On Monday, Retail Payment Solutions (RPS), a unit of U.S. Bancorp (USB - Analyst Report), introduced a new U.S. Bank Business Visa Charge Card. The card is meant to help small business owners to better manage their expenses. Moreover, the card comes without an annual or monthly fee and will assist small businesses to put together credit, control cash flow and get rewards on purchases.
There will be no interest charges or revolving balances as the business owners will pay in full monthly. The card also includes a minimum 25-day monthly grace period for customers to pay their bills and offers up to 1% cash return on purchases.
Cardholders also have the advantage of access to ScoreBoard, an online tool to scrutinize expenses, follow expenditure patterns and evaluate sales records. Moreover, it provides round-the-clock assistance through a number of domestic call centers and protection against fraud. With all these advantages, the card is obtainable at both U.S. Bank branches and online.
Presently, U.S. Bank holds a leadership position in financing and offering expert advice to small businesses. Statistically, in 2011, the record of Small Business Administration (SBA) loan approvals worth $630 million was set by U.S. Bank. These were up from $504 million recorded in 2008. Moreover, small business lending grew 3.8% in the second quarter compared with the prior-year quarter.
According to management, the U.S. Bank Business Visa Charge Card is a noteworthy inclusion into the wide range of the company’s products, specially designed for small businesses.
Mainstream banks have been hit hard by the current sluggish economic environment coupled with the new regulations. Moreover, with the implementation of the Durbin Amendment, the banks were compelled to charge merchants with lower fees when their customers pay through debit cards.
U.S. Bank had recorded lower card revenue compared with the prior-year quarter, mainly due to these financial regulations. Hence, we can conclude that the introduction of the Business Visa Charge Card was to primarily augment its declining card revenue.
Recently, Citigroup, Inc. (C - Analyst Report) and American Airlines (also known as AA), a subsidiary of AMR Corporation , partnered to launch a new travel benefit card - the CitiBusiness / AAdvantage World MasterCard. This card also intended to fulfill the requirements of small businesses.
U.S. Bancorp currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. However, considering the fundamentals, we maintain our long-term ‘Neutral’ recommendation on the stock.