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The U.S. Market For Corporate Credit Cards and Purchasing Cards - 2nd Edition


Attention: There is an updated edition available for this report.

The commercial card market is unique in the plastic payment industry and makes unique demands on issuers, as is spelled out in this updated Packaged Facts report. In thorough yet concise detail, the report estimates the market's current size and projected growth, analyzes its leading players and their competitive strategies, covers new product and marketing trends, as well as advertising and promotion strategies, and offers demographic profiles on consumer use of corporate cards. The report provides timely, strategic insight into the largest under-tapped category in the plastic card industry.


Scope and Methodology

Scope of Report

This report analyzes the U.S. market for corporate credit cards and purchasing cards, collectively referred to throughout this analysis as commercial credit cards. Packaged Facts divides the commercial card market into three categories: corporate (travel-and-entertainment) cards, purchasing cards, and business cards.

Research Methodology

The information contained in this report is based on primary and secondary research. Primary research entailed consultations with bankcard association and card-issuer executives, editors of trade journals, and industry suppliers and consultants such as software developers, merchant acquirers, and card processors. Secondary re-search involved canvassing information and articles appearing in financial, market-ing, and trade publications, government resources, company literature, independent financial reports, and product advertising. Statistics on market revenues, revenue growth rates, and marketer share are based on an evaluation of all available informa-tion on market sales and trends; in particular, statistics are based on data from Faulk-ner & Gray's 2000 Card Industry Directory, which have been revised and supplemented with estimates and extrapolations from published trade reports and in-terviews with industry executives. Figures provided on national consumer advertis-ing expenditures by individual marketers are based on Competitive Media Reporting (CMR) data, as reported in the trade press. The analysis of consumer demographics and product ownership and use is based on Simmons Market Research Bureau data for fall 1999, which is based on a sample of 33,054 adults.

Categories Covered:

  • Corporate Cards
  • Purchasing Cards
  • Business Cards

Issues Addressed:

  • Current and Projected Market Growth
  • Factors Affecting Market Growth
  • Benefits of Each Category
  • Rise of Combination Cards
  • Demographic Profile of Each Category
  • Internet Competition
  • Technological Advancements
  • New Types
  • Leading Payment Processors
  • Mergers and Acquisitions

Highlights:

  • Projected U.S. Market for Commercial Cards by Category
  • U.S. Dollar Volume of Transactions
  • Market Share of Transaction by Category
  • Number of Cards in Circulation by Brand

Competitive Profiles:

  • American Express
  • Visa
  • Mastercard International
  • U.S. Bank
  • Citibank
  • Banc One
  • GE Capital
  • Household Credit Services
  • Bank of America
  • Paymentech

Hours of Research: 800

  1. Executive Summary

    Scope and Methodology

      Scope of Report
      Research Methodology

    The Products
      Cards Used for Business Purposes
      Three Major Categories
      Corporate Cards
      Purchasing Cards
      Business Cards
      Background of Commercial Credit Cards
      New Types of Purchasing Cards

    The Market
      Market to Reach $504 Billion by 2004
      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
      American Express Leads in Transaction Volume
      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
      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
      Half of Small Business Owners Use Commercial Cards
  2. The Products

    Product Definition

      Cards Used for Business Purposes
      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
      Corporate Card Programs Operate Like Consumer Charge Cards
      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
  3. The Market
      Figure 3-1: Estimated U.S. Market for Commercial Credit Cards by Category, 1995-1999 (dollars): Corporate (T&E), Purchasing, Business

    Market Size and Growth
      Methodology for Estimates
      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
      Commercial Card Market Drivers Different from Those for Consumer Cards
      … 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
      Market to Reach $504 Billion by 2004
      Table 3-3: Projected U.S. Market for Commercial Credit Cards by Category, 1999-2004 (dollars): Corporate (T&E), Purchasing, Business, Total
  4. 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, 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
      Two Bankcard Associations and Several Independent Players Compete
      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
      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
      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
      The Largest Bankcard Association
      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 Second-Largest Card Association
      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
      The Largest Commercial Bankcard Card Issuer
      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
      Purchasing Card Leader Drops a Notch in 1999
      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 Third-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
      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
      The "First and Preferred" Charge Card
      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
      The Fourth-Largest Commercial Bankcard Issuer
      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 Fifth-Largest Commercial Bankcard Issuer
      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
      Spotlight on the Internet
      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
      Big Three Cards Spend $647 Million in 1999
      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
      Functionality Is Key
      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
  5. The Consumer

    Ownership and Use of Corporate/Business Cards

      Note on Simmons Market Research Bureau Data
      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)
  6. Appendix: Addresses Of Selected Marketers

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