 percent. For issuers, SMBs represent a key market for providing financial services.
To that end, Visa said on Wednesday (Oct. 23) that it has debuted Visa Infinite Business, billed as an expansion of its business card product suite in the U.S. The company said that the new offering targets high-spend SMBs, building on the Visa Business and Visa Signature credit products already on offer.
In an interview with PYMNTS, David Simon, senior vice president and global head of small business and medium enterprises at Visa, said that Visa Infinite Business — through Infinite B2B (tailored to everyday spend) and Infinite Preferred (focused on travel spend) — comes against a backdrop where 52 percent of SMBs leverage credit cards to run their businesses. Of those that use cards, Visa found in a study that as much as 45 percent of transactions are done across cards.
Simon told PYMNTS that it is increasingly important for SMBs to manage operations, and spend in a business environment where more payments are being made electronically. He pointed toward a continuing trend, where small businesses need higher spending limits than would be found with consumer cards.
It’s been well documented that business spending — especially on a B2B basis — is mired in paper, as 80 percent of firms still rely on paper checks when making B2B payments. As Simon said, credit offers a strong alternative to cash and check-based payments between buyers and suppliers.
“SMBs use credit in a variety of ways,” he told PYMNTS, “as end-of-the-month, short-term financing, on a per-transaction basis or as a longer-term financing vehicle.”
Speaking generally of the features offered through corporate cards, he said spend management tools (where limits can be put in place per card or employee) can control transactions, and improve operations with the insight that accompanies such data. Simon noted that Infinite Business integrates with SMBs’ accounting software, offering a holistic view of spending down to an employee or merchant level, with tailored alerts sent in real time. Businesses can analyze and dissect spending patterns on a regular basis.
With a nod to the 60 percent of SMBs that travel at least once a month, and the B2B options, he noted that rewards (through cash back or miles) exist as a way to reinvest in the business.
Drilling down into the typical SMB customer profile, he said building on the Visa Business and Signature lines comes as the firm continues to target companies with a high level of travel, or those that are, alternatively, marked by a higher velocity of spend — as measured by number of transactions, or dollar volume tied to those transactions.
Simon told PYMNTS that those attributes can differ by industry, or even by issuer, and added that Visa is working with issuers to determine what credit-line minimums and maximums will be. He said the credit limits will be higher than the other credit products Visa operates.
For the issuers, offering SMB-specific cards broaden their customer bases.
“For SMBs to use credit cards with suppliers to augment other forms of financing, and to avail themselves of the security, benefits and rewards of these cards — that’s appealing to them,” said Simon.