MasterCard International has given member banks permission to issue corporate cards in different countries, with a new design and a separate pricing structure.
The Purchase, N.Y.-based association has taken a global view of corporate products to support U.S. members who want to issue cards to multinational companies and foreign banks that want to issue cards across their borders, explained Stewart A. Stockdale, senior vice president of global corporate and travel and entertainment marketing.
"This is an $80 billion market for MasterCard worldwide and one of the fastest-growing categories," he said. "Most of the market remains up for grabs."
In 1995, more than $1 trillion was spent worldwide on corporate purchasing, MasterCard said. Citing the World Tourism Organization, MasterCard said travel and entertainment spending by business reached more than $480 billion last year.
Historically, MasterCard has not separated corporate interchange rates from consumer card purchases. In March, MasterCard said the interchange fee paid by a merchant's bank to the cardholder's bank would be lower in the United States.
Internationally, it has set the rates at 1.75% for travel and entertainment transactions and purchasing card transactions under $3,000 - above the 1.1% rate it charges for global electronic consumer card transactions or the 1.51%, plus 10 cents, for paper-based transactions. However, for purchasing card transactions above $3,000, the rate is 0.75%, plus $30.
Visa U.S.A. does not break out its corporate card rates from consumer card rates; nor does American Express Co. - except on purchasing card transactions, which it says are a notch lower than consumer and corporate card transactions.
Stanley W. Anderson, a commercial card consultant in Arvada, Colo., said the new price structure should serve as an incentive for banks to issue corporate products at home and abroad.
"On the consumer side, two-thirds of all cardholder accounts revolve," he said. "Corporate cards and procurement cards are settled within 30 days." This gives issuers a chance to make up that difference.
Members in 35 countries issue MasterCard corporate card products; members in Canada and Australia are to join the ranks by yearend. MasterCard offers travel and entertainment, purchasing, and fleet cards.
The redesigned card face, a metallic blue with a spiral design, is MasterCard's first global corporate product. It is recommending that members put the new cards in circulation over 18 months. In the fourth quarter, MasterCard plans to develop a worldwide print advertising campaign to support the global corporate card strategy.
MasterCard said it would create a consistent set of payment and information management capabilities with a broad selection of services that can be tailored to meet market conditions in each country.
