General Motors Corp. has begun consolidating its charge cards for employees into a single, multifunctional card.
GM says its corporate card system will be the largest-and one of the first-of its kind in the world. The conversion is expected to take a year.
By eliminating paper expense reports, GM anticipates it will cut costs related to its corporate card program by 93%, or $3.7 million a year.
In the existing system, 100,000 employees in the United States, Canada, and Mexico use eight cards for four business processes (corporate travel, telephone calling, fleet purchases, and indirect material purchases).
Citibank will issue the MasterCard-branded cards. The Citigroup unit will team up with Captura Software of Bothell, Wash., for technology support.
Once the system is up and running in North America, GM plans to introduce it internationally.
The new program "simplifies business travel procedures for employees and offers them a faster turnaround in expense reimbursement," said Bill Wimsatt, manager of accounting services in GM's enterprise activities group. "It provides us with important financial information we can use to strengthen our leverage with suppliers in the corporate travel business."
Steve Abrams, senior vice president of corporate products for MasterCard International, said the GM program may be the first example of spillover into the private sector from the U.S. government's upgraded commercial card program.
Mr. Abrams called the GM deal "a bit of a carry-over from our success with the government."
"It was actually the infrastructure and how we capture data that made the difference" to GM, he said.
Under a procedure set up this year by the General Services Administration, each federal agency has chosen one of five banks to provide fleet, travel, and purchasing card services. Citibank is a authorized issuer, as are U.S. Bancorp, BankAmerica Corp., Bank One Corp., and Mellon Bank Corp.
The government program went live Nov. 30. MasterCard, which under the previous contracting method had no federal business, won accounts representing $2.9 billion in annual spending. MasterCard said the government accounts will add 16% to its commercial card volume in 1999.
Private-sector interest is growing, partly in response to the government initiative, Mr. Abrams said. Requests for proposals "are coming in fast and furious to us and our issuers," he said.
"What you're seeing may be a second wave" of commercial card interest among U.S. companies, Mr. Abrams said. "The contracts are coming due" on business that was put out for bid four or five years ago, "and the large corporations are looking for one provider for purchasing and travel business."
The "vast majority" of requests for proposals in the commercial card industry are for a multifunctional "one-card solution," Mr. Abrams said.
Universities and "large multinationals" have also expressed interest in an internal purchasing system developed for the government, he said. This system makes it easier for agencies to purchase supplies internally or from one another.
The development of this service was "a direct result of what the government's RFP required," Mr. Abrams said, and "we will be rolling it out to the private sector by midyear."
As interest in commercial cards grows, other issuers and vendors are racing to provide enhancements.
First Data Resources recently an-nounced some improved features to its commercial card processing service. A daily automated clearing house option now enables commercial card issuers to arrange daily automated payments for the previous day's transactions. According to the First Data Corp. unit, this feature reduces an issuer's cost of funds and improves risk management.
Another enhancement is a flexible billing option, which lets commercial card issuers designate billing frequency at the cardholder level.
"This is the kind of value-add functionality that our commercial card issuers are looking for to make their commercial card programs more effective and profitable," said Denise McCauley, senior vice president of First Data Resources in Omaha.
