Airlines and payment companies have not traditionally targeted small businesses for travel rewards, but Chase Paymentech and United Airlines hope that by making business-related purchases easier to manage, small businesses will seek out airline miles programs.
United Airlines recently debuted its MileagePlus small business network, with Chase Paymentech among the airline’s partners. The small-business program is an expansion of United’s existing MileagePlus program, which enables businesses to earn award miles by spending at the program's vendor partners, including providers of printing, shipping, office supplies and computing services.
“One thing small businesses don’t have is time,” says Dan Charron, the newly promoted president of Chase Paymentech, JPMorgan Chase’s processing and merchant acquiring business.
“If businesses can go to one place and get different things you need for the business, it’s useful. It’s like a consumer product, where you can earn points for spending,” Charron says.
Most of the airline payments activity is aimed at consumers or larger businesses, rather than small business.
“The majority of small business owners don’t travel. You think of a small business as having about 15 people that provides a services at a specific location,” says Marc DeCastro, a research director at IDC Financial Insights, who says a program such as United’s could be used for family travel by the business owners.
Since many of the businesses are sole proprietorships, the miles could personally benefit the owners, Charron says.
Businesses can use earned miles to buy travel awards, upgrades, bid on MileagePlus auction programs and shop for merchandise and magazine subscriptions. Companies can also buy, transfer or donate their miles. The airline’s vendor partners also include UPS, Staples, Avis and Canon. The Chase Paymentech offer includes 2 miles for every $25 of Visa and MasterCard sales processed with Chase Paymentech.
“These are iconic brands that make a lot of sense for the small businesses,” Charron says.
The airline also released a bonus offer enabling companies to obtain 1,000 miles for enrolling in the new small business network and conducting transactions that earn at least 100 miles.
“It’s hard for airlines to find small businesses, and therefore you end up with small businesses that use consumer programs and turn into corporate clients if they fly a lot,” says David Oppenheim, managing director of MileagePlus business development and media at United Airlines. “We want to target small businesses that spend on all sorts of thing to accrue miles for those purchases.”
Many of the partner businesses are not available on consumer miles programs, which makes the small-business program a better fit, Oppenheim says.
United’s move comes amid a busy time for airline payments. AirTran, for example, recently signed a frequent flier card deal with Chase, and card issuers are jockeying for position to take advantage of the US Airways and American Airlines merger.
Airlines will also likely expand their digital payments initiatives, given a recent court decision that upheld the airlines' right to refuse cash payments.