Commercial Revolving Credit Cards

Commercial revolving credit card programs allow business cardholders to make purchases with a line of credit, and carry over unpaid balances to the next billing period, unlike charge cards which require full payment each cycle. Revolving credit products allow card programs to grow by offering flexible repayment options while generating revenue from interest and fees.

Revolving Credit Key Concepts:

Underwriting & Credit Limit: The program sets a credit limit for each borrower based on underwriting criteria. Borrowers can use virtual, digital or physical cards to transact within this limit.
Billing & Interest Accrual: Borrowers receive a statement at the end of the billing period, which includes all spend, interest charges, fees, and payments. Interest accrued on balances is carried over, calculated using a configurable accrual method. Businesses are required to make a minimum payment to avoid delinquency, but they can revolve (i.e., carry over) the remaining balance.
Payments & Grace Period: On a specified date, borrowers can repay the balance in full, pay the minimum, or make a partial payment. If the balance is not fully repaid by that date, any remainder accrues interest. A grace period can be applied to let borrowers have more time to pay before the balance accrues interest for the next billing period.

Key Differences from Charge Cards:

Carrying Balance: Unlike charge cards, revolving credit cards allow cardholders to carry a balance to the next period.
Interest Charges: Interest is applied to balances that are carried over, and may entail different APRs for categories like purchases or cash advances.
Minimum Payments: Borrowers can pay the minimum due, instead of the full balance, to remain in good standing.

Key Parties in Revolving Credit:

Several key parties are involved in launching a commercial revolving credit card program:

Card Program: Cardholder brand, and orchestrates the experience
Technology Platform: Lithic offers the direct connections to Visa and MasterCard, along with the infrastructure to issue cards, track transactions, and pay account balances.
BIN Sponsor: Bank partner and principal member of the card networks
Debt Providers: Provide the capital needed to pay into the card networks. The Debt Provider can be the BIN Sponsor, the Card Program, or a third party.

Lithic can help you set up a commercial revolving credit card program as a program manager or a processor. For the program managed model, Lithic is responsible for key relationships (e.g., the bank) and many operations. For the processor, you take control of most program operations and bring your own bank.

Revolving Credit at Lithic:

Lithic offers flexibility in how you set up your revolving credit card program, leveraging APIs to manage card issuance, statements, payments, and ledger operations.

APRs & Billing Periods: Define different interest rates for purchases, penalties, cash advances, balance transfers and promotional. You can also set custom billing cycles and grace periods for cardholders.
Payment Management: You may choose Lithic’s native payment rails or use your own external payment systems to pay off balances. Payment progress can be tracked via the native rails or via the External Payments API.
Management Operations: Use the Management Operations API to post fees, void transactions, or resolve disputes. Define custom methods to affect balances on a card to support your use case.
Interest Calculations: Lithic calculates interest based on the average daily balance method, simplifying billing and repayment for both the program and the cardholder. Lithic also has the ability to support custom interest accrual methods.
Statements: Statements let your customers see detailed transaction data. Importantly, that data is immutable. Use Lithic’s statements endpoint to generate periodic statements for cardholders.

Thanks to modularity and flexibility, Lithic empowers commercial credit card programs to scale efficiently while providing transparent solutions tailored to their business needs.