Research Methodology The Products
Three Major Categories Corporate Cards Purchasing Cards Business Cards Background of Commercial Credit Cards New Types of Purchasing Cards The Market
Table 1-1: U.S. Market for Commercial Credit Cards by Category, 1995-2004 (dollars): Corporate (T&E), Purchasing, Business, Total Purchasing and Business Card Use Rising Nearly 29 Million Cards in Circulation Factors to Market Growth Shift to Plastic and Employer Willingness to Provide Cards Are Pivotal Trends Economywide Shift to Electronic Payments Online Business-to-Business Purchasing a Potential Goldmine Online Corporate Travel Sector Booming Growth Factors in Fleet Cards SmartCards to Spur Overall Major Growth The Marketers
Figure 1-1: Market Share of Leading Commercial Card Issuers, 1999 (percent): American Express, Visa, MasterCard, Fleet Cards Avis Purchases Leading Fleet Card Issuers Four Bankcard Issuers with a Million Cards or More Bankcard Issuers Not the Only Players Six Leading Private-Label Fleet Card Issuers The Lure of an Undertapped Market Government's Requests for Proposals (RFPs) Expanded Citibank the GSA Leader for 1999 Technologies Developed for Feds Benefit Card Issuers and Their Private Sector Customers American Express's Withdrawal Shifts Rankings of Players Internet Creating New Competitive Arena Spotlight on the Internet Alliances Seek to Automate Online Purchasing Process Smart Commercial Cards "Cardless" Cards Nearly $80 Million Spent on Commercial Card Advertising in 1999 The Consumer
MasterCard the Most Frequently Held Card in Simmons Survey Marriage, Employment, and College Education Indicative of Corporate/Business Card Ownership Half of Small Business Owners Use Commercial Cards
Three Major Categories Corporate Cards Purchasing Cards Business Cards Background of Commercial Credit Cards Visa and MasterCard Slow to Leap on Purchasing Cards How Purchasing Cards Work Reduced Costs the Primary Benefit to Users Other Benefits to Users Suppliers Benefit from Faster Payment Benefits to Banks: Profit and Relationships New Types of Purchasing Cards Additional Products and Terms Charge Cards Credit Cards Bankcards Payment Systems MasterCard and Visa Payment Systems Issuing Banks Acquirers or Payment Processors Automated Clearinghouse and FedWire Establishing a Commercial Card Program
Purchasing Card Programs Require Complicated Systems Data Capture Is Critical Data Capture Levels Query Existing Bank Partners First Providers Often Help with Implementation How a Corporate or Purchasing Card Program Works Front-Office vs. Back-Office Functions Merchant Acquirers and Payment Processors Often Overlap One-Stop Shopping Still Not the Norm. Card Associations Respond Leading Merchant Acquirers Ten Leading Payment Processors
Market Size and Growth
Market Tops $183 Billion in 1999 Corporate Cards Account for Largest Share of Transactions, But Purchasing and Business Use Rising Table 3-1: Estimated U.S. Market for Commercial Credit Cards by Category, 1995-1999 (dollars): Corporate (T&E), Purchasing, Business, Total Corporate Card Volume Climbs, But Market Share Dips Purchasing Card Volume Triples, Market Share Up One-Third Business Card Volume, Share Slightly Behind Purchasing Card Levels Figure 3-2: Share of U.S. Commercial Card Market by Category, 1995 vs. 1999 (percent): Corporate (T&E), Purchasing, Business Nearly 29 Million Cards in Circulation Table 3-2: Estimated Number of Commercial Cards in Circulation by Brand, 1999 (percent): Visa, AmEx, MasterCard, Fleet Cards, Diners Club, Other Factors to Market Growth
… Except in Small Business Card Segment Other Differences in Commercial Card Market Shift to Plastic and Employer Willingness to Provide Cards Are Pivotal Trends Economywide Shift to Electronic Payments Federal Mandates Speed Transition to Electronic Commerce Online Purchasing a Key Factor Favoring Plastic Online Business-to-Business Purchasing a Potential Goldmine Online Corporate Travel Sector Booming Direct Payment Could Eliminate Need for Cards Plastic Reduces Costs and Boosts Efficiency New Technologies Make Even Greater Savings Possible Technology and Merchant Acceptance Bankcard Associations Are True Believers Market Segmentation Covers All Businesses GSA's Experience Illustrates Several Growth Trends Growth Factors in Fleet Cards SmartCards to Spur Overall Major Growth Electronic Commerce Likely to Compete with Cards Electronic Communications Cut Into T&E Spending Figure 3-3: Projected U.S. Market for Commercial Credit Cards by Category, 1999-2004 (dollars): Corporate (T&E), Purchasing, Business Projected Market Growth
