Very few businesses can operate solely with cash on hand, particularly merchants that can have periodic spikes in business, revenues, and expenses. The need for additional funding is evident based on estimates that the SMB credit market is half a trillion dollars.

According to a study by the Federal Reserve, 64% of small businesses experienced financial challenges. These challenges were particularly acute for startups and those with smaller annual revenues. Half of small business applicants secured less than the full amount of credit requested, affecting their ability to meet expenses or grow.

“The challenge for many small businesses is that cash is the lifeblood of a company,” said G. Gerry Hays, professor of venture capital at the Indiana University Kelley School of Business.  “You have to have the money needed to pay rent, employees and to pay yourself, or you’re not going to be in business very long.”

However, merchant cash income will typically lag cash outflow because the company starts
paying rent, acquiring inventory, and incurring other start-up business expenses before making the first sale. Payroll is another expense that, at least in the early going, may need to be paid before enough revenue from sales covers the expense. And, as Hays mentioned, the business owner will want to be able to pay himself or herself as well.

Importance of Small Business Credit

Beyond the reasons mentioned above, credit is important to small businesses for several reasons.

• Better Purchasing Opportunities: Small businesses with access to credit can take advantage of opportunities when they become available. For example, a supplier might offer a temporary steep discount on products or services that you regularly use in a business. Of particular note is that merchants and other small businesses are more likely to do more business with whoever provides them with credit, helping to establish a long-term business relationship between creditor and borrower.A line of credit gives the ability to take advantage of such discounts when they occur, cutting the business expenses and enhancing cash flow.
• Better Opportunity for Growth: By reinvesting in the business, small companies can grow to a sustainable size. This is particularly important in the early years for the company to become established. According to ScaleFactor, 34 percent of the smallest SMBs (1-19 employees) and 43 percent of SMBs with 20-99 employees use credit cards as their top funding source, reinvesting profits to grow the company.
• Maintains separation between personal and business credit: Owners of very small businesses can be tempted to use personal credit cards and other personal forms of financing to keep their businesses running. While that might be unavoidable as a business starts, it’s important to separate personal and business finances. Doing so could put you at risk if your business is ever in trouble.
• Personal finances are not a good long-term source of funding, Hays points out. While some people use personal credit, including lines of credit on their homes, personal credit cards and other types of debt to fund a business, particularly in the beginning, it’s important that the business start building its own credit history and credit score.
• Establishes Credit History for Future Use: A business needs establish its own credit history and credit score not only to help protect a business owner’s personal
  assets but also to obtain better rates and have higher credit availability in the future. A business can start building a credit history by buying and paying off small amounts of credit at the beginning. Even if the business has cash on hand, the small borrowing amounts will incur little if any interest expense (depending on the credit vehicle used),and will establish the creditworthiness for when larger amounts are truly needed. The better the credit history, the better the interest rate the business will be able to obtain.
• Easy Access to Emergency Funding: In addition to giving the business the ability to take advantage of available discounts, the availability of credit on known terms helps businesses when they have unexpected expenses, such as a prime piece of equipment failing, late payment from a supplier or a myriad of other reasons. With ready credit, the business doesn’t need to scramble to pay to get the equipment fixed or handle other short-term emergencies.

Consider Form of Credit

Whereas with a small business loan a company needs to pay on the entire amount initially borrowed (minus any principal payments), with a business credit card, the business pays interest on only the unpaid balance on the due date. For example, a $10,000 business loan will provide the business with $10,000 at the start and a periodic payment schedule. Prepayments may or may not be allowed, based on the loan agreement. With a $10,000 available on a business credit card, however, the business can borrow just what it needs, when it needs it. The business may need only $9,000 for 20 days past the due date. As long as the business makes the minimum payment, it would pay interest on the outstanding amount. If paid on day 20, then another $5,000 is accessed later, it would borrow that and pay interest on that amount until repaid.

The PayVus Solution

PayVus® is a bundled business solution combining card acceptance and a business credit card into one single product— which helps you better manage cash flow and make accepting cards more cost-effective. By enrolling in the program, you will receive all the benefits of being issued a MasterCard World Business Credit Card.

The PayVus business credit card offers qualified merchants up to a $10,000 line of credit to increase capacity to pay for supplies, buy inventory, and manage everyday business expenses.

Additionally, you can designate a portion of your daily settlement to be split between the PayVus credit card and regular bank account. Funds deposited to the credit card are posted as a credit balance and are available for immediate use. Your merchant acquirer can sign you up, and it is quick and easy, and within 5 business days of signup, PayVus can help you achieve your business goals faster.

