While the consumer credit card market
stagnates due to economic pressures, the small business card market
has seen a noticeable uptake in activity. MasterCard is now taking
a small business savings programme pioneered in the US and hoping
to replicate its success in the UK. Victoria Conroy reports.


Jason Olliver, MasterCardAlthough
economic turbulence may have subsided over recent months, there is
still enough uncertainty in the air to make both consumers and
businesses more cost-conscious and wary about card-related
spending. Consumers may have reined in their card spending in
response, but in the small business sector, the reverse has

Not only are small businesses showing more
interest in using cards to manage their spending and budgets, they
are also demanding that such cards incorporate the features more
commonly found on consumer cards, like loyalty and rebate

A small or medium-sized enterprise (SME) is
defined as a company with fewer than 250 employees; there are 4
million such businesses in the UK. Warwick Business School of the
UK carried out a recent study of small and medium-size business
finances, which used a sample of 2,500 companies.

The study found that business credit cards are
the most widely-used financing tool for small and medium-sized
companies. SMEs spend over £1.8 billion ($2.9 billion) on their
business credit cards each month.

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Most business credit card spending by SMEs is
for everyday costs and bills, such as travel expenses and raw
materials, although 12 percent of the study’s respondents said they
used their corporate cards to buy equipment and vehicles.

Only a small proportion of the money spent on
business credit cards is left outstanding as borrowing at the end
of the month. Businesses using personal credit cards pay off an
average of 79 percent of these debts in full each month. For
business credit cards, the proportion is 95 percent.

MasterCard in the UK is hoping its most recent
product launch will meet many SME needs – the MasterCard Business
Savings programme, which allows small businesses to receive
automatic rebates on essential and everyday purchases.

It is the first automatic rebate programme of
its kind to be launched in the UK, and follows the template of
MasterCard’s Easy Savings programme, launched in the US a couple of
years ago.

Data from the Easy Savings programme found
that small business cardholders enrolled in the scheme increased
their spending by more than 60 percent at participating merchants
from 2007 to 2008, and nearly 70 percent of these cardholders were
new customers for these merchants.

Saving with everyday

MasterCard launched Business Savings
in the UK in response to research it commissioned which showed that
81 percent of small business decision makers would value automatic
savings of up to 10 percent on everyday purchases, regardless of
which channel is used to make a purchase.

Given that a typical small business spends
approximately £15,000 per month on small business-related needs,
MasterCard is hoping that its new programme will attract a large
portion of that spending, thereby boosting purchase volumes and the
network’s penetration into the small business sector.

The first issuers participating in the
programme are Clydesdale Bank and Yorkshire Bank, although
MasterCard is in discussions with other issuers.

All carriers of a MasterCard Business card are
eligible to enrol in the programme, and accounts are automatically
credited with a rebate within days of spending at participating
merchants. Initial launch partner merchants include vehicle hire
firm Avis, computer supplier Hewlett Packard, software giant
Microsoft, online recruitment firm Monster, Barcelo hotels, and
internet server hoster Winweb.

Jason Ollivier, head of small business for
MasterCard, told CI that Business Savings is a unique
proposition in Europe and that the network has developed an
infrastructure upon which a patent


is pending. MasterCard has also made the
enrolment process as simple as possible to encourage uptake.

“If you have a small business card from an
issuer participating in the programme, all you have to do is
register your card once with us and it takes about 10 seconds to do
that on the MasterCard Business Savings website or on the
telephone,” Ollivier said. “Once you do that, if and when you spend
at a predefined list of everyday spend business-to-business
merchants, you will automatically get a rebate.

“The way the system works is that when you
register your card, our system will flag your card number. When
merchants sign up to participate in the programme we put a flag
beside all of their merchant numbers. What then happens is that
when you spend at a merchant, say for example you spend £100 at
Hewlett Packard, on your statement it will say ‘Hewlett Packard
£100’. Then, as that qualifying transaction goes through our
systems, our system recognises two flags, and automatically
initiates a rebate transaction.”

Ollivier added: “Every time you spend at a
participating merchant, the message is being reinforced and you’re
seeing that you’re getting something for nothing. It’s very clear
and visible. All of the rebates come from the merchant.

