The U.S. Market for Corporate Credit Cards and Purchasing Cards - 3rd Edition

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Published Jan 1, 2003 | 226 Pages | Pub ID: LA762183

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This Packaged Facts report focuses on the $350 billion dollar commercial credit card industry, covering corporate (travel and entertainment) cards, purchasing cards, and fleet cards, as well as new products such as payroll cards. The report examines the latest trends in the industry, including significant mergers, new products and services, and a multitude of growth factors in this evolving market—such as a new role for purchasing cards in business-to-business transactions, a new focus on small businesses, and a boom in electronic purchasing. This provides a baseline for projections of market growth from 2002-2007, as well as historical market data. Also included are detailed company profiles of the leading bankcard associations and card issuers, as well as demographic data on commercial credit card holders, focusing on characteristics such as gender and education and income levels.

The market for commercial credit cards is poised for substantial growth, thanks largely to the economy-wide movement to online purchasing and financial management platforms. At the same time, issuers are finding it more and more challenging to meet the diverse needs of cardholders and provide the total package in commercial card services. Some major players have backed away from the market entirely, while newer upstarts have carved out a niche with products and services that are custom-tailored to specific segments of the business market. This report traces the evolution of a rapidly growing business, and offers valuable insights into how its future is being shaped by new technology and other changes throughout the corporate world.

I. Executive Summary

    Scope and Methodology
    • Scope of Report
    • Report Methodology

    The Products

    • Cards Used for Business Purposes
    • Three Major Categories of Commercial Cards
      • Corporate Cards
      • Purchasing Cards
      • Business Cards

    • Background of Commercial Cards

    The Market

    • Market to Exceed $1 Trillion by 2007
    • Table 1-1: U.S. Market for Commercial Cards by Category, 1998-2007 (dollars): Corporate (T&E), Purchasing, Business
    • Over 38 Million Cards in Circulation
    • Commercial Card Market Drivers Different from Those for Consumer Cards
    • Corporate Card Market Weathers Recession Well
    • Shift to Plastic and Employer Willingness to Provide Cards Are Pivotal Trends
    • Online Purchasing Another Core Factor

    The Marketers

    • American Express Leads in Transaction Volume
    • Citibank the GSA Leader for 2001
    • Three Bankcard Issuers with a Million Cards or More
    • Bankcard Issuers Not the Only Players
    • Avis Owns Leading Fleet Card Issuers
    • Mobil Leads in Number of Oil Cards
    • Market Headed for Saturation in Some Segments
    • Competition Creates New Customer Options
    • Globalization of Plastic Payment Industry
    • Internet, Information Critical Competitive Factors
    • Purchasing Card Market Not for Everyone
    • New Developments in Fleet Card Market
    • Spotlight on the Internet
    • New Features for Small Business
    • Big-Ticket Transactions
    • Smart Cards Not Yet Living Up to Potential
    • “Cardless” Cards and Online Security
    • Big Three Spend $600 Million Advertising in 2001

    The Consumer

    • Low Penetration Rates Even for Top Commercial Cards
    • 66% of American Express Corporate Cardholders Are Monthly Users
    • Figure 1-1: Percentage of Total Cardholders for Selected Credit Card Classifications Who Use Card Annually and Use Card Monthly, 2002 (% of U.S. Adults): 7 Classifications
    • Diners Club Is Exception to Gender Skew
    • Higher Minority Draw for Visa Business

II. The Products

    Product Definition
    • Cards Used for Business Purposes
    • Three Major Categories
      • Corporate Cards
      • Purchasing Cards
      • Business Cards

    • Background of Commercial Cards
    • Visa and MasterCard Slow to Leap on Purchasing Cards
    • How Purchasing Cards Work
    • Reduced Costs the Primary Benefit to Companies
    • Benefits to Users: Speed and Convenience Are Top-Ranked
    • 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

    • Corporate Card Programs Operate Like Consumer Charge Cards
    • Purchasing Card Programs Require Complicated Systems
    • Data Capture Is Critical
      • Data Capture Levels

    • Querying Existing Bank Partners Is Important
    • 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

III. The Market

  • Figure 3-1: Estimated U.S. Market for Commercial Cards, 1998-2002 (dollars)

    Market Size and Growth

    • Market Hits $340 Billion in 2002
    • Corporate Cards Account for Largest Share of Transactions, But Purchasing and Business Use Rising
    • Table 3-1: Estimated U.S. Market for Commercial Cards by Category, 1998-2002 (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, 1998 vs. 2002 (percent): Corporate (T&E), Purchasing, Business
    • Over 38 Million Cards in Circulation
    • Table 3-2: Estimated Number of Commercial Cards in Circulation by Type, 2001 (percent): Visa, American Express, MasterCard, Fleet Cards, Diners Club, Other

