Mastercard teams with fintechs on small business card

Live Brief:

  • Card giant Mastercard will lock arms with two San Francisco fintechs, Flowcast and Highnote, to create a credit card for small and medium-sized businesses, offering a new card geared toward business owners who struggle to access credit and growth capital, according to a Wednesday news release.
  • Highnote, also San Francisco, will handle card issuance and program management, and Purchase, New York-based Mastercard will serve as the card network, per the release.
  • The card will be available early this year, Highnote CEO and cofounder John MacIlwaine said in an email.

Live Insight:

Small business borrowers who are “credit invisible” tend to be overlooked for financing opportunities, “especially if you look at traditional business cards that are in the market right now, because of challenges in underwriting and the lack of credit history for these businesses,” MacIlwaine said via email.

He envisions the new card bringing underbanked small businesses into the credit economy and creating “a more inclusive credit system.”

The new offering comes as fintechs use partnerships to establish themselves and encroach on legacy players’ territory in the business credit segment. MacIlwaine, former general manager of PayPal’s Braintree, said the new card will differentiate itself from fintechs like Brex and Ramp through its unique combination of services. Flowcast, backed by ING Ventures and Bitrock Capital, refers to the new product as the Tillful card.

“Our direct integration into the card networks will give Tillful and its customers greater flexibility and control in their spend management; with our general ledger, Tillful card customers will get real-time data on transactions and spending across their business operations,” MacIlwaine said. “Our rewards and points ledger open up possibilities to create flexible and customized reward offerings relevant to the small business community.”

For small business owners, “access to fast, secure and convenient payments is critical,” Sherri Haymond, Mastercard’s EVP of digital partnerships, said in the release. As the segment continues to evolve digitally, “it is imperative to provide solutions that work harder for them and their operations,” she said.

Flowcast uses artificial intelligence to develop its credit risk models. With Tillful, cardholders’ payment history is reported to credit bureaus to enable businesses to build credit; The card also offers a rewards program tailored toward small business owners, who can create virtual cards for their employees.

Highnote, which was founded in 2020 and has raised about $54 million in capital, also will support embedded banking and payment services through the Tillful card, according to the release.

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