These days, the world of corporate cards includes more than what fits in your wallet
From the April 2017 print edition
For any company looking to improve how it handles expenses, corporate cards offer several advantages. Improved security, saved process costs and better analytics are among the reasons to adopt a card program. And there’s quite a bit that’s new in the corporate card world, says Paul Roman, VP and general manager of global commercial payments at American Express Canada.
One trend Roman sees is a move from traditional areas of card usage like travel expenses, phone bills and other incidental areas. Over the past two years there has been a shift in the type of spend that organizations are using cards for, Roman says. “People had already tackled some of the low-hanging fruit in terms of where they were using these cards and saying, I really want to get rid of cheques, I really want to automate and make some of my payments electronic and be able to do that on a bigger and bigger payable footprint is,” he says.
As the purchases made on cards get larger, organizations can take a look at the way goods and services are priced, Roman says. A purchaser can buy software or a laptop using a card in the traditional sense. But when buying a server costing hundreds of thousands of dollars, the economics of a traditional card transaction don’t work. Amex, for example, owns the buy and supply side of the relationship and works to customize the pricing so the economics make sense. “As people want to spend it in broader areas, you have to catch up with how the transaction will actually take place so that it makes sense not only for the buyer but also from the supplier side as well,” he says.
Often, the card is likely to be just a number, or a single-use card where the number is generated and can only be used for specific transactions, Roman notes.
The corporate card sector continues to grow, he says. The incentive for companies to adopt corporate cards comes down in large part to process efficiency, control and visibility, along with ease of implementation.
These so-called virtual cards—meaning a number with no physical card associated with it—have become more common, says Steve Pedersen, VP and head of North American corporate card program, BMO Financial Group. But the technology has pros and cons, and falling costs of using virtual cards meaning more customers can use them, he notes. “That is where you’re seeing an explosion,” Pedersen says.
Cheques remain a payment option, he adds, although not as commonly in Canada as the US. But as technology evolves to become more efficient and less expensive, that migration away from cheques will continue.
Data remains important in the administration of corporate cards, Pedersen says. Procurement and others who use cards, such as travel managers, look to optimize their supplier base so data from cards can show them where money is spent. This facilitates negotiations with suppliers for better terms, he says.
Patrick Sulston, VP & SBL-business development at MasterCard, also sees growth in the use of virtual cards, specifically use account products where the buyer provides an account number to a merchant for each transaction. This allows for one-to-one matching on an invoice payment. One reason for this trend is security. “It gives the buyer flexibility to restrict how, when and where cards can be used by individuals, departments or divisions,” he said. “This includes changing purchasing authorizations and spending criteria quickly and easily.”
The Commercial Card industry is constantly evolving, says Katie Beatty, community engagement specialist, NAPCP. As new technology is developed, card issuers and provider banks are quick to embrace and incorporate new payment technologies. For example, electronic accounts payable programs (ePayables) are becoming more common, and more expense management systems are utilizing mobile apps. Companies are implementing mobile alerts that lessen fraudulent transactions. Another method used to make P-cards even more secure is tokenization, which protects card data by substituting a card’s primary account number (PAN) with a unique, randomly generated sequence of numbers, Beatty says. The service provider can reverse the “token” to its true PAN value. Tokens can be single- or multi-use and only used with specific mobile devices or merchants.There are several advantages for companies to incorporate cards into their payment structures. Organizations not using cards would do well to explore this payment option.