In our previous blog, “Finding a Credit Card Program Your Bank Can Own,” we discussed how community banks can achieve ownership of a credit card program to enhance their offerings and deepen customer relationships. Now that you know how to find the ideal program for your financial institution, it is critical to understand how to compete with other issuers in the market effectively. Banks that aim to serve commercial clients, including nonprofits and local municipalities, can recognize huge advantages from offering commercial credit cards.
The Importance and Benefits of Commercial Credit Cards
Commercial credit cards are becoming a crucial tool for many companies. Commercial credit card spending is gradually projected to increase in every product category, with total spend by mid-market companies already at $590 billion in 2021.
Companies benefit from many perks when using cards. The 30-day float helps to manage cash flow, employee expenses can be better managed and automated with the cards, and virtual cards with ePayables support are more efficient in paying vendors than checks or ACH. According to Mastercard, middle market virtual card spending is expected to grow by 332% over the next three years, faster than any other market segment.
Commercial Cards:
- Create leverage for buyers
Commercial credit cards create leverage for buyers with the ability to float working capital from statement to statement, unlocking greater value for businesses. This reduces reliance on alternative financing sources, resulting in lower costs and optimized capital use. Essentially, it helps companies make the most out of their available resources.
- Relieve suppliers
Commercial credit cards also relieve many of the responsibilities of suppliers. When utilized, the relative cost, ease, and speed for suppliers to accept virtual cards is estimated to save 76% in cost and 72% in time compared to a traditional purchase order process.
- Increase security from virtual cards
Virtual cards are rapidly transforming B2B payments with their heightened security features. These digital cards allow for precise control over spending limits, merchant transactions, time frames and usage, which significantly mitigates the risk of fraud. Additionally, they come with digital invoice data, offering a more secure, adaptable and streamlined approach to handling B2B payments. This combination of features enhances safety and improves the efficiency of financial transactions.
- Streamline expense management
Managing employee and purchasing expenses can be a challenge for companies. With commercial credit cards, businesses can streamline expense tracking, making it easier to monitor and reconcile employee spending. This not only improves transparency but also reduces administrative workload and human error, allowing businesses to focus on growth and operations rather than time-consuming back-office functions.
Choosing a Respected Partner
To fully leverage the opportunities in the commercial credit card sector, it is essential to partner with a respected provider that offers a comprehensive suite of features tailored to your bank’s needs. A key factor is finding a program that not only allows you to retain control over rebates to companies from interchange fees but also supports the scaling of the program to large companies with hierarchical administration of cardholders and credit limits.
Your chosen partner should support virtual cards for ePayables which are essential in today’s digital-first B2B transactions. In addition to virtual cards, the program should include physical cards and detailed expense reporting to cover all types of transactions. It’s also crucial that the program features a user-friendly self-service portal with spend controls, automated rebates and advanced reporting and analytics. CorServ’s turnkey credit card issuing program offers these features to banks looking to launch a successful commercial credit card program.
Download the full guide or contact CorServ for more information about starting a credit card program.
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