Table 3-3: Projected U.S. Market for Commercial Credit Cards by Category, 1999-2004 (dollars): Corporate (T&E), Purchasing, Business, Total
Visa Making Gains on American Express Table 4-1a: Leading Commercial Card Issuers: Estimated Number of Cards, Charge Volume, and Market Share, 1999 (number and dollars): 6 Leading Issuers, Other Table 4-1b: Leading Commercial Card Issuers: Estimated Number of Cards, Charge Volume, and Market Share, 1997 (number and dollars): 6 Leading Issuers, Other Avis Purchases Leading Fleet Card Issuers Four Bankcard Issuers with a Million Cards or More Nine Additional Commercial Card Leaders Table 4-2a: Leading Commercial Bankcard Issuers, 1999 (number): 13 Issuers Leading Players Shuffle, But Most Names Remain the Same Table 4-2b: Leading Commercial Bankcard Issuers, 1997 (number): 12 Issuers Another Half-Dozen Issuers Have 10,000 Cards or More Bankcard Issuers Not the Only Players Diners Club Boasts a High-Transaction Card JCB Another Internationally Recognized Card Six Leading Private-Label Fleet Card Issuers The Oil Company Card Segment: Mobil Leads in Number of Cards, Chevron by Charge Volume American Express on Top in Corporate and Business Cards U.S. Bank Still Leads in Purchasing Cards, But GSA Contract Opened to Competition Competitive Situation
The Lure of an Undertapped Market Competition Creates New Customer Options Issuers Increasingly Competing in All Categories Government's Requests for Proposals (RFPs) Expanded Major GSA Card Requirements Smart Cards Also Required GSA Encouraging Transition to E-Commerce Citibank the GSA Leader for 1999 Table 4-3a: GSA Commercial Cards: Issuers by Total Number of Cards and Transaction Volume, 1999 (number and dollars): 5 Issuers GSA Purchasing Cards: U.S. Bank Leads in Transaction Volume and Cards Table 4-3b: GSA Purchasing Cards: Issuers by Number of Cards and Transaction Volume, 1999 (number and dollars): 5 Issuers GSA Travel Cards: Bank of America Leads in Transaction Volume and Cards Table 4-3c: GSA Travel Cards: Issuers by Number of Cards and Transaction Volume, 1999 (number and dollars): 5 Issuers GSA Fleet Cards: Citibank Leads in Transaction Volume and Cards Table 4-3d: GSA Fleet Cards: Issuers by Number of Cards and Transaction Volume, 1999 (number and dollars): 5 Issuers Technologies Developed for Feds Benefit Card Issuers and Their Private Sector Customers American Express Withdraws from GSA Bidding Round, Cites Low Profit Margins as Reason American Express's Withdrawal Shifts Rankings of Players One-Card Program Causes Problems for Citibank … Yet One-Cards Catching On Mergers Continue to Reshape Competitive Landscape Acquisitions Also Alter Scene in Fleet Cards Justice Department Investigating Visa and MasterCard, May Divide Playing Field Globalization of Plastic Payment Industry E-Commerce Also Spurs Globalization Internet Creating New Competitive Arena Information a Critical Competitive Factor Issuers Also Working to Improve Ease of Use Technology Plays Major Competitive Role Competitive Issues in Travel-and-Entertainment Who Gets the Rewards? Perks and Bonus Programs Being Added to Corporate Cards Annual Fees Characterize Reward Programs Yet Visa and MasterCard Getting Out of Enhancement Business Purchasing Card Market Not for Everyone Bankcard Issuers Giving American Express a Run for its Money in Business Category Market Attracts Non-Bank Players Competitive Focus: Fleet Cards Avis Surprises Industry with Purchase of Wright Express Comdata Launches All-in-One Fleet Card Competitive Profile: American Express
