CU Small Business Members More Active Card Users
CU members that hold small business credit cards use those cards more often than small business owners use credit cards issued by banks, according to an analysis of data from Visa, Inc.
Card Services for Credit Unions, the association of credit unions that process their card transactions with FIS conducted the analysis. The association found that volume on credit union issued business credit cards grew 11% in the first quarter of 2010 while volume on business credit cards overall rose by only 4.8%.
Transactions on credit union owned business cards were also higher in the same period, averaging 7.5 transactions versus 6.5 for business cards overall.
"The performance of these business programs is very encouraging," stated Bill Lehman, vice president of Portfolio Consulting for CSCU. "Most credit unions already engaged with business lending. Business cards are a way to further those programs, better server members payments needs, and build profitability."
On average, small business credit card programs offer five times the profitability of consumer programs. Over the next 12 months, as the interchange framework resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act is defined, the industry will likely see changes in interchange fees for business cards, along with consumer cards. However, issuers can still expect greater profitability from business card programs thanks to larger average tickets, more transactions and greater spend.
"With over 29 million small businesses in the US spending nearly $5 trillion per year, this is a great opportunity for credit unions-and one that CSCU supports. Whether through our free marketing materials that help introduce our credit unions' business card offering to members, or recommendations on growth strategies from our portfolio consultants, CSCU is working side-by-side with our credit unions to help build and grow their portfolios," concluded Lehman.