Capital One’s Strategic Small Business Shift: Finance Small Players, Reward Big Ones

Capital One is discontinuing the highly popular Spark Cash card for new business cardmembers, and instead segmenting their market into two different products. It’s fascinating the business direction the appears to paint for the issuer’s small business portfolio.

  • Spark Cash Plus is their new 2% cash back card, targeted to very high spending small businesses. It has an initial bonus offer of $1000 after $50,000 spend in six months, and comes with a $200 bonus each year the business spends over $200,000 on the card. And it’s a charge card (pay in full, no preset spending limit), rather than credit card, with a $150 annual fee.

  • Spark Cash Select offers just 1.5% cash back, no annual fee, and a choice of $500 initial bonus after $4500 spend within 3 months or 0% introductory APR for 12 months.

Small businesses that spend less are being offered less cash back, and the opportunity to revolve, while businesses with much higher spend levels are being offered even more cash, effectively 2.1% (rather than 2%) on exactly $200,000 annual spend.

And Capital One is focusing on the high spend business segment while also taking revenue from revolve more or less off the table. Card issuers make money on fees (like annual fees), intercharge (merchant swipe fees), and revolve (cardmembers paying interest when they don’t pay off their card in full each month).

Credit cards are highly competitive businesses, with most of the money earned off of interchange going right back to the customer with the richest rewards products, and an issuer might only make money off revolve. Of course many of the highest-end rewards products are targeting customers least likely to revolve balances. And no doubt that’s the case with small businesses, too.

Along with moving to a ‘no preset spending limit, pay your bill off in full each month’ model with Spark Plus, the first time Capital One has done this, they’re pitching this as a way for businesses to spend more and offering a tool to cardmembers to test their purchasing power before putting a large charge on the card.

For years this was the American Express play, and one American Express has moved away from in recent years. They earned their bread and butter off of interchange, and issuing charge cards for their proprietary products, but for both business and consumer cards they’ve shifted, looking for a piece of the financing business as well.

Is it at all strange to be seeing Capital One move first into the premium travel rewards space with transferable points and reimbursement for TSA PreCheck, even preparing to launch a new travel portal after a $170 million investment in Hopper, and soon airport lounges – in other words becoming more like the old American Express! – as Amex itself tries to become more of a lifestyle brand rather than being tied strictly to travel?

Fortunately, if you’re looking for 2% rebate on a small business card from Capital One without the fee increase at this time, Spark Miles (whose points transfer to airline miles) appears to still be available.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I dealt with the capitol one crooks years ago
    Once was enough thank you
    They make Citibank seem like Gods

  2. Why would someone choose Spark Cash Plus over the Citi Double Cash card which hs no annual fee? About the only reason I can think of is the no preset spending limit, which for most folks, probably isn’t an issue.

  3. Also had a really bad experience with Capital One where they increased my APR for no good reason. All my payments were on time and I only carried a balance for three months. Spoke with a CSR and they gave me some excuse about how Capital One does things differently. Paid everything off and the first thing I did was cancel my Capital One card. Don’t care who they have as new transfer partners or what new products they launched. After a bad experience some customers are never coming back.

  4. The question I have is if the charge card monthly balance will be reported on my personal credit report line the spark cash card does

  5. Capital One blows

    No way to transfer lines from cards that are basically obsolete like Quicksilver or other CapOne cards to Venture

    Cap One says a) can’t give you more credit because you have x and y cards with us. I say cancel x and y card and move line. They say no process to do that and recommend me to cancel the two existing cards and ask for increase. Did so and closed 26K in lines and was declined for an increase on Venture

    No explanation
    800 credit score

  6. @Mets Fan in NC – they are very off

    Knew someone that had a “starter card with them open for 3 years could never get them to budge off the $500 opening c/l

    “Not enough use” – he argued back any use over $50 screws ratios – Cap1 wouldn’t budge.

    Every year at the anniversary same story… No increase in line.

    Month 38 from opening, “you’re pre-approved”.. Open the X card.

    Does the online app stuff with pre-approval code – 15k line of credit. 3 years later – they still will not up the c/l on the 1st account.

    Such morons

  7. Capital One just dropped all of the card protections and travel benefits from the one card I have with them. The only reason I don’t close it is because it’s my oldest account. No thanks!

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