For many small businesses, a business credit card is an essential tool for managing cash flow for everyday businesses expenses, including purchasing inventory and business supplies.  While some small businesses are hesitant to take on credit card debt, there are several advantages that a business credit card provides to a merchant’s business.

Improved Purchasing Power

With a business credit card, a merchant or other small business can take advantage of volume discounts for inventory or supplies, quickly acquire inventory to meet demand, revamp the eCommerce site to boost sales or have money for other actions that will boost the revenue of the
business and boost profits. The small amount of interest paid to borrow for a short-term need can pale in comparison to the additional revenue.

A business credit card will even able you to have the money interest-free for a short period. Interest won’t start accruing until the statement closes. So if the statement closes on the first of the month, and the business buys inventory on the second, there will be no interest on the purchase until the first of the next month. Depending on the amount of the purchase and the revenue of the business, it’s possible the entire balance can be paid before any interest accrues.

Easier, Faster Access to Credit

Businesses can qualify for a business credit card much more easily than they can for a small business loan. The application process for a business credit card is extremely simple, and the approval decision is made quickly. With a business loan, on the other hand, and there is quite a bit of paperwork, meaning time not only to fill it out but to obtain any supporting financial statements or other documentation. The loan application might need approval from multiple people, further delaying the process.  Also, as mentioned earlier, the small business credit card enables you to pay it down at your own pace, meaning you have better control of the amount of interest you will pay for a given period.
You can pay down the credit card, then use the credit again when another opportunity presents itself. With a business loan, the payments or more structured, prepayments may or may not be permitted, and if another opportunity presents itself, you will need to apply for another business loan, going through the paperwork and decision waiting game once again.

Business loans do have their place. There are some purchases, like an expensive piece of equipment, that can be funded through a business loan. But first, the business will need a sufficient credit history and credit score to qualify for the loan.

The business credit card enables the business to make several smaller purchases – as well as some larger ones — to quickly build a favorable credit history and credit score to help the business qualify for a business loan – at favorable rates – when the need arises.

Controlled Delegation of Business Spending

A very small merchant may handle all of the spending for the business, but as the company grows, the owner needs to spend the time where it has the most impact, not on some of the minor spending decisions, like a ream of paper or toner for the printer. The owner can use the business credit card account to allocate limited purchasing power to trusted employees.

For example, a lead administrative assistant may have a monthly spending limit of $150, a middle manager may have a limit of $250, and a senior executive $1,000. Each can use the card to make purchases up to the individual limits.

The business owner still has oversight and can cancel or change the spending limits for any of the individuals at any time. By providing the cards to internal staff our outside salespeople (for gas, other travel expenses), the business retains control over the overall spending but can delegate much of the minutiae so that the merchant can concentrate on operating the business.

Separation of Business, Personal Expenses

While some start-ups will obtain initial funding from the owners own personal financial resources, it’s important to separate personal finances from business finances as much as possible.

The Internal Revenue Service has strict rules about mixing personal and business expenses. Using personal checks or a personal credit card makes your bookkeeping much tougher.

“When you run things on your personal credit, it’s a lot more complicated,” said G. Gerry Hays, professor of venture capital at the Indiana University Kelley School of Business.

Additionally, if you an incorporated business, but mix personal and business finances, the personal assets you thought were protected from business liability may not be. Mixing personal and business finances make it easier for someone trying to collect from you to “pierce the corporate veil” and go after personal assets.

“It’s important to extract yourself from the risk of the business,” Hays said. “It’s important to establish a relationship with a credit provider so you can de-risk yourself as soon as you can.”

That being said, the small business still needs to use the credit wisely. There are plenty of good reasons to access business credit. But simply adding inventory without regard to how well it is turning over or buying technology without careful consideration to how it can help bring a return on investment – even if not immediately.

The PayVus Solution

PayVus® is a bundled business solution combining card acceptance and a business credit card into one single product— which helps you better manage cash flow and make accepting cards more cost-effective. By enrolling in the program, you will receive all the benefits of being issued a MasterCard World Business Credit Card.

The PayVus business credit card offers qualified merchants up to a $10,000 line of credit to increase capacity to pay for supplies, buy inventory, and manage everyday business expenses.

Additionally, you can designate a portion of your daily settlement to be split between the PayVus credit card and regular bank account. Funds deposited to the credit card are posted as a credit balance and are available for immediate use. Your merchant acquirer can sign you up, and it is quick and easy, and within 5 business days of signup, PayVus can help you achieve your business goals faster.

