While there are many uncertainties for 2017, the credit card industry has typically been characterized by both stability and profitability. From the height of the last expansion to the depths of the Great Recession, banks have relied on their lines of business and personal credit cards for consistent profits.
As the market for business credit cards continues to grow and evolve, and 2016 comes to a close, here are five trends that I’m anticipating for the new year.
1. Increased Sign-Up Bonuses
When you have a product that nearly always makes a profit, you want to get it into the hands of as many users as possible. On the consumer side of the credit card market, the big story of 2016 was Chase’s Sapphire Reserve card, which debuted with a 100,000-point sign-up bonus. Demand was so strong that it generated mainstream media coverage and even resulted in a temporary shortage of cards.
Chase is trying to seize on its success by replacing its Ink Plus business card with the new Ink Preferred card. This card offers an 80,000-point bonus after new customers spend $5,000 on purchases within three months of account opening. In response, I would expect other major banks to increase the sign-up bonuses on their business credit cards.
2. More Premium Reward Cards
The success of the Sapphire Reserve in 2016 also sent a strong signal that cardholders were willing to pay a $450 annual fee for the right card. In 2017, expect to see credit card issuers introducing more premium reward cards for small business owners as well. These cards will offer not just additional rewards, but increased travel benefits that business users value.
Compared to consumer card users, business card users have an even greater interest in spending less time waiting in lines at the airport, and more time being productive in a business lounge. In addition, small business owners represent an affluent segment of the market that has not been fully developed by credit card issuers.
3. More Mobile Payments
The business credit card market has been trailing the consumer market in its adoption of mobile payment solutions such as Apple Pay, Android Pay, and Samsung Pay. For example, the Chase Ink cards are not currently compatible with Apple Pay.
However, 2017 could be the year that mobile payments are finally enabled for small business credit cards. This will be a welcome development for small business owners who often carry multiple personal and business credit cards that they would rather leave at home.
4. Expansion of Flexible Rewards Programs
Business travelers have had a front-row seat watching the airlines devalue their frequent flyer programs. Award tickets now cost far more miles, and there are fewer seats available at the lowest mileage levels.
In 2017, I expect to see more small business reward cards being offered that earn miles in so-called flexible rewards programs. These programs could offer points that can be redeemed for statement credits toward travel reservations. Or you could use these points to purchase travel directly through a designated travel agency. Finally, the best programs offer points that can be transferred to miles with several different airlines, or even hotel points.
It wouldn’t surprise me to see more business credit cards that offer American Express Membership Rewards, Chase Ultimate Rewards, or Citi ThankYou Points.
5. No-Fee Business Cards
While the market is strong for premium rewards cards, there are still some small business owners that want to earn rewards without paying an annual fee. In 2017, banks could offer more of these cards as a way of increasing their market share, and as a gateway to eventual adoption of their premium products.
These cards may offer modest rewards and benefits, but they can be perfect for small business owners that are just getting started and trying to minimize their expenses. There’s also a significant market of small business owners who rarely travel, and simply have no need for rewards in the form of points and miles.