The exploding market in corporate cards has created special challenges- and growth opportunities-for payment processors.
To get the most out of the card programs, business customers want more and more sophisticated, analytical information about their employees' transactions. The cards are far more than straightforward payment vehicles.
Capturing those details is tricky. Commercial card programs are highly tailored to each company's needs, and processors must cope with all the variations.
Payment processors like those serving banks on the consumer account side-First Data Corp., Total System Services Inc., and Electronic Data Systems Corp.-are jockeying for places in the emerging corporate market.
The new demands mean processors have to enhance their services, said Stanley W. Anderson, president, Anderson & Associates, Arvada, Colo.
What businesses want these days is "not just a statement with a date and price," he said. "It's a breakdown of what's bought"-and that breakdown has to move "from the merchant to the processor to the issuer processor, who puts it on the statement."
Because the market is so new, authoritative market share figures are hard to come by. Total System may have an early edge because its customers include the biggest bank commercial card issuer, U.S. Bancorp.
"Half the market is in-house," said David Robertson, president of The Nilson Report, Oxnard, Calif. "No third party dominates the commercial card market at this stage," he said, but "it is inevitable the third-party processors will take a bigger part of the market."
Commercial card experts speak of progressive levels of information requirements, beginning with the basics of card number, merchant name, city, state, and ZIP code.
Level two adds two elements: sales tax amount and a code identifying the customer for corporate purposes.
On level three, the special domain of corporate cards, is what is called line-item detail: what was bought, how much was spent, duty or freight charges, and shipping discounts.
Randall L. Hutchinson, senior vice president of First Tennessee Bank, Memphis, which has issued 25,000 corporate cards, said today only 20% of point of sale terminals in the United States can handle level two information and only 5% can handle level three.
Gleaning deeper information from a transaction is one advantage corporate cards offer; eliminating paper invoices is another.
Companies "are used to seeing invoices that tell me how many widgets I have and the number and the lot they came from," said Joan M. Christensen, director of client relations, commercial cards, First Data Merchant Services, a division of the Hackensack, N.J.-based parent. "They still want to receive that information" in a paperless card system.
Mary Dees, group executive, First USA Paymentech Inc., Dallas, said corporate cards offer the "ability to take all that data and put it in a centralized repository" that shows "how someone is actually spending money- where, how much, and what frequency." The data can then be used in a variety of ways to help companies save money.
Mr. Robertson agreed. "Everything about the card industry is about moving more information from the point of sale to processors so it can then be analyzed and manipulated," he said.