Now Is the Time for CUs to Start Offering Commercial Credit Cards

Owning your own credit card program gives you the freedom to serve the needs of each member while deepening relationships.

By Anil Goyal | March 31, 2023

Source: Shutterstock.

Offering credit cards to commercial members has not been something that credit unions have prioritized in the past, but as the opportunity for commercial lending increases, credit unions are in a unique position to support their small business and commercial members.

As credit unions continue to pursue innovative ways to compete with larger financial institutions, providing their members with services that support their professional interests is a fantastic way to add value to member relationships and retain members. Offering credit cards to commercial members not only brings value to those relationships, it also brings monetary value to the credit union.

Provide Solutions to Unique Problems

Local financial institutions are known for their personalized service and close relationships with their members. As a result, small businesses prefer to work with their local financial institution. These businesses are important to their local economies and often have unique financial needs that require different solutions. Issuing credit cards allows credit unions to provide those solutions.

Credit unions can improve credit access and help their small business and commercial members with an additional source of funding to allow them to grow. A small business or commercial credit card can give businesses the ability to make larger purchases on demand, which can help manage cash flow. Small business and commercial cards often have detailed reporting features that make it easy for owners to track and manage their expenses. The increased control also gives owners a choice between central billing and individualized billing, as well as the opportunity to keep business expenses separate from personal expenses.

Deepen Your Relationships With Your Members

It is important to be able to provide unique and valuable services not just to consumers, but to small businesses and commercial members. Advanced services like virtual cards and expense reporting can be very valuable for business members to streamline their spending. It is crucial for credit unions to understand the new digital payment capabilities that are needed by small business and commercial members in today’s environment. Investing in programs that are going to meet their needs and add value to their banking experience will continue to build the trust and loyalty credit unions should be aiming for.

Credit unions already have a leg up on megabanks when it comes to relationship banking and serving as the primary provider of financial services, including credit cards, in their respective markets. Building a sustainable program requires tapping into relationship banking to build continued loyalty. Owning your own credit card program as a credit union gives you the freedom to make decisions and serve the needs of each member while deepening relationships, which leads to a well-rounded and profitable credit card program.

Many credit unions offering credit cards either launch their program with a limited product set and limited digital technology, or they outsource their credit card program to an agent bank. With advanced, fully digital capabilities that are now available at a low or no implementation cost, credit unions are in a great position to upgrade their credit card program. With more personalized service and local convenience, credit cards offer a differentiated opportunity for credit unions to deepen their community relationships. It is proven that members who have more financial products with a financial institution show improved retention and more activity across their products, leading to higher profitability. And small businesses benefit from relationship lending, which is core to community banking. What’s more, many credit unions that use relationship data in underwriting for credit cards have higher approvals and lower loss rates.

Anil Goyal

Anil Goyal is CEO at Corserv, an Atlanta-based payment card issuing company.