The commercial or corporate card is a credit card issued by employers for their employees to make purchases on behalf of the company. The commercial card is generally issued by a retailer and bears the name of both retailers and Credit Card companies. Commercial cards are frequently used by companies to keep track of expenses in order to analyze more closely the effects on the company budget. Commercial cards for business include both Visa and MasterCard, which offers special credit cards designed to manage the employees’ spending and streamline their purchasing process. The commercial card offers flexibility to set employee-spending limits and restrict card usage for specific types of purchases. For instance, a cardholder might be authorized to use the card only for purchasing office supplies.
Increasing Demand for Cashless Purchasing is one of the Major Drivers Propelling Growth of the Commercial or Corporate Card Market
Commercial or corporate cards help corporates to manage cash and vendors more effectively through detailed reporting on purchases through a wide range of billing and payment options for commercial card activity. The cost of commercial card usage is typically borne by corporations accepting commercial card payments. For instance, according to National Automated Clearing House Association’s (NACHA) analysis in 2015, issuers such as corporations, investment trusts, or foreign governments earned over US$ 7 to US$ 8 billion in interchange revenue by processing US$ 428 billion of commercial card payments, out of which around 80% of interchange revenue from foreign government is shared back with corporates using commercial cards.
Moreover, the growing popularity of these among consumers, as it allows short-term loan instantly, which is the major factor for consumers to choose corporate card over cash. Corporate card companies offer incentives to cardholders, such as points and rewards that could be redeemed in the form of airline tickets or products. These factors boost corporate card transactions in the corporate or commercial card market.
Online Banking Application is one of the Major Restraints Hindering Growth of Commercial or Corporate Card Market
Rising online banking applications lower commercial card popularity as it is convenient to make payments and track balance using mobile applications. For instance, in India Unified Payment Interface (UPI) has grabbed a major market share. According to Reserve Bank of India data, transactions via UPI reached half the value of debit and credit cards swiped at stores in India till March 2018.