The second largest bank in the United States, JPMorgan Chase & Co. launched their charge card aimed at small businesses last Wednesday. This move puts them directly in competition with American Express Co, the dominant company in this particular market.
Along with the launch of their charge card, JPMorgan also launched three new credit cards specifically targeted at small businesses. These credit cards offer several incentives for card holders such as cash backs, rewards and large credit limits. The small business sector has been having a lot of trouble with credit cards recently and these three new credit cards from JPMorgan might just be the answer that they are looking for.
Called the Ink Bold, this new card that JPMorgan is offering is actually the first charge card to come from an issuer of Visa or MasterCard branded credit cards. Charge cards operate similarly with common credit cards but with a small difference. Not like credit cards where monthly payments can be rolled off to the next month, charge cards require full payment at the end of each month. This helps reduce the risk of defaults, a very important feature considering the record highs that the United States default rate has reached recently.
Given these developments, once can easily see that JPMorgan maybe getting back a bit of its confidence on the United States economy. Richard Quigley, president of the credit card division of JPMorgan Chase, Chase business cards, said, “We really believe we are starting to see a stabilization point in the economy, and there are going to be small-business owners that are going to be leading the U.S. out of this recession”.
Expanding to the business sector is no trivial matter either. Large profits can be seen from small business credit card holders. According to Quigley, small business expenses include $5 trillion on non-payroll expenses in the U.S. 70% of those expenses are also paid with checks, he further added.
With the release of their new charge card and credit card lines, JPMorgan hopes to be able to diversify their card business, an important goal in a time when large credit losses and a new upcoming law denting credit card business.
However, even with this diversification, JPMorgan doesn't yet expect to see any profitability, at least up to 2011. Notably, the charge card carries no fee for the first year of ownership. Afterwards, it will cost the owner 95% to keep the card. The new small business credit cards also will not have an annual fee for the first year. After that, it will cost $60.
Currently, the JPMorgan financial company is the biggest issuer of Visa branded credit cards. It is also the second largest MasterCard issuer of branded credit cards.