American Express Co., MasterCard International, and Visa U.S.A. are supporting a standard approach to transaction coding that they say can help streamline their purchasing card programs.
The competitors agreed that a system developed by Dun & Bradstreet Inc. can help their customers reduce the costs of purchasing management.
Many companies do not know what they are buying nor which vendors they are using, according to D&B, Murray Hill, N.J. They can end up buying the same item from multiple suppliers.
By encoding the types of products and services they use, companies can "leverage their buying power," said William J. Schoch, director of the purchasing division in Visa's commercial card products.
With the big card companies' support, the 10-digit system could evolve into a formal industry standard.
Though fewer than two dozen companies now subscribe to the draft version, Dun & Bradstreet plans to market it aggressively when it is formally released next year. Though the code is free, D&B hopes to earn money helping companies install it.
The system is also designed to foster electronic commerce, officials said.
Purchasing cards, a fast-growing piece of the commercial card business, do not now yield the transaction details of paper purchase orders. Once the code is adopted, card issuers can include it with their transaction reports so companies can see what items they are buying.
American Express looks at standard product and service codes "as an invaluable way for us to organize purchase information across a vast array of commodity groups," said S. Thayer Stewart, vice president for new business development.
MasterCard already has a place in its automated purchasing card records for a product code, said Steve L. Abrams, senior vice president for U.S. corporate products. The code will further the growth of electronic commerce, he added.
The codes currently cover 6,000 broad categories, without giving specific details about brand names of items or services. Writing paper, graph paper, print paper, and fine paper each have a code, but the system does not go into color, style, size, or maker.
As more companies adopt the code, Dun & Bradstreet will expand it, said Frank Fitzsimmons, the company's senior vice president for global electronic commerce.
Buyers also will be able to cross-reference purchased items with vendors so they can get a view of their suppliers and what other products they buy from each company, said Michael B. Smart, Dun & Bradstreet's director of supplier evaluation and management services.
Michelle Fried, Chase Manhattan Corp.'s purchasing card product manager, said the bank is very interested in backing the code.
"The value of the purchasing card is in providing information to clients," she said. "The more information we can provide, the more value we can add."