“Between launches of new cards and revamps of existing cards, 2018 has been an exciting year for the credit card world, to say the least,” according to The Points Guy, an online credit card comparison site. “However, issuers aren’t slowing down—there’s already a lot in store for 2019 on the credit card front.”1
Driving this activity into 2019 and beyond is “the imperative for financial institutions to develop and continually refresh sound payments strategies to remain competitive in a market being reshaped by technology, new competition, and customer demands,” according to McKinsey & Company.2
A Kaleidoscope of Business Credit Card Rewards
A growing subindustry of comparison sites underscores the range of business credit card rewards programs. A sampling includes: quadruple points in categories where an SME spends the most; up to 200,000 bonus miles of travel in the first six months; 7x points for ridesharing; tens of thousands of bonus points in the first three months; gift cards; extra points for buying ads online; cell phone insurance; a discount on shared office space; 1.5 points per dollar on purchases over $5,000; and a free year of productivity software.
Even more targeted rewards have been developed for business credit cards co-branded with airlines, hotels, hardware retailers, e-commerce giants, and others, addressing niches from the business traveler to the construction company to the digital-first enterprise. (Think airport lounge access, free hotel nights, 5 percent off construction supplies, cloud computing discounts.)
Many SMEs Favor Business Credit Cards with Rewards
Three quarters of small businesses prioritize rewards when choosing business credit cards, according to a 2018 Mercator survey. Often, their preferred reward is cash back, over airline travel miles or points toward merchandise such as office supplies and phone bills. Among other priorities, many seek to avoid annual fees (79 percent), receive good customer service (78 percent), access generous credit lines—over $10,000 (77 percent), and enjoy competitive interest rates (74 percent).3
All of those options put SMEs in a position of having to balance priorities and the actual cost/benefit ratio of rewards versus fees versus annual percentage rates (APRs). More rewards often means more business credit card fees and higher interest rates. That said, some business credit cards reward new cardholders by waiving the first year’s annual fee or promising a zero percent introductory APR, so SMEs can assess the benefits without paying a premium.4
Also complicating SME decision-making is the continuous evolution of business credit card rewards. The whole concept of credit card rewards dates back to the late 1980s, beginning with airline miles, and “the concept snowballed from there,” according to Bankrate, another comparison site.5 Fast forward to today, and “credit card offers change regularly, based on the health of the economy and issuers’ business objectives,” according to the WalletHub comparison site.6
Leveraging Business Credit Card Rewards Programs
Whether business credit card rewards come in the form of cash back, points, or other benefits, they can help lower operating costs for small businesses in ways that are unavailable with debit cards, wire transfers, cash, or checks.
“No single card is ideal for every business,” as U.S. News and World Report says on its comparison site.7 One way of maximizing business credit card rewards is to opt for multiple cards that give bonus points on different types of spending. For example, an SME might have a credit card that gives bonus points on office supplies, and another that gives bonus points on airfares and hotel bills.8
SMEs can also use credit card rewards as a tool for employee retention and motivation in a tight job market. They can opt to allow employees to keep their points, rather than pooling rewards and using them to defray business expenses. Many employees appreciate being able to use the rewards they have built up on their business credit cards to treat themselves and their families to travel, dining, and other personal benefits. Using points for parties and other employee benefits is another choice SMEs make.
