MC (DRI) Is a dispute process
that was put in place on 12th April 2019. The system is to enhance
the capability to prevent invalid disputes from entering the MasterCard
Network. Those disputes deemed valid by MC will allow for the Issuer to file a
dispute on behalf of their cardholder. A
merchant may contest a chargeback via a 2nd presentment or accept
the dispute. All cases that receive a response will be assessed a MC
association system fee of $3.00 per case. The fee will commence on any August 2019 case.
VISA ALLOCATION: FRAUD AND AUTHORZATION DATA DISPUTES
VISA VCR Allocation is a dispute
process that was put in place on 15th April 2018. VISA reviews data
and documentation submitted by an issuer for dispute. Based on the data, VISA
can assign liability to the merchant or reject the issuer’s claim. If a
merchant is assessed liability, the merchant may respond to the dispute via a
pre-arbitration or accept the case. All disputes must be responded to
regardless if the reply is an acceptance or a rebuttal with the intent to
contest. Any case that does not receive
a response will have an $0.85 cent fee applied.
VISA COLLABORATION: CONSUMER AND PROCESSING ERROR
VISA VCR Collaboration is a
dispute process that was put in place on 15th April 2018. This
system is similar to the dispute process that was in place prior to VCR. The issuer
files a dispute on behalf of their cardholder through VISA system to the Acquirer,
and the dispute is passed onto the intended merchant. A merchant may contest the dispute via a
re-presentment or accept it. All disputes must be responded to regardless if
the reply is an acceptance or a rebuttal with the intent to contest. Any case that does not receive a response
will have an $0.85 cent fee applied.
A business credit card can be much more than a convenient way to pay for purchases. These cards can also provide lucrative rewards, superior fraud protection, and smooth out cash flow. According to the Federal Reserve’s 2019 Small Business Credit Survey, 52% of firms with 1 to 499 employees use credit cards on a regular basis.
Here, seven small business owners reveal the smartest purchase they ever made on a credit card, and why putting those purchases on plastic was a savvy move. In addition, you’ll learn strategies for making the most of your business credit cards.
1. Travel rewards
I put all my marketing ad spend from Facebook and Google on my business credit card and pay it off monthly. It’s helped me gain an extra 30 days of cash flow at no cost and was the driver for scaling my business quickly. The biggest advantage, though, is that I’ve racked up 500,000+ miles by switching from my operating account to a business credit card. I’ve used these points to fly my family round trip, first class, to Spain for free. I don’t pay for flights anymore!”
—Jeff Root, owner, Rootfin.com, an insurance comparison website
Travel miles strategy:Business travel credit cards can offer lucrative rewards, but choose wisely. If you typically fly one airline, consider that airline’s co-branded credit card as it may provide perks such as priority boarding, free checked bags, and the ability to earn status faster with that airline. Otherwise, a card that offers flexible travel rewards that can be used with multiple providers will often be best.
2. Fraud protection
“Anytime I’m dealing with vendors outside the U.S., I find it’s critical to use our business credit card to pay them. It’s nearly impossible for a small business to go after someone for an international claim if they get taken advantage of, so using our card for foreign transactions gives us protection to dispute the payment and protect our cash on hand.”
Fraud protection strategy: Business credit cards provide excellent fraud protection. Under federal law, cardholders are not responsible for more than the first $50 in fraudulent charges, and most issuers offer zero liability. Business debit cards do not offer the same protection under federal law, so a credit card is often a smarter choice.
—Seth Kravitz, CEO, Phlearn, an online Photoshop and Lightroom training company
3. Finance large purchases
“When we first started our business we needed some specific third-party analytic tools that we simply did not have the money for. However, we did not feel we could move forward and be competitive without them. Taking a leap of faith, we purchased the program we needed on our small business credit card and luckily it paid off 10 times over! Leveraging our small business credit cards equity allowed us to purchase something we direly needed to grow our business, and it was the smartest purchase we have ever made for the business.”
