Utilizing Personal Credit Cards - the Top 5 Motivations for Small Business Proprietors:
Small Business Owners Increasingly Rely on Personal Credit Cards for Business Expenses
A new report from Mercator Advisory Group, titled "Payment Cards and B2B Payments: Riding a Wave of Positivity," highlights a growing trend: the use of personal credit cards by small business owners. This shift contributes significantly to card payment volumes within small businesses, according to the report.
The findings suggest that small business owners often resort to personal credit cards for business expenses, reflecting a positive trend in payment card adoption in the B2B sector. Card payments now account for a substantial portion of total sales for U.S. small businesses, with around half of sales being paid by card.
This increasing reliance on payment cards as convenient and flexible payment methods for small business owners is noteworthy, considering the traditional separation between personal and business finances. The report attributes this behaviour to factors such as ease of use, acceptance scalability, and liquidity management benefits.
The report also reveals that payment innovations and flexible credit solutions, including various card programs and point-of-sale credit options, continue to boost merchant growth and customer loyalty. These factors further reinforce why small business owners might prefer using cards, including personal credit cards, for business purposes.
The report, which is the first of three from Mercator's annual Small Business Payments and Banking Survey Series, is based on findings from an online survey of 2,002 U.S. small businesses fielded in March and April 2019.
The survey also uncovered several reasons why small business owners prefer using personal credit cards. The top reason is better rewards (48%), followed by the ease of using a personal account (45%). Additionally, 37% of small business owners trust their personal cards, citing better cardholder protections.
However, the report also indicates that 30% of small business owners were not willing to underwrite cards for employee use, and 21% were not approved for business credit cards. Furthermore, 33% of small business owners did not find the added business reporting and control functions of business cards necessary.
Some small business owners might also be wary of the liability associated with business cards, with 21% expressing concern. The survey's findings also include attitudes toward cash flow and line of credit.
The report's charts show the primary payment methods used by type, and it includes small businesses' criteria for choosing a new credit card for the business, which differ by size of firm.
Overall, the report reveals that U.S. small businesses are largely positive about the prospects for the future of their respective firms with regard to revenues, profitability, and employment. The trend of small business owners using personal credit cards for business expenses underscores this optimism, as it indicates a growing confidence in the use of payment cards in the B2B sector.
Small business owners increasingly rely on personal credit cards for business expenses, which contributes significantly to card payment volumes within small businesses. This shift in payment methods is noteworthy given the traditional separation between personal and business finances.
The preference for using personal credit cards by small business owners can be attributed to factors such as better rewards, ease of use, and better cardholder protections. However, concerns regarding liability and the necessity of added business reporting and control functions may deter some small business owners from using business credit cards instead.
