Commercial Payment Cards in the United States and Globally

Commercial Payment Cards in the United States and Globally

While U.S. consumer credit card spending may still be suffering, commercial card purchase volume is moving full steam ahead. According to Packaged Facts’ Commercial Payment Cards in the United States and Globally, commercial card purchase volume grew by 13% in 2013, reaching $888 million. Commercial payment cards are catching on in both the U.S. and abroad: we forecast global commercial card purchase volume to grow by 13% in 2014 and in 2015, rising from $1.4 trillion to $1.79 trillion, with both small businesses and larger corporations fueling this growth.

The global market for commercial payment cards is changing quickly, due heavily to the quick rise of UnionPay, which now generates more commercial card purchase volume than JCB, BC Card and Discover/Diner’s Club—and surpassed Visa in 2013 as the largest network by credit and debit purchase volume. With globalization occurring at a rapid pace, payments networks and financial institutions—eager to meet the needs of multinational corporations and to penetrate new markets—are growing alongside the world’s large corporations.

The U.S. commercial banks have worked hard to close the commercial payments gay with competitors such as American Express. Long the “Apple” of corporate payments, American Express offers cards, service, solutions, and a network all under one roof. Unlike Apple’s competitors, which rely on outside operating software to run their machines, leading U.S. commercial banks can pick and choose, developing in-house proprietary solutions as well as drawing from Visa and/or MasterCard solutions—and tapping their unsurpassed global location reach. But American Express has come into 2014 as strong as before, devoted to leveraging third-party merchant acquiring relationships via its OptBlue U.S. small merchant acquisition.

The basic drive behind migrating to commercial cards remains cost savings. However, the industry is approaching with increasingly sophisticated solutions: With names like IntelliLink (Visa), SmartData (MasterCard), PAYVE (American Express) and Paymode-X (Bank of America), the industry has introduced some very enticing value propositions to their corporate clients, allowing them to leverage information, create process synergies, and control costs better than ever before. Gaining traction in the marketplace, these kinds of platforms are the real growth drivers behind the cards, which allow some to no longer rely on physical cards at all.

Scope and Methodology

This Packaged Facts report presents data and analysis on the global and U.S. market for commercial payment cards and the U.S. market for commercial electronic payments. Commercial Payment Cards in the United States and Globally presents the size and growth of the market and related key metrics within the broader payment card industry. Also included in this report are discussions and analysis of the various card associations or networks, commercial payment card types, trends and factors affecting their growth, and a focused analysis of commercial card consumer demographics and preferences. In addition, major card brands and issuers are profiled with their recent activity. In particular, this report:

  • Provides a commercial card market size and forecast through 2015, with supporting analysis of global, U.S. and non-U.S. consumer and commercial purchase volume growth during 2010-2013. This includes volume share among the leading global networks: American Express; BC Card; Diner's Club; Discover; JCB; MasterCard; UnionPay and Visa. In the United States, we also distinguish between credit/charge volume and debit/prepaid volume by major network for 2013.
  • Analyzes American Express, Discover/Diner’s Club, MasterCard and Visa commercial card operations, including growth strategies, card programs, and electronic solution evolution, and U.S. and non-U.S. trends. We also provide 2010-2013 trending of American Express, MasterCard and Visa global, U.S. and non-U.S. commercial and consumer purchase volume. In addition, we provide small business volume estimates for these three networks, and (for Visa and MasterCard), the percentage of U.S. commercial spend attributable to credit cards and debit/prepaid cards.
  • Assesses the commercial card strategies of major U.S. commercial bank players, including Bank of America, Citibank, JPMorgan Chase and U.S. Bank, as well as the commercial card processing giant Total System Services.
  • Analyzes the closed-loop commercial fleet card market and the closed loop airline/travel market, focusing on the strategies being employed by industry players such as Comdata Inc., FleetCor Technologies, Inc., MasterCard, U.S. Bank Voyager Fleet Systems Inc., WEX Inc., Universal Air Travel Plan, Inc. and AirPlus International.
  • Analyzes the U.S. government’s contribution to commercial card growth, focusing on growth trends in its SmartPay charge card program. Spend and transactions are trends by contract holder (Citibank, JPMorgan Chase and U.S. Bank) as well as by purchase, fleet and travel spending categories.
  • Addresses trends shaping the commercial card industry, including globalization trends, analysis of UnionPay and JCB; data-driven analysis of purchase card usage and spending; and location acceptance issues.