    Factors to Market Growth

    • Commercial Card Market Drivers Different from Those for Consumer Cards
    • … Except in Small Business Card Segment
    • Other Differences in Commercial Card Market
    • Corporate Card Market Weathers Recession Well
    • Shift to Plastic and Employer Willingness to Provide Cards Are Pivotal Trends
    • Economywide Shift to Electronic Payments
    • Associations and Issuers Target Small Businesses
    • Middle-Market Companies Also Poised for Growth
    • Room to Grow in B2B Purchasing
    • Online Purchasing a Key Factor Favoring Plastic
    • $6.3 Trillion in Online B2B Spending by 2005
    • Direct Payment Could Eliminate Need for Cards
    • Potential Savings of Purchasing Cards Not Fully Realized
    • Slowdown in Corporate Travel Hits Card Market
    • 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
    • Government Saves $1.29 Billion with P-Cards
    • SmartPay Offers Lessons to Private Sector
    • Capital Goods, “Nontraditional” Purchases on the Rise
    • Growth Factors in Fleet Cards
    • Merchants Remain Tepid on Smart Cards
    • Electronic Communications Cut Into T&E Spending
    • Figure 3-3: Projected U.S. Market for Commercial Cards by Category, 2002-2007 (dollars)

    Projected Market Growth

    • Market to Exceed $1 Trillion by 2007
    • Table 3-3: Projected U.S. Market for Commercial Cards by Category, 2002-2007 (dollars): Corporate (T&E), Purchasing, Business, Total

IV. The Marketers

    Marketer and Brand Shares
    • American Express Leads in Transaction Volume
    • 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, 2001 (number and dollars): 6 Leading Issuers, Other
    • Avis Owns Leading Fleet Card Issuers
    • Three Bankcard Issuers with a Million Cards or More
    • Seven Additional Commercial Card Leaders
    • Table 4-2a: Leading Commercial Bankcard Issuers, 1999 (number and percent): 10 Issuers
    • Table 4-2b: Leading Commercial Bankcard Issuers, 2001 (number and percent): 10 Issuers
    • Leading Players Shuffle, But Most Names Remain the Same
    • Another Half-Dozen Issuers Have 10,000 Cards or More
    • Bankcard Issuers Not the Only Players
    • Diners Club Boasts 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 Cards
    • U.S. Bank Loses Lead in GSA Contract

    Competitive Situation

    • Two Bankcard Associations and Several Independent Players Compete
    • Market Headed for Saturation in Some Segments
    • Competition Creates New Customer Options
    • Issuers Increasingly Competing in All Categories
    • U.S. Government’s Commercial Card Program
      • Major GSA Card Requirements
      • Smart Cards Also Required
      • GSA Encouraging Transition to E-Commerce

    • SmartPay Plagued by Abuse, Poor Controls
    • Agencies Cracking Down on Card Abuse
    • Citibank the GSA Leader for 2001
    • Table 4-3: GSA Commercial Cards: Issuers by Transaction Volume, 2001 (dollars): 5 Issuers
    • Technologies Developed for Feds Benefit Card Issuers and Private Sector Customers
    • One-Card Program Causes Problems for Citibank
    • One-Cards Find Niche with Mid-Market Companies
    • Mergers Continue to Reshape Competitive Landscape
    • Justice Department Investigating Visa and MasterCard, May Divide Playing Field
    • Associations Weigh Value of New Interchange Rates
    • Globalization of Plastic Payment Industry
    • International Alliances
    • The Individual Approach
    • E-Commerce Also Spurs Globalization
    • Internet, Information Critical Competitive Factors
    • Competitive Issues in Travel-and-Entertainment
    • Who Gets the Rewards?
    • Bonus Programs More Prevalent Among Corporate Cards
    • Rebates No Longer an Industry Secret
    • Purchasing Card Market Not for Everyone
    • Bankcard Issuers Giving American Express a Run for its Money in Business Category
    • American Express Still Fighting Back
    • Competitive Focus: Fleet Cards
      • New Developments in Fleet Card Market
      • Fleet Card Companies Under Investigation

    Marketing and New Product Trends

    • Spotlight on the Internet
    • Card Associations Venture into New Online Territory
      • American Express Capitalizes on Past Strengths, Promotes New Platform
      • Visa Takes “Commerce” Online
      • MasterCard Gets “Smart,” Pursues Strategic Alliances

    • New Features for Small Business
      • Giving Back to Small Business
      • No Substitute for Good Service

    • Big-Ticket Transactions
    • Latest Cards Offer Better Control
    • Greater Functionality in Cards
    • Smart Cards Not Yet Living Up to Potential
    • Rewards, Rebates Widespread in Commercial Card Market
    • Cross-Selling Is Another Strategy
    • Most Issuers Offering Premium Corporate Cards
    • “Cardless” Cards and Online Security
    • Fleet Cards Following Similar Evolution
    • More Governments Signing On to Card Programs
    • Internet Marketing Begins to Displace Direct Mail