Current Strategic Focus: Internet, Global, and Legal Maneuvers American Express's Business Lines Reinforce Each Other, Extend to New Markets Closed-Loop System Gives Greater Control More Than 55,000 Commercial Supplier Locations Purchasing Card Program Offers Flexible Purchasing Limits Comprehensive Management Reporting Electronic Reporting Options Quality of Reporting Earns Government Acceptance Variable Per-Card Fee Schedule Move to Sign More Suppliers Dedicated Commercial Support Alliances with 10 Leading E-Commerce Providers American Express @ Work Develops Network for Business2Business E-Commerce Creates Online Site for Travel Card Reservations AmEx Partners with GetThere.com Corporate Card Product Enhancements Corporate Card Offerings Extended Globally and in U.S. Issuer Develops Credit and Co-Branded Cards Moves Aggressively to Challenge Visa and MasterCard American Express Courts Banks for Two Reasons A Potential Drawback Company Spends $55 Million on Commercial Card Advertising, But Blue Card Is the Big News Competitive Profile: Visa
A Division of Visa International Visa International Creates Global Commercial Division Visa Helps Members Compete for Commercial Card Market Association Bullish on Commercial Cards Table 4-4: Visa-Branded Commercial Cards by Type, Sept. 30, 1999 (number): 4 Types Visa Corporate Cards Visa Purchasing Cards Visa Business Cards Adds Business Check Cards and Platinum Credit and Check Cards Company Moves Into Fleet Cards InfoSpan 2.0 Supports Corporate and Purchasing Cards Visa Also Offers Electronic Purchasing Teams with D&B to Develop Market Intelligence for Business Card Issuers Visa Grows Market by Expanding Acceptance Visa and MasterCard Match Programs Visa Battles American Express, Scores International Coup Visa Active in Smart Card Development Company Developing "Open Platform" Technology E-Commerce the Big Arena Visa International Launches Global E-Commerce Initiative eVisa Unveiled Competitive Profile: MasterCard
The Third-Largest Brand of Commercial Cards Mondex and MULTOS MasterCard Enters Fleet Card Market with MultiCard MasterCard Launches Comchek MasterCard Corporate Fleet Card Introduces Premium Corporate Cards, World Card Corporate Card Offers Unique VAT Reclaim Service Enters Alliances for Online Purchasing Card Program Alliance with Microsoft, Clarus to Create E-Commerce Platform Ventures to Support Multinational Reporting "Priceless" Campaign Expanded to Include Business Cardholders The MasterCard Future of Transactions Laboratory at MIT Competitive Profile: Bank of America
Gains from Federal Contract and NationsBank Merger Strength Is in Size, Not Innovation Company Offers Corporate, Purchasing, Fleet, and Commercial Cards Corporate Card Offers Many Choices Purchasing Card Offers Similar Features Fleet Card Offers Standard Fare Commercial Card Combines Three in One A Heavyweight in Other Fields Competitive Profile: U.S. Bank
A U.S. Bancorp Subsidiary Company Wins $750 Million Lockheed Martin Purchasing Card Contract U.S. Bancorp Announces Course for the Future The Largest Visa Commercial Card Issuer Company Background First Bank Wins GSA Contract Company Expands Corporate Travel Program U.S. Bank and Staples Offer New Small Business Card Company Teams with Voyager to Offer Fleet Card U.S. Bank Offers Relocation Card Company Develops Chip-Containing Smart Card for Siemens Parlays Government Experience into Innovative PowerTrack Service FirstView 3.0 Enhanced to Support Corporate/Purchasing Cards U.S. Bank Partners with Remedy Corp. to Automate Corporate Purchasing Process Online Acquisitions an Ongoing Part of Strategy U.S. Bancorp Teams Up with Canada's Royal Bank in 2000 Competitive Profile: Citibank
The Major Banking Subsidiary of Global Citigroup Global Presence Gives Citibank Edge with Multinationals Wins Leading Share of GSA Business by Volume GM Card Program the Largest of Its Kind Citibank Offers Specialized Commercial Cards Citibank Acquires AT&T Universal Card Services Citibank's AT&T Universal Business Card Program Competitive Profile: Diners Club
Diners Club Targets Frequent Business Travelers and Affluent Individuals Corporate Card System Plush Enhancement Options Strong Software Support Corporate Travel System (CTS) Group Event System Competitive Profile: Bank One
