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/.

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