“Unlike some of the other programmes out
there, 100 percent of that rebate is passed on to the cardholder.
With many of the traditional programmes out there, the merchant has
to stump up an amount and then someone will take a cut and then
someone else will take a cut and the cardholder gets left with a
little less. That is not the case here.”

A unique loyalty

Although loyalty programmes are by
no means new, they have up until recently been rarely found within
the small business card sector. Where they do exist, they typically
take the form of promotional codes or coupons. And, according to
Ollivier, these have proven to be difficult for small businesses to

“Because small businesses are what they are,
and they behave in the way they do, our research has shown that
they really do not have the time to go around trying to get a
promotion code or coupon or whatever else. They don’t have the time
or the inclination to play those games,” he explained.

“The challenge for us is to get the merchant
brands into the heads of our cardholders. As soon as that job’s
done, they know that they’re going to get the relevant rebate on
spend at the merchants listed. That’s the way the programme works.
With the traditional programmes their very infrastructure means
that there are a load of hurdles in the way preventing the
cardholder from obtaining the benefit. What we’re doing is smashing
those hurdles away so that it is very easy with no hassle.”

Are there any spending limits, or minimum or
maximum amounts that cardholders need to adhere to?

“No, and this is integral to the overall
philosophy of the programme,” Ollivier said. “The philosophy is to
strip out as much of the complexity and the small print. Obviously
there are a few minor conditions around each different offer, but
as far as we can possibly do it, I know that if I spend at merchant
X with my enrolled card, I get money back.”

Business Savings was born out of market
research undertaken by MasterCard in the UK, with recurring themes
emanating from small businesses.

“We’ve been listening to UK small businesses,
both cardholders and non-cardholders. We understand what it is that
influences them and what motivates them,” Ollivier told

“Pretty consistently now we’re getting three
messages – ‘I want cashback, I want rewards, I want something back
for the loyalty that I’m showing.’ We are hearing that they also
want security and control over their spending.

“If I have a card or a series of cards I don’t
want them to be abused. Finally, I want availability of funds, and
especially now, I need liquidity. The control piece and the
availability of funds we are addressing through separate features
and separate products, all of which are able to be linked in with
Business Savings.

“For me the three main points are that number
one, we’ve been listening to our cardholders. Number two, we have
leveraged some global infrastructure in a way that is hugely
pertinent to our particular market. Therefore we have created a
product which has sufficient resonance, it’s simple and it’s
automatic so it is going to create a change within the buying
behaviour of the small businesses. Number three, it works and it’s
proven,” Ollivier added, alluding to the ‘Easy Savings’ scheme
which was pioneered in the US in 2007. Having initially launched
with six merchants, it is now up to 20.

“It is a proven concept and the results have
been quite spectacular.”

Getting the right marketing

What lessons has MasterCard taken
from the roll-out of Easy Savings in the US?

“We’ve learned how best to position the
programme with regards to the marketing,” Ollivier told
CI. “The key challenge that we have is to get these brand
names in front of the cardholder base. And the brand names need to
have resonance. So Bob’s hardware store on the corner, with all due
respect to Bob, it isn’t going to cut the mustard.

“Number one, make sure you have the right
names and make sure you have the right offers – offers that people
are going to get out of bed for. When you merge the right offers,
with the right names, when you merge that with the ease with which
the product works, then you’ve got something which has credibility
and is going to do something.

“With regards to lessons, we have some
excellent calls to action the way in which we work with the issuers
to help provide them with the copy that we know has had results in
the US.

“We know the statement inserts and collateral
which has resonance and we know the material that does not. We also
know the media that has resonance and the media that does not. If
you do statement inserts properly, and do them well, and you don’t
dilute the message that they’re saying, and you’ve got the right
calls to action, we found in the US that doing that is far more
effective than some other perhaps more sexy means of getting the
message across.”

In the UK, the scheme has launched with six
partner merchants, although Ollivier told CI that more are
coming on board each month.

“We have some pretty advanced and exciting
additional contracts which we’re just closing off now,” he