With the credit power of a business credit card, merchants can fund expansion, take advantage of volume discounts and other sales of supplies or inventory and help build their credit history to enable them to obtain a business loan when they need it.

Much Better Leverage

Several FinTech companies provide debit cards coupled to merchant acquiring, but the debit cards don’t have the same purchasing power as credit cards. By their very nature, a debit card only enables a merchant to buy up to the amount the business has in the connected deposit account, whereas a business credit card expands the merchant’s buying power beyond that account to the limit of the business credit card.

For example, a merchant with $10,000 in a deposit account and a debit card can purchase up to $10,000 in inventory, supplies, etc. or use that money for other purposes. A merchant with $10,000 in a deposit account or in any other form of liquid cash and a business credit card with a $10,000 line of credit, can purchase up to $20,000 in inventory, supplies, etc., or use that money for other purposes.

Therefore, the merchant with the business credit card has twice as much leverage. If a supplier offers a 10 percent discount for volume purchases over $8,000, for example, the first merchant in the example above can get only a $200 savings – 10 percent of the $2,000 ($10,000-$8,000). The merchant with the business credit card, on the other hand, can enjoy a savings up to $1,200, 10 percent of the $12,000 the merchant can buy over the $8,000 volume discount floor.

Even if each a merchant purchases $10,000 from the supplier, so the savings is the same, the first merchant is tapped out, if a better opportunity or surprise expense, like a major piece of equipment failing, the merchant has to wait until receivables come in or seek more expensive short-term financing for additional funds. The merchant with the business credit card, on the other hand, still has access to another $10,000 for other uses.

Additionally, there could be suppliers where the discount doesn’t start until after the first $10,000 – entirely locking out the first merchant, while the second merchant can use the available cash and the credit to take advantage of the discount.

ISOs Should Be the First Choice for a Business Credit Card

Merchants have a few different choices when it comes to business credit cards, but ISOs and Merchant Acquirers have a unique advantage in being the card provider.

When typical bank card issuer offers a business card, the financial institution collects interest on the outstanding debt. So, even with the advantages the card provides, the merchant will sometimes see the interest charges and perceive the card as an expense, rather than as an opportunity.

Win-Win Opportunity

But business credit cards offered by ISOs and Merchant Acquirers represent a tremendous opportunity for the merchants and for the providers. The merchant not only has all of the buying power and other advantages of the business credit card, with the PayVus® business credit card from Aliaswire, the merchant’s daily receivables are split-settled between the card and their existing bank account, with the merchant choosing the portion to go to each.

The more the merchant deposits to the card, the more the merchant saves on processing fees. The savings are immediate and unlimited. Unlike some other business credit products, PayVus has no annual fees. Additionally, since the PayVus card is funded automatically from daily fund deposits, thereby reducing any outstanding credit, the merchant will incur only minimal, if any, interest charges. So the “total cost of ownership” for merchant services is significantly lower.

The Merchant Acquirer receives a significant revenue share from the funds deposited to the PayVus credit card. The Merchant Acquirer can then designate a portion of the revenue share directly to the merchant, helping to reduce the merchant’s interchange rate further. The revenue share, combined with the merchant’s deposits to the PayVus card, can result in ‘Interchange Minus’ pricing for the merchant – a saving that flows directly to the merchant’s bottom line. For ISOs and Merchant Acquirers, the card represents another valuable service being provided to the merchants, helping to sustain and grow the business relationship. Financial service providers learned a long time ago that the more products or services that a customer has with them, the less likely the customer will take his or her business to another provider. Business credit cards also help ISOs, and Merchant Acquirers reduce churn while building their own revenues.

PURCHASE, N.Y.–(BUSINESS WIRE)–Mastercard today announced that it is working with several new partners, including ConEd, to roll out Mastercard Bill Pay Exchange. Avidia Bank, Aliaswire Inc., OSG Billing Services and Transactis will be among the first to offer Bill Pay Exchange to their customers.

Mastercard rolled out Bill Pay Exchange to make it easier for consumers to view, manage and pay telecom, utility, rent, credit card, mortgage and other personal bills without having to set up accounts with different billers, remember multiple passwords, and log in to multiple websites.

With Bill Pay Exchange, consumers can pay their bills either with cards, real-time payments or from their bank account, and receive confirmation of payment all within their banking app or website.