Market Insights: A Selection From The Report

All of the largest five U.S. banks by assets are aggressively pushing abroad, following U.S. companies that increasingly demand global commercial card solutions; forging relationships with non-U.S. corporations demanding the same; and leveraging partnerships to meet the increasingly sophisticated challenge of offering global card solutions.

In Europe, Bank of America Merrill Lynch in 2012 expanded its commercial card network to include seven additional countries: Argentina, Czech Republic, Denmark, Finland, Norway, Poland and Sweden. As a result of these new additions, it could offer card solutions in 70 countries globally and in 29 different currencies. It has also enhanced its Works card management platform and broadened its reach.

Among fellow U.S. banking goliaths, Citibank is especially well positioned with global cards, with longstanding international operations. Citi may also be the most well positioned of all non-Chinese banks operating in China—no small feat in a market tightly controlled by the Chinese government, which has championed the growth of domestic financial services institutions.

As of 2013, Citi has 13 corporate bank branches in China (in Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Chengdu, Hangzhou, Dalian, Chongqing, Guiyang, Nanjing, Changsha and Wuxi) and more than 50 consumer bank outlets.

In addition to operating a China securities joint venture (launched in 2012), Citi has a nascent but growing presence in the Chinese credit card business. After becoming the first global bank allowed to issue credit cards in mainland China under its own bank brand in 2012, it launched a commercial cards program there, making it the first global bank to offer such capabilities to its large corporate and multinational clients. In doing so, it connected China its issuing network, which spans more than 50 countries.

It has also ramped up its Latin American operations: through its Treasury and Trade Solutions division, in 2013 Citi launched its Global Issuing platform in the Latin America region, expanding the reach of its commercial card issuing business. The effort continues Citi’s intention to follow and serve its multinational clients as they expand across the globe.

Press Release

U.S. and International Businesses Fuel Growth in Commercial Payment Card Purchases

Commercial payment cards are catching on in both the U.S. and abroad. As a result, global commercial card purchase volume is forecast to increase by 13% in 2014 and 2015, rising from $888 billion in 2013 to $1.4 trillion to $1.8 trillion as both small businesses and larger corporations fuel growth. The finding was made in Commercial Payment Cards in the United States and Globally, a recently released report by market research publisher Packaged Facts.

Several factors affect commercial card growth drivers and trends. Chief among them is globalization, which is occurring at a rapid pace. For payments networks and financial institutions to meet the increasingly global needs of the world's large corporations, they must grow along with them, according to the report. This has inevitably caused growing pains, as players struggle to craft solutions sophisticated and robust enough to meet global challenges of many stripes--regulatory and operational hurdles among them. Ultimately, it means expansion--following the arc of global growth and growing products and solutions accordingly, notes Packaged Facts research director David Sprinkle.

Fortunately, major U.S. financial institutions such as Bank of America, Citibank, JPMorgan Chase, Wells Fargo and U.S. Bank (not coincidentally the largest U.S. commercial banks by total assets in 2013) appear up to the task. This, in turn, means increased product and price competition. Thickening the competitive broth, both Visa and MasterCard continue to support card issuers such as Citibank, JPMorgan Chase and U.S. Bank, including by improving data collection and reporting to meet customers' requirements. And undoubtedly the rise of global competition and activities from the likes of Chinese powerhouse UnionPay and Japanese credit card product and service provider JCB only further emphasize the seismic developments shaping the future of this industry segment.

