The mid-market continues to attract the interest of payment and banking firms, as Mastercard unveiled a suite of digital and financial management resources tailored for that audience on Tuesday (Feb. 18).
Dubbed the Mastercard Mid-Market Accelerator, this collection of solutions is designed for firms with annual earnings between $10 million and $100 million, or roughly 50-250 employees. It will aid banks and FinTechs in serving their lower middle-market clientele. The offering, which will first be launched in the U.S. before expanding globally, seamlessly integrates Mastercard’s digital payment capabilities and value-added services with features from partners that emphasize transparency, automation, and security.
As per Mastercard’s Jane Prokop, EVP and global head of small and medium-sized enterprises, the Accelerator will deliver a versatile assortment of solutions that financial providers can adjust to suit the needs of middle-market clients.
Mastercard is partnering with issuers like Citizens and FinTechs including Navan (expense management) and Trovata (cash flow management). The new Mastercard business card is a part of the middle-market offering and will provide various Mastercard card benefits from established small business and commercial card programs, alongside novel rewards. The card is available in both physical and virtual forms and will come with security enhancements like ID Theft Protection, HealthLock, and Zero Liability Protection.
Challenges in the Middle Market
In a conversation with PYMNTS, Prokop remarked that middle-market firms face distinct challenges not typically encountered by small businesses or larger corporations. While small enterprises enjoy simplified financial products, and large corporations can access highly tailored solutions, middle-market entities often find themselves grappling with capital access, fragmented banking partnerships, and outdated underwriting practices that fail to accommodate their rapid expansion.
“The absence of access to appropriate kinds of capital for business growth is a significant pain point in the middle market,” Prokop stated. “They require more complex underwriting due to often managing multiple bank accounts, which creates a fragmented view of their financial activities.”
Mastercard’s research indicates that the average growth rate for middle-market companies within its network is projected at 12% in 2024. This growth rate often leads middle-market businesses to discover that conventional underwriting methods fail to reflect their current growth trajectory, delaying access to essential funding. Furthermore, many of these firms continue to rely on manual operations, such as invoicing and reconciliations, which hinder their operational efficiency.
Prokop emphasized that a vital aspect of Mastercard’s initiative to better serve this segment is the embrace of virtual cards. Despite their advantages in security and expense management, the adoption of virtual cards has not yet reached the levels desired by leading financial institutions. Prokop noted two significant benefits: secure supplier payments and delegated spending authority.
“A virtual card issues a one-time number that cannot be reused. That’s a transformative aspect for security,” she explained. Additionally, for businesses where owners may still carry personal risk on a corporate credit card, virtual cards provide a secure manner to delegate spending to employees and contractors without risk of fraud or mismanagement.
PYMNTS Intelligence data reveals that virtual cards present a flexible cash flow option that finance departments can monitor with ease. Nevertheless, the data shows that just 3.3% of growth corporates in North America are utilizing virtual cards.
Tailored for Challenges
Prokop underscored that Mastercard’s middle-market program positions issuers at the forefront of the experience. By merging FinTech partners with financial institutions, Mastercard aspires to develop a more comprehensive array of offerings that address mid-market requirements such as cash flow management and expense oversight.
“This initiative is not merely about theoretical enhancements,” Prokop affirmed. “We have been collaborating closely with issuers and middle-market businesses for over 18 months to create solutions based on their challenges.”
The accelerator ensures that organizations can access these services directly through their current banking relationships, facilitating seamless adoption and helping issuers provide customized solutions. This announcement is also in line with Mastercard’s broader partnership strategy, which is founded on collaboration between traditional financial establishments and FinTechs to foster more effective financial ecosystems.
“We aim to connect parties in ways that enable them to serve the middle market more comprehensively,” Prokop stated. This strategy allows banks to smoothly transition businesses from small business offerings to middle-market solutions without losing customer relationships, she added, emphasizing that scalability and personalization remain integral to Mastercard’s vision for this sector. By utilizing richer data insights, issuers can gain a better understanding of customer requirements and deliver more personalized financial products.
“Personalization begins with data,” Prokop noted. “Numerous middle-market firms struggle to attain a comprehensive view of their financial standing. By enhancing the accessibility of this data, we empower both businesses and their financial partners to make more informed choices.”
Ultimately, Mastercard’s growth in this domain is not solely about refining its card offerings but also about evolving beyond cards entirely.
“Delivering solutions that transcend card offerings is truly central to our vision,” Prokop concluded. “We’re dedicated to providing a comprehensive range of financial and payment solutions that empower our partners and their customers to thrive in an increasingly digital landscape.”
