The global commercial or corporate cards market was valued at US$ 26.3 billion in 2017 and is projected to reach US$ 49.3 billion by 2026, registering a CAGR of 7.3% over the forecast period (2018-2026), according to Commercial or Corporate Cards Market Report, By Product Type (Purchase Cards, Business Cards, Travel & Entertainment Cards, and Gift Cards), By Card Type (Open-loop cards and Closed-loop Cards), By End User (Small & Mid-sized Enterprises and Large Enterprises), and By Region.
Increasing focus by corporates to optimize working capital is one of the major factors driving growth of the commercial or corporate cards market. Moreover, stringent government regulations and rising demand for business cards globally is further boosting the market growth. Commercial or corporate cards help firms in maintaining a perfectly controlled and compliant procure-to-pay process, right from the placement of orders to financial reporting. For instance, the U.S. Sarbanes-Oxley Act of 2002 (SOX) significantly impacted procure-to-pay processes of mid- to large-size companies. The act mandated requirements, which included standardized processes, enhanced reporting capabilities, increased ability to detect fraud, improvements in data access capabilities, and conducting control reviews on a periodical basis. Another factor that aided in growth of the market is the changing restrictions that increased the acceptance of corporate or commercial cards in the payment facilitator model. For instance, companies such as Visa and Mastercard permit service providers, acting as a payment facilitator, to accept card transactions on behalf of multiple smaller merchants.
The payment facilitator model enables B2B fintech platforms to extend purchasing card acceptance among suppliers who are leveraging the platform’s merchant acquiring facility. This facility allow merchants to accept credit card payments from card issuing banks within an association. However, increasing usage of personal credit cards and acceptance of business cards among suppliers hinders the market growth. For instance, the cardholder or the purchaser pays 1% to 3% of the card processing fee while rest of the fees need to be paid by the merchant. The fees that has to be paid by merchants for accepting card payments include license fees, interchange fees, acquirer fees, and processing fees. These additional fees deter small merchants from accepting card payments and thereby, hinders growth of the market.
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