PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Business Credit Cards: You’d Better Watch Out!

By Ken Paterson
May 27, 2011
in Mercator Insights
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Mobile banking

In the fall of 2010, small business creditcard issuers experienced a brush with potential new regulation asthe industry was accused of widespread solicitation of consumerswith business card apps. The allegation was that the objective ofthese solicitations was to avoid the restrictions of the card actwhile issuing cards to consumers. Business credit cards wereexcluded from the scope of the CARD Act -in part due to therationales that businesses should be better able to analyze theirown credit terms, as well as a concern that adding regulation(especially in 2009-2010) might jeopardize the fragile supply ofcredit to small businesses.

The release of a new report from the Pew Safe Cards Project againraises questions regarding the exclusion of business credit cardsfrom the strictures of the CARD Act. In particular, the CARD Actcontrols over penalty fees, application of payments, penaltyinterest rates, and notifications regarding changes in terms arecalled out as lacking in business products. Bank of American andCapital One are called out as leaders for incorporating keybenefits of the CARD Act into their business card terms.

As I have discussed in past Small Business Credit CardUpdate reports, it is just a matter of time before many CARDAct protections become de facto expectations for business products,and Bank of America and Capital One deserve credit for their movesin that direction. What is less clear is how big an issue is themis-targeting of business card solicitations to consumers. Often,the public interpretation is that issuers are purposelycircumventing the CARD Act by pitching business cards to consumers.Hopefully the following conclusion in the Pew report will not betotally lost in the headlines:

Though business credit card offersrepresented a historically high proportion of all credit cardoffers in 2009, this surge was mostly due to a drop in consumercard marketing rather than a spike in business card marketing.Overall, analysis of direct marketing trends provides no evidencethat issuers are attempting to circumvent consumer safeguards byshifting
households toward business credit cards.

from U.S. Households At Risk From Business Credit Cards, the PewHealth Group, May 2011

Most small businesses are in factvery small, and their finances do indeed merge in many cases withthose of the business owners’ households. But let’s not forget howimportant a step it is for a small business owner to separate hisor her business finances from those of the household, and thefinancial benefits business cards can offer small businesses interms of tracking and financial management.

Business cards are again in the spotlight. Let’s hope issuers andregulators can stake out a reasonable middle ground regardingcredit terms and user protections that will avoid disrupting a keyservice to small businesses.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Tags: DebitMerchant AcquiringMobile PaymentsPrepaidSocial Media

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025
    agentic commerce

    The Agentic Advent: How the Next Iteration of AI is Shaping Commerce

    June 6, 2025
    payments hub, digital banking

    All in One: How a Payments Hub Eliminates the Pain Points

    June 5, 2025
    Vertical SaaS

    From Underdogs to Industry Leaders: How Vertical SaaS Powers Mid-Sized Firms

    June 4, 2025
    credit card surcharging

    A Perfectly Understandable Bad Idea: Why Merchants Should Reconsider Surcharging

    June 3, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result