Aug, 2021 - By
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.
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.
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.
On the basis of region, the global corporate or commercial card market is segmented into North America, Europe, Latin America, Asia Pacific, Middle East, and Africa.
North America was the dominant region in the commercial or corporate card market in 2017 and is expected to remain as the leading region throughout the forecast period. This is owing to the growing customer base for credit cards and a large number of commercial businesses in the region. According to coherent Market Insights, the purchase volume of commercial cards issued by selected credit card companies in the United States in 2015 and a projection therefore for 2020. It was found that the purchase volume of the commercial cards issued by Visa amounted to 2.76 trillion U.S. dollars in 2015.
Asia Pacific is expected to exhibit high growth over the forecast period. This is owing to the growing BSFI sector in the region. For instance, according to Coherent Market Insights, banks in the emerging economies of Asia Pacific region are forecasted to maintain an asset growth of 13% CAGR during the period 2014-2019, while GDP per capita is forecasted to exhibit a CAGR of 5.1% during this period.
Global Commercial or Corporate Card: Competitive Landscape
Some of the key players operating in the global commercial or corporate card market include AirPlus International, Amazon.com, Inc., American Express Company, Bank of America Corporation, Union Pay, Citigroup Inc., FleetCor Technologies Inc., JCB Co., Ltd, JPMorgan Chase & Co., MasterCard, PayPal Holdings, Inc., U.S. Bank, Universal Air Travel Plan Inc., Visa Inc., and WEX Inc.
Global Commercial or Corporate Card Market: Taxonomy
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