Across the world, card payments have more or less replaced hard cash in business transactions. For small and medium-sized enterprises (SMEs) especially, providing digital payment solutions gives you a competitive edge, allowing you to reach out to more customers and paying your vendors and suppliers quickly and easily. While a card transaction can be completed in a matter of seconds, its inner workings are a lot more complicated than you think. It is, therefore, important that business owners familiarise themselves with payment networks and how they work so that they can use them in the most efficient way without the risk of fraud and high fees.
A payment network – also called a payment card network or payment processing network – facilitates digital transactions between businesses and their customers. Think Visa, Mastercard, and American Express, the three most widely used payment networks in the world and in Singapore as well. These payment networks act as a communication system through which digital transactions are accepted, authorised, verified, and approved.
Global transactions supported by major payment networks are growing steadily and stood at USD 467.65 billion in 2020, up 6% from 2019, according to the 2022 Nilson Report, a respected source on global card payment news and analysis. The same report pointed out that Visa accounted for 40% of those transactions, followed by Mastercard with 24%.
While payment networks have everything to do with credit and debit cards, including corporate cards, they might not issue the cards themselves. Visa and Mastercard don’t provide cards but allow other financial institutions – such as banks and fintech companies (like Aspire) – to issue cards with their logos.
Say you have a Visa corporate card issued by DBS Bank, such as the DBS Business Advance Debit Card. This card carries the bank’s logo on the top left corner and the Visa logo on the bottom right. This signifies that Visa is the payment network while DBS is the ‘card issuer’ or ‘issuing bank’. Likewise, in the case of Aspire’s Visa Corporate Card, Aspire is the card issuer and Visa the payment network.
A card issuer accepts and approves applications for cards and distributes the cards to customers. It extends credit to the card holder and sets the credit limit. It also sets card terms and conditions (fees, rewards, offers, and so on) and collects payments from the card holder. And, it has the final say on whether a transaction is approved or denied. Visa and Mastercard do not manage the card holder’s account in any way.
Markedly different from Visa and Mastercard, American Express provides its own cards, making it both a card issuer and payment network.
From the section above, we now know that there are two types of payment networks. These go by different names. Payment networks like Visa and Mastercard, which allow other financial institutions to issue their cards and only facilitate transactions on these cards, are called ‘open networks’. On the other hand, American Express, which issues its own cards and processes transactions on them, is called a ‘closed network’.
From the moment you swipe, tap or insert your corporate card on a point-of-sale machine or make an online payment using a mobile device, the payment network takes over and sets into motion a series of steps:
There are a number of reasons why businesses and customers alike prefer card payments, especially if they are powered by global payment networks:
As a leading global payment network, Visa, by its own admission, processes 76,000 transactions per second. It is the most widely accepted payment network in the world, favoured by millions of individuals and businesses, including Aspire. As corporate cards go, here’s what to expect from a Visa corporate card:
Eligibility criteria for Visa commercial cards differ from issuer to issuer, and some are more stringent than others. Many banks such as DBS have an age (21 years and above) and annual income requirement (SGD 30,000 and above) for employees. Others, like Citibank, have a minimum net worth requirement (SGD 50,000) for companies. Fintech companies are known to have more relaxed rules for small businesses that fail to meet the eligibility criteria of major banks. For example, you can get an Aspire Visa Corporate Card simply by opening a business account with us and submitting a few documents.
As a small business in Singapore, what’s the best payment network for you? As you grapple with Visa versus Mastercard, Visa versus American Express, and Mastercard versus American Express, we’ve stacked up the three players on key parameters to see how they compare:
These are some of the best Visa commercial cards in Singapore with a special focus on small businesses:
Card type: Debit, virtual, multi-currency card
Features and benefits: Real-time payment tracking, customised spend limits to control overspending, automated receipt reminders, all your transaction records in one place, and easy integration with your accounting system. Also, you can get unlimited virtual cards so that each member of your team gets their own, a feature not offered by other banks and financial institutions.
Fees and rewards: Lowest foreign exchange rates (two times lower than what banks offer), 1% cashback on digital payments, no card activation fee, zero transaction fee, no minimum balance requirement.
Card type: Corporate credit card
Features and benefits: Spend limit based on card holder’s usage requirement, transaction record available online or via e-statement.
Fees and rewards: SGD 194.40 annual fee, SGD 45 late payment fee, one-year fee waiver, free travel accident insurance, complimentary employee misuse coverage up to USD 25,000 per card holder and USD 1.65 million per company, cash rewards and air miles.
Card type: Corporate debit card
Features and benefits: Customised spend limits, foreign currency withdrawals at overseas ATMs.
Fees and rewards: Zero annual fee, 0.3% cash rebate on transactions, free travel accident insurance, complimentary employee misuse coverage up to USD 25,000 per card holder and USD 1.65 million per company.
Card type: Business credit card
Features and benefits: Pre-determined credit limit for each card, consolidated view of business spend, no annual income requirement.
Fees and rewards: Annual fee of SGD 181.68, SGD 20 fee for card replacement, 0.3% cash rebate on every SGD 5 charged on monthly purchases, complimentary travel insurance, e-commerce purchase protection against non-delivery and damage up to USD 200 per claim or USD 800 per annum.
Card type: Commercial card
Features and benefits: Easy single payment solution and expense tracking, contactless payments through ‘tap and pay’, can be used at 33 millions establishments worldwide for travel, entertainment, and business expenses.
Fees and rewards: SGD 150 annual fee, SGD 30,000 minimum annual income requirement for card holder, SGD 50,000 minimum company net worth requirement, free travel accident insurance, free employee misuse coverage of up to USD 25,000 per card holder and USD 1,650,000 per company, 0.3% cashback of company’s annual spend, Thank You points (one point equals SGD 1) that can be redeemed for cash rebates or rewards.