    Advertising Expenditures

    • Big Three Cards Spend $600 Million in 2001
    • Commercial Card Advertising Expenditures Hard to Pinpoint
    • American Express Leads in Commercial Card Spending
    • Diners Club Lays Out Over $7.9 Million
    • Print Plays Major Role in Commercial Card Advertising
    • Advertisements Appear in Specialty/Business Publications
    • …But New Approach May Be Needed

    Advertising Positioning

    • Functionality Is Key
    • MasterCard Marks Five Years of “Priceless” Campaign
    • American Express Builds on International Cachet
    • American Express Courts Entrepreneurial Spirits
    • Rewards Another Theme of Business Card Advertising
    • Cost Control Featured in Purchasing, T&E Card Advertising
    • Ads Blend Business and Personal Appeal

V. Competitive Profiles

    Competitive Profile: Advanta Corp.
    • Small Business Specialist Fifth Largest in Commercial Bankcards
    • Simple Card Lineup for Businesses
    • Online Account Management for All Cardholders
    • Advanta Business Center

    Competitive Profile: American Express

    • Still on Top in Commercial Cards
    • 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
    • Cards Accepted by Half a Million Vendors
    • 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
    • American Express @ Work
    • Alliances with Leading E-Commerce, Technology Providers
    • AmEx E-Commerce Evolves in Surprising Ways
    • Corporate Card Product Enhancements
    • Corporate Card Offerings Extended Globally and in U.S.
    • Issuer Develops Credit and Co-Branded Cards
    • Waiting for Resolution to Visa/MasterCard Challenge
      • American Express Courts Banks for Two Reasons
      • A Potential Drawback

      Company Spends $45 Million on Commercial Card Advertising, Experiments with New Promotions

    Competitive Profile: Bank of America

    • Fourth-Place Commercial Bankcard Issuer
      • Success in GSA Programs Comes at a Cost

    • Merger Woes Finally Put to Rest
    • Strength Is in Size, Not Innovation
    • Company Offers Corporate, Purchasing, Fleet, and Commercial Cards
      • Corporate Travel Card Offers Many Choices
      • Purchasing Card Offers Similar Features
      • Fleet Card Offers Standard Fare
      • Payroll Card Reduces Costs
      • Corporate Card and Commercial Card Combine Three in One

    • Line of Small Business Cards Expanded
    • Extensive Lineup of Electronic Tools
    • A Heavyweight in Other Fields

    Competitive Profile: Citibank

    • The Second-Largest Commercial Bankcard Issuer
    • The Major Banking Subsidiary of Global Citigroup
    • Global Presence Gives Citibank Edge with Multinationals
    • Wins Leading Share of GSA Business by Volume
    • Citibank Commercial Card Products
      • Citibank Corporate Card
      • Citibank Purchasing Card
      • Citibank Fleet Card
      • Citibank One Card

    • Enhancements Add Flexibility to Card Programs
    • Citibank Small Business Cards
    • Citibank e-Business

    Competitive Profile: Diners Club

    • The “First and Preferred” Charge Card
    • Diners Club Targets Frequent Business Travelers and Affluent Individuals
    • Corporate Card System
    • Company Card for Small Businesses
    • Plush Enhancement Options
    • Strong Software Support
    • Corporate Travel System (CTS)
    • Group Event System

    Competitive Profile: GE Capital Financial, Inc.

    • The Sixth-Largest Commercial Bankcard Issuer
    • The GE Capital Corporate Card
      • GE Capital Gains Reward Program
      • Enhanced Travel Authorizations (ETA)
      • Customized Card Design
      • Synergy 2.1 and NetReport

    • The GE Capital Executive Corporate Card
    • The GE Capital Purchasing Card Program
      • Program Extended with ePcard
      • GE Hunts Big-Ticket Transactions with e-Payment Solution

    • The GE Capital Fleet Travel Card
    • Options for Small Businesses
    • GE Business Marketplace a Portal to Seamless E-Commerce
    • GE Capital Is Leading Proponent of MasterCard’s Global Alliance Strategy

    Competitive Profile: MasterCard

    • The Second-Largest Card Association
    • Mergers and Acquisitions Reshape MasterCard International
    • MasterCard Expands MultiCard Program
    • Card Lineup Offers Extensive Slate of Perks
    • MasterCard Touts Convenience, Savings of Payroll Cards
    • New Focus on Small Businesses
    • MasterCard Business Savings, Bonuses
    • MasterCard Forms Multiple Alliances for E-Business
      • MasterCard SmartLink
      • MasterCard Enhanced Merchant Data Reporting System
      • Online Purchasing
      • Expense Management
      • SmartData Online

