To capture part of a resurgence in corporate spending as the economy recovers from the recession, Citigroup Inc. has unveiled a commercial card that allows companies to isolate and control spending on specific projects.
The Citi Project card aims to reduce the paperwork associated with significant projects, such as a product launch or opening a new location, Paul Horn, Citi's global director for commercial cards, said in an interview.
The Project card was launched Wednesday in North America and will be offered in most parts of the world next year.
"The breakthrough here is the ability to link a card to a project instead of tying each individual transaction to the project," Horn said.
"And in the process you're potentially eliminating a whole lot of separate invoices and purchase orders that tend to tie up projects at corporations."
Once a Project card is set up, each expenditure made with it is grouped with built-in spending controls, Citi said. The controls ensure employees are using appropriate vendors and staying within preset spending limits and time frames, it said.
Project expenditures made with the card are typically paid in one lump sum for each pay cycle instead of spreading them across multiple payment channels and across various commercial cards, Horn said.
Each Project card has an initial credit limit to ensure projects stay within budget, but corporations can adjust those limits as necessary, said Julie Lubell, Citi's global product manager for commercial cards.
The new card relies on technology similar to what Citi uses for its Meeting card, launched last year, but its function is broader, Lubell said.
"The Project card provides detailed, streamlined reporting for expenditures within a wide range of types of projects that could even encompass meetings and events," she said.
The Project card can be structured as a revolving credit or charge card, Lubell said.
The technology that controls and sorts purchases made with commercial credit and charge cards is not new, said Patricia McGinnis, a director at Mercator Advisory Group.
American Express Co. offers a feature called "Preset Spend" on its corporate cards enabling customers to set limits on the amounts and time frame of spending for specific projects, meetings and events, a representative for the company said.
Amex's feature also provides detailed, customized online reports tracking preset expenditures and within the past few months it became available in 14 markets worldwide, the representative said.
Citi clearly hopes to use its Project card to "repackage" and expand global availability of its controlled-spending products to drive new business from existing customers, McGinnis said.
"Citi is harnessing an existing technology to bundle certain products and features together to increase their appeal to specific kinds of users in new markets," she said.
The global reach Citi plans for the Project card is also significant, McGinnis said.
Commercial card volume declined sharply in 2008 and 2009 during the recession, but in 2010 commercial card spending grew, she said.
"Citi is making a big play here," McGinnis said.
