American Express sheds light on business spending trends amid economic moderation

The Economy Moderates: Small Business Credit Card Competition Heats Up

As reports of a moderating economy continue to surface, American Express sheds light on the current state of business spending. The latest quarterly earnings report from American Express revealed that business spending, particularly on business credit cards by small and medium-sized businesses, has been sluggish. In fact, spending on these cards only rose by one percent compared to the same time last year.

Despite the subdued spending environment, American Express sees a lot of opportunity in the small business sector. The competition for business owners’ wallets has been heating up, with credit card companies vying for a piece of the pie.

Business credit cards function similarly to consumer credit cards, with cardholders using them to make purchases and earn rewards. However, businesses tend to use their cards much more frequently than consumers. For example, Jeff Cayley, owner of Worldwide Cyclery, charges upwards of $800,000 a month on his Capital One credit card, earning two percent cash back on all purchases.

The cash back incentives offered by credit card companies can provide significant savings for businesses. For Worldwide Cyclery, this means potentially saving thousands of dollars each month, which directly impacts the company’s bottom line.

While credit card companies earn fees from transactions made by both consumers and businesses, they tend to generate more revenue from consumer credit cards due to the larger market size. However, with the number of small businesses on the rise, credit card companies are increasingly targeting this sector with specialized products and services.

From cards tailored to influencers to those designed for small business owners looking to build credit history, the business credit card market is becoming more diverse. Despite the array of options available, the success of these cards ultimately depends on whether business owners feel comfortable using them.

Marcia St. Hilaire-Finn, owner of Bright Start Early Care and Preschool, has scaled back spending on her American Express business card due to stalled enrollment and rising costs. However, she remains optimistic about the future and hopes to resume spending on non-essential items once business picks up.

As small businesses navigate the current economic landscape, the competition in the business credit card market continues to intensify. With new products and services being introduced to cater to the evolving needs of small business owners, the battle for their wallets shows no signs of slowing down.