Bank's Own Figures Exceed Government Reports First Private-Sector Purchasing Card Issuer Company Offers Procurement, Fleet, and T&E Purchases on Single Card Commercial Cards Supported by Enhanced Reporting Capabilities Bank One Offers Several Reporting Software Options Provides Implementation Assistance and Technical Support Company Also Offers Cards for Smaller Businesses Sears Selects Bank One as Exclusive Commercial Credit Card Issuer Bank One's New One Net Cross Border Internet Payments System Competitive Profile: GE Capital
The GE Capital Corporate Card GE Capital Gains Reward Program Enhanced Travel Authorizations (ETA) Customized Card Design. Synergy 2000 The GE Capital Executive Corporate Card The GE Capital Purchasing Card Program The GE Capital Fleet Travel Card New Technology to Merge Desktop and Online Reporting GE Business Marketplace a Portal to Seamless E-Commerce Company Launches Euro-Denominated Cards GE Capital Is Leading Proponent of MasterCard's Global Alliance Strategy Marketing and New Product Trends
Alliances Seek to Automate Online Purchasing Process American Express Teams up with Ariba and OutPurchase.com Visa Focusing on XML Technology MasterCard Launches Test Site in April 2000 Internet Start-Ups Up the Ante Other Innovations in Reporting Software Greater Controls Programmed into Cards Greater Functionality in Cards Card Issuers Ink Exclusive Deals with Popular Websites Card Issuers Offer Rewards and Enhancement Products Cross-Selling Is Another Strategy Most Issuers Offering Premium Corporate Cards Smart Commercial Cards Visa and U.S. Bank Develop Smart Cards for Siemens Employees MasterCard Develops Smart Card for Ticketless Boarding on American "Cardless" Cards Tapping Institutional Markets Direct Mail to Business Owners Advertising Expenditures
Commercial Card Advertising Expenditures Hard to Pinpoint Nearly $80 Million Spent on Commercial Card Advertising in 1999 American Express Leads in Commercial Card Spending Diners Club Lays Out Over $5 Million Print Plays Major Role in Commercial Card Advertising Advertisements Appear in Specialty/Business Publications Advertising Positioning
MasterCard Also Parlays Intangible Appeal American Express Builds on International Cachet American Express Courts Entrepreneurial Spirits AmEx Corporate Optima Platinum Helps Small Businesses Manage Their Expenses Rewards Another Theme of Business Card Advertising Cost Control Featured in Purchasing, T&E Card Advertising
Demographic Data on Commercial Card Owners Corporate/Business Card Use Not Widespread MasterCard the Most Frequently Held Card in Simmons Survey Marriage, Employment, and College Education Indicative of Corporate/Business Card Ownership The American Express Corporate Card Owner American Express Executive Corporate Profile Virtually Identical MasterCard BusinessCard Owners Include African Americans Visa Business Card Owners Present Younger Profile Diners Club Owners Follow Similar Pattern Air Travel Card Owners Concentrated in West Western Residence Also Indicative of Auto Rental Card Ownership Hotel Card Owners Indicated by Southern Residence Frequency of Use of Corporate/Business Cards Half of Small Business Owners Use Commercial Cards Fewer Small Businesses Paying Off Balances One-Fifth of Small Business Owners Use Cards Often Table 5-1: Ownership and Use of Corporate/Business Credit Cards by Type, 1999 (number and percent): 9 Types Table 5-2a: Demographic Characteristics Favoring Ownership of Corporate/Business Credit Card: American Express Corporate vs. American Express Executive Corporate, 1999 (U.S. Adults) Table 5-2b: Demographic Characteristics Favoring Ownership of Corporate/Business Credit Card: MasterCard Business vs. Visa Business, 1999 (U.S. Adults) Table 5-2c: Demographic Characteristics Favoring Ownership of Corporate/Business Credit Card: Diners Club International vs. Air Travel Card, 1999 (U.S. Adults) Table 5-2d: Demographic Characteristics Favoring Ownership of Corporate/Business Credit Card: Auto Rental Card vs. Hotel Card, 1999 (U.S. Adults) Table 5-3a: Demographic Characteristics Favoring Frequent Use of Corporate/Business Credit Cards by Type: American Express Corporate vs. MasterCard Business, 1999 (U.S. Adults) Table 5-3b: Demographic Characteristics Favoring Frequent Use of Corporate/Business Credit Cards by Type: Visa Business vs. Diners Club International, 1999 (U.S. Adults) |
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