National Data Corp. has introduced a payment service linking companies that issue procurement cards with their suppliers.
NDC, an Atlanta-based transaction processing firm, said more than 100 companies have signe dup to use the NDC Procurement Card Service.
Procurement cards -- a fast growing segment of the credit card market -- are issued to employees for relatively small purchases of business supplies.
Joel Harris, a group vice president and general manager with NDC, said the cards streamline the purchasing process for companies and result in speedier payment to suppliers.
No Invoice Needed
There is no need for an invoice, for example.
"Part of the objective is to eliminate some of the lower-dollar transactions," he said. "The average ticket we're seeing is in the $300 dollar range."
He said that some companies also use the cards as a kind of petty-cash reserve. "It varies by corporation. They all have a business need to limit the expensive accounts payable [process] for items that don't need as much scrutiny."
NDC has thus far signed up 100 companies for the service -- ranging from Fortune 500 manufacturing firms such as Xerox Corp. to office supply firms.
The potential transaction volume for corporate purchasing cards has been estimated to be up to $400 billion a year.
When a purchase is made, an NDC card terminal prints a receipt with the customer's card number and sales tax amount. Payments are totaled each day and billed to the appropriate account.
But, Mr. Harris noted, the market is so new that a few technical challenges are still being ironed out.
"Visa, MasterCard, and American Express haven't come across all the issues yet," he said.
Some supplier companies, for example, have not previously accepted credit cards. Those firms are either provided with a standard credit card terminal or can use personal computers.
"Wholesale companies that never took credit cards operate differently than retailers," he said. "You're dealing with a whole new customer set.
"There is additional information that needs to be captured because it now has to be integrated with the corporation's back end."
To accommodate the added fields of information required by corporate accounts-payable departments, Mr. Harris said NDC has "increased and enhanced our back-end systems."
But for NDC, there were no big-ticket expenses. "Our [new] software will simply fit on top of existing hardware already installed," said Mr. Harris.
But the biggest issue has been designing the service to handle the differences that exist between the three different card types.
He noted that MasterCard's systems can handle more characters of information than American Express'.
Also, MasterCard now provides a way that cashiers can be prompted to ask for the extra information required by cardholders' employers.
Mr. Harris said that American Express, which doesn't have the extra prompt, "is not as user friendly."
Further, he noted that some companies require more data to be entered into the transaction than other firms.
"Somehow the supplier has to know what form of data" the company needs, said Mr. Harris. "We've got to become the middle man to iron that out."
NDC is working to develop a consistent user interface. "Unfortunately, the requirements keep changing," he said. "But that is why [card-issuing] banks rely on us to provide these services."