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Four months after buying GE Money's corporate card unit, American Express Co. has expanded further in that space by acquiring a minority stake in a company whose widely used expense management service will be paired with Amex's corporate card operations.
July 30 -
Bank of Montreal is expanding its commercial card operations into a broader spending management system for its corporate clients using technology from the payments software vendor Ariba Inc.
July 28 -
As Bank of Montreal continues forming alliances with international partner banks, it is looking toward Asian markets to help it compete in the commercial card markets against large rivals in general and American Express Co. in particular.
April 22
MasterCard Inc. is expanding its corporate travel and expense management business with an eye toward stealing share from market leader American Express Co.
Working with Bank of Montreal, MasterCard is forming a series of partnerships to deliver detailed travel data to corporate clients to help them control expenses, enforce policies and negotiate deals with airlines and hotels.
Steve Abrams, MasterCard's global product group executive for commercial products, said the initiative could open the T&E market to banks that were too small to compete in the past.
Though the effort clearly targets American Express, Abrams did not mention the company by name.
"We're starting to see the value of complete differentiation versus our key competitor. That's what this is all about," he said. "The end game is one voice, one view, from our issuers to their customers."
The Purchase, N.Y., company plans to develop the fledgling T&E business as an open network that can interconnect to a variety of corporate and vendor technologies; it unveiled the initiative in San Diego this week at a conference hosted by the National Business Travel Association.
The new strategy is an industry-specific approach to the integrated payment portals that major financial companies have begun to develop in the past three years, and while market watchers said they saw great opportunity in the T&E arena, they also cautioned that the complex systems could involve long-term sales and support to corporate clients.
"It's beyond the capability of a traditional banker to sell these solutions," said David C. Robertson, a partner at the Chicago consulting firm Treasury Strategies Inc., predicting that MasterCard would have to take an active role in conjunction with its issuers during the sales cycle and implementation. "It has to be more of a consultative sale where the company is willing to re-engineer its back office operations."
Jeanne Capachin, the research director of corporate banking at IDC Financial Insights in Framingham, Mass., noted that the alliance strategy fits with recent moves by U.S. Bancorp and Bank of America Corp. to spin off their internal corporate-payment portals, in U.S. Bancorp's case through a joint venture with Visa Inc. and in B of A's by selling the technology to a vendor in which it has taken an ownership stake.
"It looks like partnerships are going to be one of the ways that we decide which of these vendors work out and which don't," Capachin said.
American Express does not comment on announcements by competitors, said Janet Lee, a spokeswoman for the company. But she said Amex is seeing "very positive results" from its alliance with Concur Technologies Inc. of Redmond, Wash., the leading provider of T&E automation technology, in which it took a 13% stake in July 2008.
"Things continue to progress very well on both sides of the partnership," Lee said. "In this environment, there is growing demand for solutions that offer savings and control by automating travel management."
MasterCard, by contrast, is taking a more diverse approach to T&E automation. It and Bank of Montreal announced separately that they were allying with CyberShift Inc. of Parsippany, N.J., and with each other.
Bank of Montreal, of Toronto, also announced a partnership with Tri-Pen TravelMaster Technologies LLC of Carson City, Nev., another provider of T&E management technology, and said it would be making additional vendor announcements in coming weeks to build out its BMO Business Travel Alliance.
And MasterCard Europe announced an alliance Thursday with the British data consolidator DataflexNet to expand MasterCard's data-transfer relationships with travel management companies across Europe.
Terry D. Wellesley, the managing director of BMO Spend & Payment Solutions, said that diverse vendor alliances would enhance Bank of Montreal's ability to connect with its card customers' computer systems, no matter what systems those customers use.
"We think third-party integration is key," Wellesley said. "We're taking the best of what's available in the market and applying it to the BMO solution."
Bank of Montreal plans to offer its T&E service to customers in both Canada and the United States, through its Chicago unit Harris Bank, he said.
Alliances with vendors are generally more advantageous to the bank than developing specialized technologies on its own, Wellesley said.
"They're continually putting new releases out there that are going to help you."
Robert E. Farina, the chief executive of CyberShift, said MasterCard offers a more open platform than American Express, which offers only Concur T&E management and its Cliqbook online travel agency.
"MasterCard has a number of compelling capabilities that American Express doesn't bring to the table," Farina said.
Abrams said one of those is MasterCard's global acceptance, with 29 million merchants worldwide, making its T&E offering potentially more widely available.
MasterCard plans to target middle-market companies, broadly defined as having annual revenue of $50 million to $1 billion, Abrams said.
"Here's a market that has not been highly penetrated even by corporate cards, let alone expense management systems," he said.
Robertson of Treasury Strategies said that MasterCard's involvement could open the commercial card market to more banks, because it has the scale to invest in the technology.
"Citi, JPMorgan or U.S. Bank can invest in their own platform," Robertson said. "It's been difficult for some of the smaller banks to offer T&E cards unless it's a turnkey operation, integrating all the capabilities."
Capachin of IDC Financial Insights said that despite the difficulty of integrating such systems with a company's internal operations, "there's probably a willing audience for these tools."
The diversity of MasterCard's alliances could be a strength, she said. "Then their clients can pick and choose which of their partners they want to work with."
The same could be true of banks, which could make MasterCard more attractive in their eyes, Capachin said. "Banks are seeking ways to differentiate themselves in corporate cards. This is a way to do that."
