Among the lingering side-effects of the financial meltdown has been a seemingly permanent shift in the consumer credit market and a customer base that is slightly more hesitant around credit products.
However, while consumer credit has been slow to recover, however, commercial card payments have been on a sharp incline and all indications indicate that the growth trend is likely to continue.
According to Commercial Payment Cards: The U.S. and Global Markets and Trends, 8th Edition, in 2013 commercial card purchases hit $888 billion and the volume of transactions grew 13 percent in 2013.
The growth is also apparently a global phenomenon as commercial card us continues to grow internationally. According to the study, global commercial card purchase volume is forecast to grow by 13 percent worldwide in 2014 and in 2015. That would make an increase from $1.4 trillion to $1.79 trillion a year.
Apart from being international, the study also demonstrates that the growth in the use of commercial cards is expanding in businesses of all sizes. Thought larger enterprises tend to be heavier commercial cards users by spend, small and medium sized business has seen a sharp uptick in usage and is growing at a faster rate than the average. Small and medium companies saw their commercial card purchasing increase worldwide by almost twenty percent in 2013, a growth pattern that is forecasted to hold.
As the landscape changes for pay cards, the players lining u globally to provide those cards are also changing.
China’s UnionPay has risen from a “not ranked” to the leader of the pack in a relatively short period in time, as credit purchasing in China on the whole has taken off over the last ten years. Union Pay now generated more commercial card purchases than JCB, BC Card and Discover/Diner’s Club. Union Pay is also an increasingly dominant as a debit player, and for the first time surpassed Visa in 2013 as the largest network by credit and debit purchase volume.
U.S. commercial banks, looking for a bigger share of both the domestic and international dollars associated with the explosion in commercial card spending may now be facing working double time to close the commercial payments gap with long-time market place competitors like as American Express.
Amex, which has long the “Apple of corporate payments,” offers its own ecosystem of benefits to corporate customers that include cards, service, solutions, and a network all under one roof.
Banks looking to compete need not only meet, but must also exceed the network of offering that American Express brings to market and will need to bring the level of their collective game up a notch.
Commercial banks are not without option, and can choose between developing in-house proprietary solutions, as well as tapping into Visa and/or MasterCard solutions’ reach.
However, American Express didn’t come to dominate the commercial card space because it has a track record of sitting comfortably on its laurels, and has come into 2014 keen to leveraging third-party merchant acquiring relationships via its OptBlue U.S. small merchant acquisition.
Commercial cards are essentially attractive because of cost savings associated with them,
The basic impetus behind migrating to commercial cards remains cost savings. However, that alone isn’t enough for consumers with the a blooming tree of options including IntelliLink (Visa), SmartData (MasterCard), PAYVE (American Express) and Paymode-X (Bank of America). Value propositions for corporate clients increasingly need go beyond mere cost savings and look more broadly to allowing allow spend managers to leverage information, create process synergies, and control total expenditures.