This solution will give billers access to a new billing and payment channel, which can reduce the cost of mailing paper bills and processing checks, provide streamlined reconciliation and lower customer support costs due to added payment transparency. Billers will also have the option to accept cards, real-time payments, or traditional bank account payments as they do on their own websites.

“ConEd is committed to continuously improving our billing and payment options for our customers,” said Frank D’Amadeo, director of Treasury at ConEd. “By delivering bills directly to our customers’ banks, they have a new option to simplify how they can see and pay their bills.”

Mastercard will also be testing the solution with eight other partners, including Best Digital Solutions, Inlet, Nordis Technologies, Papaya, Payrailz, Plastiq, RR Donnelley (RRD), and Synapse to make the solution available for consumers. These partners collectively will help drive adoption and scale for the solution in the United States.

“We’re excited to be partnering with Mastercard on the Bill Pay Exchange, as the solution aligns perfectly with our transformative approach to customer communications,” said Jonathan Gustave, Executive Vice President of OSG Billing Services.

“Since first announcing Bill Pay Exchange, Mastercard has continued to evolve this digital solution to benefit consumers, billers and financial institutions alike,” said Ronald Shultz, executive vice president, New Payment Flows, North America, Mastercard. “With the help of our trusted pilot partners, this solution will bring speed, transparency and efficiency to bill payments for the masses.”

“We are thrilled to bring our comprehensive content management capabilities and strong client relationships to our partnership with Bill Pay Exchange. We look forward to assisting Mastercard in its efforts to better connect with its customers through this new offering.” – John Pecaric, President, RRD Business Services.

“Mastercard Bill Pay Exchange brings compelling new presentment and payment experiences, including a choice of payment instruments, to Inlet’s expanding biller network while enabling improved consumer interactions at our bill pay channels.” – Christopher Johnson, CEO at Inlet.

“Through our partnership with Mastercard, our biller clients can deliver their consumers a significantly improved online bank bill pay experience. The Bill Pay Exchange is a perfect fit for our strategy to offer innovative billing and payment options to our customers. This product is a game changer for online bill pay and we are excited to be a part of it.” – Ronnie Selinger, President/CEO Nordis Technologies.

“With Bill Pay Exchange, Mastercard is leading the industry with an innovative approach to improving the bill payment user experience and transforming the relationship between billers and their financial institutions. Aliaswire is excited to participate as one of the initial partners” – Scott Goldthwaite, President, Aliaswire, Inc.

About Mastercard

Mastercard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. Our global payments processing network connects consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. Mastercard products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MastercardNews, join the discussion on the Beyond the Transaction Blog and subscribe for the latest news on the Engagement Bureau.

Massachusetts innovators combine forces to provide new bill presentment and bill payment experiences at scale

BURLINGTON, Mass., Oct. 17, 2019 /PRNewswire/ — Aliaswire, Inc., a leading bill payments innovator, and OV Loop, Inc., the disruptive messaging and payments platform, announced today a joint initiative to enable new, large-scale bill payment experiences on both platforms.

In the mutually beneficial agreement, Aliaswire will incorporate OV’s Concierge™ solution into their EIPP/EBPP platform, and OV will integrate Aliaswire’s bill presentment and credit/debit/ACH processing capabilities into the OV Conversational Commerce (cCommerce™) platform.

Scott Goldthwaite, president of Massachusetts-based Aliaswire said the integration enables unique customer experiences to better serve the bill payment market. “By integrating our DirectBiller® platform with the OV Concierge™ platform, Aliaswire can now provide an end-to-end Conversational Payments solution to our enterprise bill payment customers via our growing network of channel partners and resellers,” he said.

Aliaswire’s DirectBiller platform is a highly integratable web-based, multi-channel Electronic Invoicing / Bill Presentment and Payments technology that orchestrates and streamlines the bill pay process for anytime, anywhere, anyhow payments.

Will Graylin, CEO of Boston-based OV Loop said that Aliaswire’s large-scale processing capabilities further enable the company’s launch into Financial and other segments that issue credit or have high-volume, recurring transactions. “We are excited to further enhance our Conversational Commerce (cCommerce™) offering by enabling large-scale batch bill presentment as part of OV’s MessagePay solution, as well as credit/debit card and ACH processing of consumer payments initiated through OV’s platform,” he said.

“As we launch our solutions into segments that issue credit or have high-volume, recurring payment transactions, it was important to find a partner who had the combination of know-how and scale that Aliaswire brings to the table,” said Graylin.

