Credit cards for corporate purchasing departments, like the one unveiled last week by MasterCard International, could open a whole new category of merchants to the bank card industry.

MasterCard officials said its "purchasing card" would create an opportunity for banks that process card sales for merchants to sign new clients with an average transaction size four times the MasterCard average.

Targeting a market that generates up to $400 billion a year in transactions, these cards -- also known as procurement cards -- enable corporate purchasing managers to streamline the billing and accounting for smaller transactions by reducing paperwork.

The cards are handed out to the employees responsible for buying the supplies. Managers are able to control purchasing activity by setting spending limits on each employee, and are provided with daily reports on purchasing activity.

The vendors of supplies and equipment often are wholesalers that would not otherwise accept credit cards.

A MasterCard spokesman listed Fischer Scientific Co., Electronic Data Services, and the State of Colorado as examples of nontraditional merchants that accept cards in existing procurement programs.

Visa U.S.A., which also has targeted the procurement market, said its research showed only about 40% of the merchants that procurement managers deal with currently accept Visa cards.

Senior vice president Peter Gustafson was quick to point out that the same research shows that only about 8% currently accept the cards of American Express Co., which also is going after the procurement business.

MasterCard's said its program allows the client to receive more detailed daily reports than earlier procurement cards.

Processing Terminals Upgraded

MasterCard has upgraded its processsing terminals in stores to cue the merchant to enter a purchase order number when a procurement card is used. This helps the processor to deliver detailed daily reports to the purchasing manager, including important tax-related information.

Total System Services Inc., Columbus, Ga., is the first processor certified to handle MasterCard purchasing card transactions. The second-largest nonbank processor of credit card accounts, Total is controlled by Synovus Financial Corp.

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