—Mark Huntley, co-founder, Credit Knocks, an online credit information and review service
Financing strategy: You may be able to finance large purchases inexpensively by using a card with a low introductory rate or a low-rate balance transfer. Also, keep in mind that even a credit card with an interest rate of 16 to 18% is often cheaper than other small business financing options that often carry much higher rates.
4. Save on travel
“Booking our travel with our business credit card has to be the smartest purchase we’ve made. By using our credit card, we save on travel insurance and rental car insurance. We also earn rewards which lets us earn free flights and discounted insurance. I always make it a rule to book all our travel with our credit card as it helps us keep a record of our deductible expenses, too.”
Travel savings strategy: Some business credit cards offer collision damage waiver coverage when you rent a car as primary coverage, which means you may not have to file a claim with your own auto insurer first. Some offer secondary coverage, which may provide benefits if your auto insurance doesn’t cover the full amount of the loss or damage. Read the fine print to make sure you understand your benefits.
5. Fund your startup
“We spend thousands of dollars a month running online ads and paying for them with our business credit card. When we were first starting out, we needed the credit card because we didn’t have the funds to purchase the ads right away, so it was a way for us to initially get off the ground. But now we enjoy being able to cash in on all the reward points. We go on company retreats all the time, and much of the expenses are paid for due to credit card perks. These points keep adding up because we are constantly spending on the card.”
—Sean Pour, co-founder, SellMax, a nationwide car-buying service
Startup financing strategy: Most business credit cards rely on the owner’s personal credit scores when evaluating an application, which means these cards may offer financing for new businesses that don’t have access to other forms of financing. In addition, income requirements may often be met with income from all available sources, not just business revenues.
6. Save on important expenses
“Hands down, the best small business purchase we made on a credit card was hiring a developer to create our forum. The forum has proved very valuable since launch, because it has given our audience a platform to speak with one another, post pictures of their pets (bearded dragons, leopard geckos, etc.), and ask critical questions on how to take great care of their pets. We’re seeing an instant impact on user engagement, which has increased our repeat sales.
“Because our credit card offers 2% cash back on all purchases, we look at all credit card purchases as if they have a 2% discount. The forum was about $15,000, which made it obvious that we’d want to use the credit card to pay for the service; it yielded a $300 cash back return. This may not seem significant compared to the cost of the forum; however, over the course of a year, 2% cash back on all business expenses can cover a significant portion of someone’s salary or other business expenses.”
—Jeff Neal, operations manager, The Critter Depot, an online seller of insects and supplies for reptiles
Cash back strategy: Cash back is a popular reward that every business can use. Some cards provide flat cash back rewards across most purchases while others provide a larger cash back reward for specific categories of spending. Cards with the highest rewards may charge higher fees. You may maximize cash back by using more than one card. Analyzing your spending can help you determine which card works best for you.
7. Provide employee perks
“I charged my remote employees’ home offices on my credit card. I made sure they received top-of-the-line desks, ergonomic chairs, and brand new laptops for them to do their jobs efficiently. I immediately saw performance improvements in my remote employees—I’m not kidding! I later found that some of my remote employees had previously been working on their couches with their laptops on their lap. And not only did these employees’ efficiency improve once they had a real home office setup, but morale improved as well.
“And, as an added boost, I used a business credit card that gave me travel rewards for my purchase: win-win!”
Employee perks strategy: Some business owners accumulate cash back rewards throughout the year and then use those rewards for end-of-year bonuses or celebrations. Others share miles or travel perks with specific employees. Still others, like Allec, make purchases that benefit employees. Any of those strategies can have a positive effect on employee satisfaction and productivity.
Use the right card
Finally, when choosing a credit card, consider the impact to your business and personal credit. According to the Nav American Dream Gap Survey, 22% of business owners reported using a business credit card and 24% used a personal credit card the last time they needed funding. With a personal credit card, account activity will appear on the owner’s personal credit reports and can impact personal credit scores.
Small business credit cards, however, do not always impact personal credit scores, and most of them will report activity to commercial credit reporting agencies, which means they help build business credit.