In addition to product and price competition, other key competitive factors in the corporate payments business include global servicing capability, quality of data, and access to additional services, such as reporting and program management tools, and customer experience, as well as the evolution toward payment products that integrate with corporate expense management tools and support electronic payment methods. It also means that payment providers have expanded global issuance footprints and product portfolios by forming partnerships and improving proprietary capabilities.

For more information on Commercial Payment Cards in the United States and Globally please visit: http://www.packagedfacts.com/Commercial-Payment-Cards-7932719/.

About Packaged Facts -- Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, consumer packaged goods, and pet products and services. Packaged Facts also offers a full range of custom research services. To learn more, visit: www.packagedfacts.com. Follow us on Facebook, LinkedIn, Twitter, and Google+.

Chapter 1: Executive Summary
Report Scope
Scope
Report Summary
Market size and forecast
Some global context
In the U.S. . . .
And outside of the U.S.
Commercial card growth drivers & trends
Global competition increases
Commercial cards making inroads
And purchase cards generate lots of spend
But not used prevalently
Make it easy
Accept me!
Commercial card network operators
American Express
Discover/Diner’s Club
MasterCard
Visa
American Express, MasterCard and Visa commercial card value growth trends
Credit card/business credit card penetration by company size
Commercial card bank issuers and processors
Abroad, ho!
A growing plethora of electronic solutions
Moving into new verticals
A bit about the players
Commercial card non-bank issuers and processors
Closed-loop fleet cards
Comdata Inc.
Fleetcor Technologies, Inc.
Airline/travel
Commercial cards and government
Chapter 2: Introduction and Overview
Introduction to commercial payment market product categories and segments
Open-loop versus closed loop cards
Products and services out of scope
Chapter 3: Market Size and Forecast
Summary analysis
Overall card purchase volume
Commercial card purchase volume
Commercial card purchase volume market size & forecast
Table 3-1: Global Payment Card & Commercial Card Purchase Value: 2010-2015
Debit cards and prepaid cards
Table 3-2: U.S. Commercial Card Purchase Volume: Total, Credit/Charge & Debit/Prepaid, by Network Operator, 2013
Closed loop fleet cards
Global card purchase volume trends
Global card purchase volume grows 72% during 2010-2013
UnionPay takes global lead
Table 3-3: Global Card Purchase Value/Value Share, by Network Operator: 2010-13
Global commercial card purchase volume trends
Commercial card share
Table 3-4: Global Commercial Card Purchase Value & Share of Global Card Purchase Value, 2010-13
Visa, American Express and MasterCard maintain volume leadership
Table 3-5: Global Commercial Card Purchase Value/Value Share, by Network Operator: 2010-13
U.S. card purchase volume trends
Table 3-6: U.S. Card Purchase Value & Global Market Share, 2010-13
Table 3-7: Commercial Card Purchase Value: Global, U.S. & Non-U.S., 2010-13
Visa maintains lead
Table 3-8: U.S. Card Purchase Value/Value Share, by Network Operator: 2010-13
Table 3-9: U.S. Commercial Card Purchase Value/Value Share, by Network Operator: 2010-13
Non-U.S. card purchase volume trends
Table 3-10: Non-U.S. Card Purchase Value/Value Share, by Network Operator: 2010-13
Non-U.S. commercial card purchase volume trends
Table 3-11: Non-U.S. Commercial Card Purchase Value/Value Share, by Network Operator: 2010-13
Chapter 4: Commercial Card Growth Drivers & Trends
Summary analysis
Going global, global, global
Europe
And facing global competition
UnionPay
