New Small Business Credit Cards

Last week, two interesting new small business cards were announced. I’ve covered business cards in a few previous editions of CardsFTW, and the list continues to grow. Our last, very informal count included more than three dozen commercial or small business fintech cards (available to paid subscribers at the end of this newsletter), as well as more than a dozen debit offerings.

Owners Bank

Last week, Owners Bank, the spin-off of 201-year-old Liberty Bank of Connecticut, launched a small business card. Unlike many startup-focused offerings, Owners Bank has a strong meat-and-potatoes vibe. Owners originally launched a no-fee checking account, followed by term loans, and now a revolving credit card product.

Owners Bank makes a big deal out of its no-fee checking account product, but the credit card includes a lot of fees: foreign transaction, late payment, over the limit, returned payments, statement fees, and more. The APRs are good at 16.99% vs. a general consumer card average of 20% or so right now.

Also interesting: this is very much a regional bank play. A minimum credit score of 650, plus a location in Connecticut, Massachusetts, Rhode Island, or Pennsylvania, is required to apply for a loan. In contrast, most tech-enabled cards are nationwide offerings.

Nav Prime

A new fintech SMB credit card offer comes from marketplace Nav. The Nav Prime card is a no-fee Visa card issued by Thread Bank (Nav’s existing debit card product is issued by Blue Ridge Bank). Both products appear to operate on the Unit banking-as-a-service platform.

Nav Prime is not a traditional credit card; it is a charge card with daily pay. Daily pay is gaining traction as a way for subprime users to build credit, tech companies to limit capital lending costs, and brands to engage in payments and earn higher interchange than on debit card products.

In order to be eligible for the Nav card, it appears that a business needs to subscribe to Nav Prime for $49.99 per month, which includes many services, such as a debit card, a credit card, and credit reporting tools.

While the Nav Prime card can help build business credit (and doesn’t require a personal credit guarantee like many small business cards from traditional issuers like Chase or American Express), a daily pay charge card doesn’t provide any real financing for the business; operationally it is much like a debit card. While almost nationwide, the Nav Prime card is not available in a few states (California, Nevada, North Dakota, and South Dakota).

Earning and Burning

When we write about credit cards, we are very focused on how cardholders earn points: Are there bonus categories? What is the rate? Can points be transferred? We focus less on the redemption options, especially as major consumer-facing sites have developed points valuations (which are on the high side, in my opinion). You may be wondering: what is an American Express Membership Reward point worth? Well, that depends on how you use it: anywhere from 0.6 cents to 2.2 cents!

A significant challenge for users is determining the best way to redeem points. Recent market entrant Bilt, which developed a credit card product with Wells Fargo for users to earn points on everyday spending and for making qualified rent payments (which mostly occur via ACH, not card rails), has transferable points to a variety of carriers (most international).

This week, Bilt announced an integration with points company Awayz/Odynn to help users use their points. Maintaining customer satisfaction and reducing churn is all about people being able to use their points in ways that leave them feeling good about their card. Research has shown that consumers are most satisfied with their card immediately after a redemption (sorry, I can’t find the reference). It’s also then a time users may stop using a card (if your balance goes to zero, you could move on). Using points is hard. If it was easy, we probably wouldn’t have loads of websites dedicated to teaching you how to use it.

A funny thing about all these points cards is that the reality is many people do redeem for subpar values. I am familiar with many cards, seeing up to 50% of their redemptions for the lowest value (typically cash back or a product). Early on in my credit card experience, I did this, too. Card profitability depends on cardholders redeeming in a variety of ways.

Fall Conference Season

I’m excited about the upcoming fall conference season. Totavi will be attending two conferences this fall:

CardCon 2023

CardCon is the conference for consumer credit cards. As with the past few years, I have been helping organizer Jason Steele put together a panel focused on fintech card entrants. This year, Totavi’s own Ellen Perl will moderate a panel exploring alternative secured card models. Joining me will be founders from Pesto*, Yendo, and Vie, plus Mastercard.

CardCon is November 7th through 9th in Nashville. Register today with code “cardsftw” to save 20%.

Money20/20, 2023

Money20/20, 2023, is another event I look forward to. With a pandemic-related exclusion, I’ve attended every Money20/20 since its inception in 2013. We’ve set up a party tracker (please contribute) and look forward to seeing you roaming the Venetian halls near Starbucks or Illy Caffè. Email us if you want to meet!