Corporates across the Asia Pacific region are increasing their use of commercial card products, according to a new report from Citi.
Reports in The Asset on Thursday (Oct. 25) said Citi's Asia Pacific Commercial Cards Survey 2018 revealed businesses in the region are expanding their commercial card programs, as organizations shift away from legacy payment tools and use their cards for more spend categories, including procurement and meetings and events.
Businesses increased their spend on commercial cards by 24 percent in 2017, Citi's analysis found. Overall, B2B spending jumped by nearly 50 percent last year.
"The expanding use of commercial cards by corporates in the region corresponds to the increasing focus on digital and technology," reflected Deven Somaya, Citi Treasury & Trade Solutions' head of commercial cards for Asia Pacific, in a statement. "As business operations become more complex, corporates want solutions that are simple and digital to optimize efficiencies."
Citi concluded that commercial card adoption is largely driven by businesses' demand for greater visibility into spend and cash flow, as well as the tools' ability to streamline financial controls and governance and promote efficiencies.
Travel and expense management is the most common spend category for commercial cards, with 76 percent of survey respondents saying they have mandated the use of cards for T&E. Of the more than one-third of businesses that don't have a procurement card or virtual card account program, most said they plan to adopt a commercial card program to replace ACH transactions, checks and other payment rails they currently use.
While Citi's survey suggests significant traction for commercial cards in the Asia Pacific region, it should be noted that the report only surveyed 46 executives at 40 different companies in the region.
But the report follows earlier research that predicted significant growth for commercial cards in both Asia Pacific and Europe. Research conducted in 2016 concluded that purchasing and virtual card adoption is likely to gain traction amid significant growth in business travel spend.