    • “Priceless” Campaign Celebrates Its Fifth Year

    Competitive Profile: U.S. Bank

    • U.S. Bank Leads in Commercial Card Market
    • A U.S. Bancorp Subsidiary
      • U.S. Bancorp Regroups After Merger, Recession

    • Company Background
      • First Bank a Top-Three Player in GSA Card Program
      • Company Expands Corporate Travel Program

    • New Purchasing Card Offers Automation, Discounts
    • Company Teams with Voyager to Offer Fleet Card
    • U.S. Bank Offers Relocation Card
    • Parlays Government Experience into Innovative PowerTrack Service
    • U.S. Bank Blitzes Small Businesses
    • FirstView Enhanced to Support Corporate/Purchasing Cards
    • U.S. Bank Launches eCommerce Suite
    • Acquisitions an Ongoing Part of Strategy

    Competitive Profile: Visa

    • The Largest Bankcard Association
    • A Division of Visa International
    • Visa Helps Members Compete for Commercial Card Market
    • The Visa Corporate Card
    • The Visa Purchasing Card
    • The Visa Business Card
    • Company Moves Into Fleet Cards
    • InfoSpan 2.4 Supports Corporate and Purchasing Cards
    • Visa Also Offers Electronic Purchasing
    • 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 Pushes Open Platform, Smart Visa Framework
    • E-Commerce the Big Arena
    • Visa Commerce Marks New B2B Approach
    • Tying It All Together with eVisa

    Competitive Profile: Wright Express

    • Unchallenged Leader in Fleet Cards
    • WEX Card Promises Convenience, Control, and Flexibility
    • Preferred Fleet Card of FedEx, State Governments
    • Co-branding Expands Features of WEX Card
    • Wright Express Corporate Card Offers Unmatched Acceptance
    • FleetPro Leads Charge Into Distributor Market

VI. The Consumer

    Corporate Credit Card Demographics
    • Note on Simmons Market Research Bureau Data
    • MasterCard Business, American Express Corporate, and Visa Business at Under 3% Penetration
    • 66% of American Express Corporate Cardholders Are Monthly Users
    • Diners Club Is Exception to Gender Skew
    • Higher Minority Draw for Visa Business
    • Managers at Index of 371 for American Express Corporate Card
    • American Express Shows Top Indicators Across Corporate/Business Cards
    • Table 6-1: Usage Rate and Number of Users for Selected Credit Card Classifications, 2002 (% and # of U.S. Adults): 7 Classifications
    • Table 6-2: Number of Users for Selected Credit Card Classifications: Overall, Annually, and Monthly, 2002 (# of U.S. Adults): 7 Classifications
    • Figure 6-1: Percentage of Total Cardholders for Selected Credit Card ClassificationsWho Use Card Annually and Use Card Monthly, 2002 (% of U.S. Adults): 7 Classifications
    • Table 6-3: Usage Rate and Number of Users for Selected Credit Card Classifications: Male vs. Female, 2002 (% and # of U.S. Adults): 7 Classifications
    • Table 6-4: Usage Rate and Number of Users for Selected Credit Card Classifications: White/Non-Hispanic vs. Minorities, 2002 (% and # of U.S. Adults): 7 Classifications
    • Table 6-5: Demographic Characteristics Favoring Use of Credit Cards, 2002 (U.S. Adults)
    • Table 6-6: Demographic Characteristics Favoring Use of Gasoline Credit Cards, 2002 (U.S. Adults)
    • Table 6-7: Demographic Characteristics Favoring Use of MasterCard Business Card, 2002 (U.S. Adults)
    • Table 6-8: Demographic Characteristics Favoring Use of American Express Corporate Card, 2002 (U.S. Adults)
    • Table 6-9: Demographic Characteristics Favoring Use of Visa Business Card, 2002 (U.S. Adults)
    • Table 6-10: Demographic Characteristics Favoring Use of Diners Club, 2002 (U.S. Adults)
    • Table 6-11: Top Indicators for Use of Selected Credit Card Classifications, 2002 (U.S. Adults)
    • Table 6-12: Top Indicators for Annual Use of Selected Credit Card Classifications, 2002 (U.S. Adults)
    • Table 6-13: Top Indicators for Monthly Use of Selected Credit Card Classifications, 2002 (U.S. Adults)

VII. Looking Ahead

    Trends and Opportunities
    • Online Services Largest Driver of Market Growth
      • Online B2B Purchasing
      • Online Account Management

    • Security Key to Purchasing Card Growth
    • Merchant Acceptance Grows Card Programs
    • Greatest Opportunities Lie with Small Businesses
      • Service More Important Than Technology

    • Large Purchases Also Showing Big Promise
    • Fleet Card Industry to Evolve

  • Appendix: Addresses Of Bankcard Associations And Selected Commercial Card Issuers

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