Small Biz Credit: Chase Exec Introduces New Cards

ADVERTISEMENT sat down with Richard Quigley, president of the Business Card segment at JPMorgan Chase's Card Services, to talk about the company’s new portfolio of small business credit cards launched at the Inc. 500/5000 conference outside of Washington last week. Quigley came to JPMorgan (Stock Quote: JPM) in May 2009 from American Express (Stock Quote: AXP). Below are highlights of the interview:

MainStreet: You said in a recent interview that “we’re starting to see a real stabilization” in the economy and you see this as a harbinger of a turnaround. What signs of stabilization in the small business market do you see?

Richard Quigley: Some of them are sort of macroeconomic signs in terms of the GDP bouncing back and stabilization in terms of housing starts. Even some of the projections for unemployment, while assuming it’s going to increase a bit from here, it’s not going to increase tremendously. I think there’s a confluence of a lot of different signs that show a bit of a light on the horizon.

MS: How did you figure out what kind of cards would appeal to small businesses and when to launch them?

RQ: We believe that there are business cycles. There are some rough patches, but they inevitably start to get better. We saw that there are about 27 million small businesses across the United States and that they were growing rapidly. That 27 million was about twice what it was as recently as 2000. It’s this combination of being an enormous market that’s growing very rapidly combined with one other thing. It didn’t seem that most other banks were crafting products that were really designed for small businesses. They were consumer products that were labeled as a small business product. It became increasingly evident just how different small businesses are in their needs vs. the needs of consumers. It seemed that there was a real opportunity to step forward and design products for this underserved segment.

MS: It’s no secret that credit has been very tight for everyone, and especially small businesses. I read a statistic that business credit cards are increasing by 27% a year. Do you think that’s a reflection of business owners having a harder time getting bank loans and so are turning to credit cards to finance their business?

RQ: I didn’t see that particular study but I do think that small business owners have taken it on the chin in the last couple of years in terms of the economy and the impacts that it has had on them. While I think small businesses tend to, in most recessions, get disproportionately hit by the effects of the recession, they are also the group that most quickly embraces the recovery. Because I think part of the way the recovery happens is that through the optimism and drive and passion that small business owners naturally have.

MS: I’ve talked to a lot of small business owners recently and they seem frustrated with banks because they’re not getting the loans that they feel they deserve. They’re also angry with the credit card industry because there is a lot of talk of the credit card industry hiking rates before credit card reform [goes through Congress]. You’re introducing cards that could be beneficial for these small business owners at a time when they kind of have a love/hate relationship with the credit card industry.

RQ: I think that what we’re trying to do is just to be as supportive as we can about small business and we’re certainly committed to helping them going forward. That’s why we wanted to embark on the research and understand what their needs were and build this portfolio of products which we’ve branded Ink in order to meet those needs. Part of what we’ve found is that ... there’s sometimes competitors or other people who talk about small business as sort of a monolithic group but actually they’re incredibly diverse in their needs. To meet their needs you couldn’t do it with just one product. You had to do it in our case with four.

MS: Could you talk about the suite of four products and why you think small business owners will benefit from them?

RQ: Ink Bold is a pay-in-full charge card with no interest charges. When we spoke with small biz owners they said that a typical card will give you a line of credit but it’s completely static. They were saying my spending needs change pretty radically from month to month or season to season. We built Ink Bold so that the line of credit was going to respond dynamically to what your needs are. If you’re a surf shop that has increasing spending needs in the summer months vs. a ski shop that has more needs in the winter months this product will adjust to that. It also will adjust as you grow.

We also heard from small business owners that they really wanted rewards. They like to do special things for their customers…We put together Ultimate Rewards. It’s a point-based rewards program with redemption options.

MS: There are about 27 million small business owners but about 6 million of them have employees. That’s a big difference. Did you find that certain kinds of cards were appealing to different groups?

RQ: One of the things we heard ... is that many business owners would want to give cards to employees but wouldn’t necessarily want to give out their card that has access to the full line of credit. We built into all of the Ink products the ability to set different spend limits for each employee card. They’re also able to give cards out to earn reward points from them.

Some small biz owners loved the reward part but wanted more flexibility with how they can pay. Ink Plus is like a traditional credit card but you can earn reward points.

The third group was people who weren’t that really into points based reward but wanted cash back. Ink Cash gives you 1% cash back for all of your spending and in four categories dining, fuel, home improvement and office supplies you get 3% cash back.

Ink itself is the foundation product which these other ones build off of where you’ll be able to get all the advantages that you get with Ink with access of dedicated advisors who are trained to handle servicing requests of small businesses owners and the free employee cards.

MS: Anything else you want to add?

RQ: This is meant to be a long-term commitment to small business owners. We’re starting with a suite of four products but the objective is to have a continuing series of, I think, pretty innovative new business features and services over the next coming months and years. I’m sure we’ll be talking together again in a few months.

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