About Aliaswire, Inc.

Aliaswire is a leading payments technology provider of highly advanced, secure and reliable transaction processing solutions. Aliaswire’s unparalleled, intelligent platforms, APIs and intellectual property continuously evolve and scale to meet changing market demands across multiple verticals. An industry-recognized innovator, Aliaswire provides multi-tenant payment processing capabilities to the market through our growing network of channel partners and resellers. Aliaswire’s network includes leading financial institutions, Fortune 500 companies, and multiple payment networks.

About OV Loop, Inc.

OV Loop, Inc. (OV), based in Boston, Massachusetts, provides patented Conversational Commerce (cCommerce™) and Universal Wallet (uWallet™) to help card issuers and businesses deliver next gen customer experiences (CX) with 1-Tap or Handsfree messaging & payments across virtually any device and any communication channel. For card issuers, OV enables instant issuance Tap & Pay on iPhones and Androids, plus a Super Card™ that is faster, safer and more differentiated than traditional cards. For businesses that need better customer service and collections, OV invented omnichannel multimode messaging with payments called Concierge™ and MessagePay™ to help create high-conversion and high-trust relationships with their customers.

For more information contact:
Aliaswire, Inc.
Kristen Pulkkinen
Chief Marketing Officer
kpulkkinen@aliaswire.com

OV Loop, Inc.
Max Borges Agency
Claire Rochawich

Pricing for merchant services has become extremely competitive in the last few years. Merchant pricing awareness has shifted the market pricing away from complex multi-tiered pricing to simpler ‘Cost Plus’, ‘Pass Through’ or ‘Interchange Plus’ pricing. Now, Interchange Plus pricing, has become competitive as well with some merchants in competitive markets paying Interchange + 0bps, creating significant margin compression for ISO’s and Acquirers.

With Interchange Plus being very competitive, how can ISOs and Acquirers sell at ‘Interchange Minus’ and still maintain profitability? Answer: PayVus® from Aliaswire.

Unlocking a new revenue source

To understand how PayVus® from Aliaswire works, first let’s go back to the fundamentals of Interchange. For card issuers, Interchange is a source of revenue. For acquirers, Interchange represents a cost. For Merchant Acquirers, Interchange must be marked up or passed through to their merchants, along with other value-added services in order to maintain a viable business. Merchant Acquirers only see revenue when their merchants sell and accept payments. On the other side, Issuers see revenue whenever their cardholders spend. With PayVus® from Aliaswire, Merchant Acquirers can derive revenue not only when their merchants sell but also when their merchants spend enabling Merchant Acquirers to unlock a significant revenue potential for the first time.

With PayVus® from Aliaswire, ISO’s and Acquirers can now derive revenue from Merchant’s spending activity. PayVus® merchants are issued a MasterCard World Business Credit Card and a portion of their daily deposits are settled to their PayVus® Credit Card. PayVus® pays a residual revenue share to the merchant acquirer for all the funds settled to the PayVus® Credit Card. The merchant acquirer can then pass on a portion of their revenue share to the merchant further reduce merchant processing fees.

With PayVus®, merchants get a MasterCard credit card with up to $10,000 line of credit that they can use to pay for supplies, inventory and everyday business expenses and merchants receive lower fees from their merchant acquire. ISO’s and Acquires can unlock an entirely new source of revenue and provide a competitive offering in the market to them attract and retain more merchants. When a PayVus® merchant sells and spends, they save, and ISO’s and Acquirers get a revenue boost.

The PayVus® solution is a turn-key program designed for merchant acquirers can handles card issuing, automatic split funding settlement, revenue share distribution and residual reporting.

Getting to Interchange Minus

By enrolling in the PayVus® program, the merchant acquirer will receive a significant revenue share from all of the funds deposited to the PayVus® credit card. The merchant acquirer can designate a portion of their revenue share direct to the merchant. Depending on how much of the revenue share that merchant acquirer passes on can have a dramatic impact on the overall merchant services fees. For example, a merchant priced at a blended rate of 2.0%, has the capability to reduce fees to a mere 0.75% – basically going from Interchange flat to Interchange minus 125bps, in merchant fees per transaction. In this case, the same merchant would now only be paying $5,250 in total yearly interchange, compared to $14,000 – thereby saving $8,750 every year. When you merchant saves, you win!

Payvus® not only helps ISOs and Acquirers enable new revenue streams, but also helps merchants attain Interchange Minus pricing, thereby leading to increased revenue and big savings on interchange fees.