Business Travel News - June 8, 2009 - (Page 24)

CORPORATE PAYMENT SYSTEMS Payment Vendors Push Consolidation, Globalization By Michael B. Baker Payment issuers and networks, faced with contracting volumes of travel and entertainment spending, are advocating global growth, better compliance and spending consolidation as a way to forestall expected volume declines this year. Following several years of doubledigit percentage year-over-year volume growth, volume levels by major corporate card issuers were a mixed bag in 2008. While Citi and BMO Financial Group reported 2008 volume increases of at least 20 percent compared with 2007, other issuers reported year-over-year declines in volume. No issuer stated expectations of rising volumes in 2009. “For signing new customers, it was a banner year for us, but across the board, companies are being very judicious about travel budgets, and they’ve cut back extensively this year over last year,” said Jeff Rankin, senior vice president for U.S. Bank Corporate Payment Systems, which reported a 2.3 percent year-over-year drop in T&E charge volumes in 2008. “The trend started in the middle of last year, picked up steam in the fourth quarter and is holding true in the first and second quarter of this year.” In the meantime, the financial services industry at large is undergoing its own problems in the economic downturn, and it is changing the faces of some of the industry’s key players. Even before the Wall Street meltdown last fall, one of the major corporate card issuers—GE Money’s Corporate Payment Services—was acquired by American Express, and Discover Financial Services acquired the Diners Club International network from Citigroup. Following the meltdown, there was a bevy of merger and acquisition activity—Wells Fargo’s acquisition of Wachovia, JPMorgan Chase’s acquisition of Washington Mutual and the U.K.’s Lloyds TSB’s takeover of competitor HBOS—that continued to contract the field. The industry unrest has spurred some corporations to broaden their scope in searching for corporate card suppliers, said Kevin Tait, senior manager of business development for BMO Spend & Payment Solutions, which is included in the survey for the first time this year. Only recently a player outside the procurement card field, the Canada-based BMO saw its requests for proposals for T&E card programs from the United States more than double last year, he said. “Companies have enough concerns without having to worry about the soundness of their vendors, so a lot of eyes are shifting north,” Tait said. “We’re a dominant player in Canada, and we’re moving that expertise into the U.S. marketplace.” With T&E spending not expected to pick up in the near future, card issuers and networks are focusing on other methods to keep their volumes strong. Rather than try to generate more spending, corporate card suppliers now are looking for ways to get more of the spending that’s already happening onto corporate cards. Globalization has been a key area of growth for corporate card vendors in recent years. “They’re trying to consolidate, and instead of having four or five issuers in the United States or North America, they want to handle things on a global basis,” U.S. Bank’s Rankin said. Visa’s Global Commercial Payment Solutions joint venture, formed almost eight years ago, has helped boost those globalization efforts, Rankin said. The partnership allows U.S. Bank to consolidate data from cardholders across the globe. “Large companies are trying to leverage infrastructure and reduce cost, so there continues to be interest in having card programs managed from one headquarters,” said Laima Kardokas, senior business leader of Visa Com- BETWEEN THE LINES American Express in March 2008 closed its acquisition of GE Money’s Corporate Payment Services, which issued cards on the MasterCard platform and had an estimated $3.5 billion in U.S.-based travel and entertainment card volume in 2007.American Express began issuing its own cards to the newly acquired accounts in December. Discover Financial Services in July 2008 completed a $165 million acquisition of the Diners Club network from Citi and is now merging its network with Diners. Discover said it has no plans to issue Diners Club cards itself. All issuers listed said they offer a separate card for use in meetings expenses. U.S. Bank reported 400 such cards issued as of Dec. 31. The other issuers declined to disclose the number of cards offered. All issuers listed, with the exception of Citi, offer loyalty programs that allow cardholders to earn frequent flyer mileage. All issuers offer multinational reporting with detailed spend by country in local currency. ABOUT THESE CHARTS The charts include major North America-based issuers of corporate cards, as well as the charge card networks with which they are associated. The bank networks, MasterCard and Visa, offer core card products that issuers can market “as is” or with enhancements. American Express issues its own cards. Unless otherwise indicated, vendors provided all information for the year ending Dec. 31, 2008. In cases where information was not reported, BTN made estimates based on industry knowledge and previous information provided by those companies. In some instances, figured published in last year’s survey were restated based on new information. Whenever possible, BTN separated travel and entertainment from such other commercial card areas as purchasing. mercial Solutions. “Companies that might have acquired companies in other countries are looking to leverage their relationships with banks.” Marcie Verdin, group head of the large market segment for MasterCard’s global commercial products, said global acceptance continues to rise in most locations—including the Middle East, Africa, South Asia and even the United States—in the range of high single digits to teens. Even so, the economic downturn could be stalling some globalization efforts, she said. While MasterCard still sees requests for proposals that are global in scope, most are from companies that already have global card programs in place, she said. “Like everything else, customers are in a status quo mode and aren’t making drastic changes right now.” Helping companies push for more mandated use of corporate card is another way to grow volume in tough economic times, she said. “If we can capture the cabs and the black cars and the out-of-pocket expenses people are still used to paying for in cash, we can get more spend,” Verdin said. Continued on page 26 24 June 8, 2009 • www.BTNonline.com • BUSINESS TRAVEL NEWS BUSINESS TRAVEL SURVEY 2009 http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - June 8, 2009

Business Travel News - June 8, 2009
Contents
Agencies, Corporate-Owned
Airlines
Car Rental Companies
Chauffeured Transportation Companies
Corporate Payment Systems
Hotel Companies

Business Travel News - June 8, 2009