Mirroring Chinese market growth
And maintaining domestic market dominance
While expanding abroad
By the numbers
Table 4-1: UnionPay Global Consumer and Commercial Card Purchase Volume, 2009-2013
JCB
Table 4-2: JCB Global Consumer and Commercial Card Dollar Volume, 2009-2013
Driving commercial card uptake
Cost savings
Cards still a sliver of the payments pie
Table 4-3: Percent of Payments Made by Corporations, 2013
Purchasing cards
Non-plastic purchasing card accounts
Middle market provides purchasing card opportunity
Table 4-4: Usage of Payment Types by Corporations, by Corporation Revenue, 2013
Purchasing card use is relatively widespread
But not used with much frequency
Table 4-5: Payment Method Used to Pay Major Suppliers, by Transaction Share, 2013
Convenience and ease
Accept me!
Drilling into new spend categories
Adapting to and harnessing technology
RFID on the horizon
Chapter 5: Commercial Card Network Operators
Summary analysis
American Express
Discover/Diner’s Club
MasterCard
Visa
Comparing cards
American Express
Value proposition
Special services and programs abound
Commercial card operating segments and customer bases
Charge!
Graph 5-1: American Express Global Credit Card & Charge Card Spend: Consumer, Small Business, and
Corporate Spend, 2013
International proprietary small business
Commercial growth via network partnerships
Global Commercial Services
Corporate card programs
American Express Corporate Card
Online management tools
Savings at Work
Membership Rewards
Business-to-business payment solutions
Corporate Purchasing Card
vPayment
PAYVE and buyer initiated payments
American Express Global Business Travel
Commercial card performance and growth trends
B2B emphasis
Small business growth continues
While corporate growth slows
GNS partnerships flourish
Targeting educational institutions
Technology partnerships and acquisitions
International expansion
American Express consumer and commercial card value growth trends
Global trends
Table 5-1: American Express Global Consumer & Commercial Card Value: 2010-2013
Graph 5-2: American Express Global Consumer & Commercial Card Value: 2010-2013
Non-U.S. trends
Table 5-2: American Express Non-U.S. Consumer & Commercial Card Value: 2010-2013
Graph 5-3: American Express Non-U.S. Consumer & Commercial Card Value: 2010-2013
U.S. trends
Table 5-3: American Express U.S. Consumer & Commercial Card Value: 2010-2013
Graph 5-4: American Express U.S. Consumer & Commercial Card Value: 2010-2013
U.S. commercial trends, by business type
Table 5-4: American Express U.S. Commercial Card Value, by Business Type: 2010-2013
Graph 5-5: American Express U.S. Commercial Card Value, by Business Type: 2010-2013
Discover Financial Services, Inc.
Diner’s Club provides international reach
MasterCard
Commercial payment solutions
Commercial card strategy
Leveraging the location advantage
Direct-to-corporate sales strategy
Unleashing MasterCard Smart Data
Tapping MasterCard Advisors
The art and timing of the cross-sell
Small business strategy
An integrated approach
MasterCard Business Network: negotiating strength for small business
MasterCard consumer and commercial card value growth trends
Global trends
Table 5-5: MasterCard Global Consumer & Commercial Purchase Volume: 2010-2013
Graph 5-6: MasterCard Global Consumer & Commercial Card Purchase Volume: 2010-2013
Non-U.S. trends
Chipping away at China
Elsewhere abroad
Table 5-6: MasterCard Non-U.S. Consumer & Commercial Card Purchase Volume: 2010-2013
Graph 5-7: MasterCard Non-U.S. Consumer & Commercial Card Purchase Volume: 2010-2013
U.S. trends
Consumer credit emerging from doldrums
Chase relationship a boon and a bane
Other commercial contract wins
Table 5-7: MasterCard U.S. Consumer & Commercial Card Purchase Volume: 2010-2013
