The Market for Corporate Cards

SUMMARY

As the consumer credit market matures, issuers and credit card associationsare seeking new sources of transaction volume.  Commercial card market isone of them.  While the consumer credit card charge volume grew at 9.8percent from 1998 to 2002, commercial card market grew at a 20-30 percent rate. During this period, the commercial card volume growth rates for AmericanExpress, and MasterCard/Visa combined were 20 percent and 25.77 percentrespectively.

Equipped with informationmanagement and e-business tools, commercial card programs offer corporationssignificant cost reductions in purchasing.  And, as a result, theirpopularity is increasing. 

Evren Bayri, Director of Mercator Advisory Group's Credit Advisory Serviceand author of the report comments, "although there have been verysignificant developments in the way companies conduct business today, we haveyet to realize the end-to-end e-business vision.  Companies still print outinvoices, handle purchasing manually and use cash and checks for payment,especially for large ticket items.  Solutions such as Visa Commerce andMasterCard e-P3 are designed to tackle these hurdles and get companies closer tothis streamlined vision of the future."

This new Mercator Advisory Group report takes a closer look at this rapidlygrowing market, focusing on business cards, corporate cards and purchasingcards.  It provides definitions, value propositions, market size, andexample solutions for each category and highlights recent initiatives in thecommercial card arena.

TABLE OF CONTENTS

1. Introduction

2. Commercial Card Market

2.1. Characteristics of the Market

2.2. Market Size

3. 3. Corporate Cards (T&E - Travel and Entertainment Cards)

3.1. Definition

3.2. Value Proposition

3.3. Market Size

3.4. Corporate Card Solutions

4. Business Cards

4.1. Definition

4.2. Value Proposition

4.3. Market Size

4.4. Small Business Solutions

5. Purchasing Cards

5.1. Definition

5.2. Value Proposition

5.3. Market Size

5.4. Purchasing Card Solutions

6. New Initiatives

6.1. Visa Commerce

6.2. MasterCard e-P3?

6.3. The CitibankR Global Data Repository

7. Fraud and Misuse

8. Conclusion

Table of Exhibits

Table 1: Costs of Traditional vs. Online Purchasing Processes

Exhibit 1: U.S. Visa & MasterCard Commercial Card Purchase Volume

Exhibit 2: American Express, Visa, and MasterCard U.S. Commercial CardVolume

Exhibit 3: U.S. Visa & MasterCard Commercial Card Purchase Volume bySegment

Exhibit 4: U.S. % Breakdown of Commercial Card Segments (Visa &MasterCard)

Table 2: Potential Savings of Indirect Cost

Exhibit 5: Visa & MasterCard Corporate (T&E) Card Purchase Volume

Exhibit 6: U.S. Visa & MasterCard Business Card Purchase Volume

Exhibit 7: U.S. 2002 Business Card Market Concentration

Exhibit 8: U.S. 2002 Business Card Market Concentration (after mergers)

Figure 1: Purchasing Card Transaction Flow

Exhibit 9: P-card vs. Cash and Check: Average Cost Per Transaction

Exhibit 10: P-card vs. Cash and Check: Average Cycle Time Per Transaction

Table 3: Data Items by Level

Exhibit 11: U.S. Visa & MasterCard Purchasing Card Purchase Volume

Figure 2: MasterCard e-P3?: EIPP and MasterCard P-Card ? How it works