Small businesses are no longer the forgotten ones when it comes to financial services. Thanks to the explosion of fintech, traditional players are now going after their business.
For good reason. At last count there were 27.9 million small businesses in the U.S., accounting for nearly half of the nation’s Gross Domestic Product. They employ nearly two-thirds of the global workforce.
The fintech companies are wise to that, but the large financial players have been slower to see the opportunity. They are now scrambling to get a piece of the pie, resulting in a slew of partnerships and acquisitions.
One company that’s been leading the charge is Mastercard. It’s been fogging deals to offer virtual cards, digital payments and expense management services with a slew of small business focused fintech companies. It's also investing money and resources in developing digital products and services that can be utilized by the fintech companies serving the small business market.
Take its announcement earlier this month. It announced its expanding its partnership with Zoho, the online platform that enables small businesses to run business operations. It has more than forty apps in many business categories including sales, marketing, customer service, accounting, and back-office operations. It also provides business owners with access to productivity and collaboration tools.
With the deal, Mastercard will offer access to enterprise resource planning and finance software on the Zoho platform. Other offerings include customer relationship management and marketing software.
“When Mastercard and Zoho come together, we’re able to pair our smart solutions and scale to fundamentally address some of the challenges small business owners face every day,” said Zahir Khoja, executive vice president, Global Acceptance at Mastercard said when announcing the expanded partnership. “These entrepreneurs drive job creation, productivity and growth globally; it’s critical that we find partners and develop solutions that allows us to help them succeed.”
This isn’t the first fintech deal Mastercard has been involved in during the past few months. In the spring it was one of the investors in Bill.com, the business payments software company. The $88 million round gave Bill.com a valuation of more than $1 billion. Through the deal Bill.com now offers Mastercard’s virtual cards on its automated accounts payable platform. Bill.com is focused on the small and medium-sized business market.
Mastercard is already partners with a slew of fintech companies including Monzo, N26, Starling, Revolut, and Transferwise and in June announced new initiatives aimed at deepening its relationship with fintech companies including next-generation digital banks. The company predicted in a report at the start of the year that small businesses will be the next battleground for fintechs. Arguing small businesses want the same on-demand experiences their larger brethren have, Mastercard predicted a slew of services will be rolled out by financial technology startups.
“SMBs are increasingly a critical component for deals across the FinTech ecosystem,” wrote Mastercard in the research report. “For one, SMBs remain underserved by established players that target bigger corporate customers, and additionally, the core of FinTech has largely been focused on helping SMBs obtain loans and financing.”