There are two very distinct types of card in the world of bank cards: debit and credit. We’ve previously written a little about debit cards in our Closed vs Open Loop blog post. Today, CARDCore will be going into a little more detail on which type of card is best suited to different kinds of business — whether you’re a new financial institution or a store looking to introduce branded cards.
The case for debit
Whether operating on an open or closed loop, debit cards are fairly straightforward to understand and use — both for businesses and customers. Debit cards are loaded with funds and can be designed to reloadable by their users.
Debit cards are for more than tools for fledgling banks. They can be used to encourage larger customer purchases — such as white goods and automobiles — by offering a cash back incentive. An open loop debit card gives the customer complete control over how they spend their cashback, and offers more freedom than a gift card would. This is an appealing prospect for a savvy customer, and puts a card with your branding into their purse or wallet — a way to encourage repeat business.
These cards also serve as easy, convenient ways to distribute small to moderate money prizes from any competitions or promotions your business might be running.
Business credit cards, in this context, refer to more than the card you use to streamline office supply purchases and other incidentals. These aren’t the cards you’d issue to your employees on trips, either — in this context, we’re referring to store-based credit cards issued to customers.
Store-based cards can serve as an alternative or an upgrade to a customer loyalty program. They are used only to make purchases at your business, as their name implies. These purchases can be encouraged by offering incentives such as discounts, free shipping, and points in a rewards scheme. Some customers can be wary about taking on a store credit card, so it is a good idea to take the time to build trust in your brand and its cards.
If you are a financial institution, issuing credit cards –especially to businesses — can be a mutually beneficial arrangement. In particular, small businesses tend to lean on credit cards in their early years.
Which will suit my business?
If your business…
- Wants to easily manage cash prizes for giveaways and contests.
- Sells big-ticket items such as whitegoods, furniture, electronics, or more.
- Would like to offer consumers a more open alternative to gift cards.
Then looking into issuing debit cards would suit you.
If your business is….
- A financial institution or reseller of a larger bank’s products
- In the retail industry
- Is interested in offering either an alternative or an upgraded form of a loyalty card
Then it’s likely you and your business will benefit more from utilizing credit cards.