Dive Brief:

• Nexus Systems, which provides payment automation services to the real estate industry, has partnered with JPMorgan Chase's WePay unit to create a service through which small and medium-sized businesses (SMBs) will be able to accept payment via a single use "virtual card."
• Nexus aims to tap a rise in demand for the virtual cards during the COVID-19 pandemic, a rise already playing out among its larger business that had point-of-sale (POS) equipment.
• The new service will facing competition from companies such as Square that already provide payments services to small businesses.

Dive Insight:

The new offering, called NexusDirect, is designed to let Nexus's clients more easily pay smaller vendors, such as lawn care, pest control and facility management firms, and to allow the small and mid-sized businesses faster access to their payments. The vendors receive payments directly into their bank accounts without having to provide bank account information or to acquire a POS system, Nexus said in a press release today.

Such a service takes direct aim at other fintech companies such as Square that have been in the business of facilitating digital payments for smaller businesses online for years. Still, Nexus has made inroads for the new service with its portfolio of big real estate clients, including commercial real estate services firm Cushman & Wakefield, real estate investment trust company Boston Properties, and real estate developer Silverstein Properties. 

The service works like this: The small business contractor receives the virtual card as a single digital payment for a particular service provided, with Nexus and WePay managing the paperwork, and when the buyer of the service pays for the purchase and authorizes the card, the money flows to the business owner's account, without any card fees. However, contractors with Chase accounts will be eligible for same-day payments without charges.

Debit card use has risen during the Covid-19 pandemic while credit card use has declined for a variety of reasons from economic slowdown causing hardship for some users to a preference for less contact to perhaps a general unease with credit in uncertain times. Such consumer sentiments could be reflected in small business behavior too.

Previously available Nexus virtual cards required point-of-sale equipment and therefore smaller contractors and businesses were less likely to make use of them than their larger peers with POS equipment. Nexus said that use of the previously available virtual cards rose by as much as 42 percent in some months last year compared to the same month in 2019, the company said.

"NexusDirect is a quick and secure way for a small supplier to receive all the benefits of electronic payments," Nexus President Jennifer Coolidge said in the release.