Graph 5-8: MasterCard U.S. Consumer & Commercial Card Purchase Volume 2010-2013
Commercial credit card versus commercial debit/prepaid
Table 5-8: MasterCard U.S. Consumer & Commercial Card Purchase Volume: Credit vs. Debit, 2010-2013
Visa
Commercial payment solutions
Small business
Credit card issuer signings strengthen Visa’s U.S. consumer credit card position
Medium-sized and large businesses
Scratching the surface: the cards
Beneath the surface: harnessing data, simplifying the process and growing payment spend
IntelliLink
PerformSource
Visa Payables Automation
The CyberSource connection
Syncada
Industry vertical solutions
Visa consumer and commercial card value growth trends
Global trends
Table 5-9: Visa Global Consumer & Commercial Card Value, 2010-2013
Graph 5-9: Visa Global Consumer & Commercial Card Value, 2010-2013
Non-U.S. trends
Table 5-10: Visa Non-U.S. Consumer & Commercial Card Value, 2010-2013
Graph 5-10: Visa Non-U.S. Consumer & Commercial Card Value, 2010-2013
U.S. trends
Table 5-11: Visa U.S. Consumer & Commercial Card Value, 2010-2013
Graph 5-11: Visa U.S. Consumer & Commercial Card Value, 2010-2013
Commercial credit card versus commercial debit/prepaid
Table 5-12: Visa U.S. Consumer & Commercial Card Value: Credit vs. Debit, 2010-2013
Credit card/business credit card penetration by company size
Visa, MasterCard & American Express
Table 5-13: Consumer & Business Credit Card Usage Penetration, 2013
Table 5-14: Consumer & Business Credit Card Usage Penetration, 2013
Chapter 6: Commercial Card Bank Issuers & Processors
Summary analysis
Bank of America Merrill Lynch
U.S. presence
International scope
Commercial card solutions
Table 6-1: Bank of America Merrill Lynch Card Solutions, 2013
Comprehensive Payables
Paymode-X and ePayables
Works
Enhancements and expansion
Citibank/ Citi Commercial Cards
Expansion and enhancements
Product rollouts
International growth
Well positioned in China
Latin America gets global issuing platform
JP Morgan Chase/Chase Commercial Banking
Products & Capabilities
Cards
Electronic solutions
New partnerships
Total System Services, Inc.
Commercial card scope and growth
Table 6-2: Total System Services: Consumer, Commercial, Government & Prepaid Accounts, 2011-2013
U.S. Bank
Commercial card solutions
Electronic solutions
Healthcare
Fuel solutions
Chapter 7: Commercial Card Non-Bank Issuers
Summary analysis
Fleet cards
Market size
Expansion and enhancements
Fleetcor Technologies, Inc.
Table 7-1: FleetCor U.S. & International Networks and Network Locations, 2013
Acquisitions build volume and strengthen product portfolio
WEX Inc.
Fleet cards
Virtual and prepaid cards
Acquisitions
Airline/travel
Universal Air Travel Plan
AirPlus International
Chapter 8: Commercial Cards and Government
Summary analysis
Thank you, Uncle Sam!
SmartPay
GSA charge card issuers: Citibank, JPMorgan Chase, and U.S. Bank
SmartPay spend on decline
Table 8-1: GSA SmartPay Program Spend and Transaction Volume: Fleet, Purchase, Travel, 2009-2013
U.S. Bank contract generates 60% of SmartPay fleet volume
Table 8-2: GSA SmartPay Fleet Card Spend and Transaction Volume: Citibank, JPMorgan Chase and U.S.
Bank, 2009-2013
U.S. Bank cards generate 60% of SmartPay fleet volume
Table 8-3: GSA SmartPay Purchase Card Spend and Transaction Volume: Citibank, JPMorgan Chase and U.S.
Bank, 2009-2013
Citibank contract generates three-quarters of travel volume spend
Table 8-4: GSA SmartPay Travel Card Spend and Transaction Volume: Citibank, JPMorgan Chase and U.S.
Bank, 2009-2013
Table 8-5: GSA SmartPay Spend and Transaction Volume: Department of Interior, 2009-2013
Appendix
Methodology
Consumer survey methodology
Market size methodology
Volume estimates
End users included
Volume not included
Other
Sources
Abbreviations

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