New global survey reveals increased spending on corporate and purchasing cards, opportunities lie ahead with Middle East gradually realising benefits

In addition, the survey finds that companies worldwide primarily implement purchasing card programs for cost-savings and increased financial control, but the goals and growth drivers for programs differ by region.

Global highlights from the Commercial Payment Cards survey include:

•The majority of organizations worldwide (66 percent) indicate that mandating the use of corporate cards is the top factor for driving growth.
•The general objective for implementation of corporate card programs in most enterprises worldwide (nearly 70 percent) is enhanced visibility into spend.
•The average processing costs associated with a transaction made on a P-card is 70-75 percent lower than that of a traditional payment transaction, and represents significant savings when considering the thousands of transactions being processed.
•The number one priority around the world for implementing P-card programs is reducing administrative costs for transaction processing (86 percent).

"Corporate and purchasing payment programs have long been recognized by companies worldwide for their ability to effectively increase the bottom-line by improving overall processing efficiencies and improving cash flow management by providing enhanced visibility into expenditures," said Aliza Knox, senior vice president, Visa Commercial, Visa International. "The global Aberdeen survey results identify growth in business spending worldwide and increased use of commercial payment card to better manage the increased spending."

Commenting on the findings of the global survey, Kamran Siddiqi, General Manager for Visa International CEMEA in the Middle East said: "The increase in global spending on corporate cards, according to the global Aberdeen study, is a testament to the enhanced transparency and cost-savings which corporates can benefit from. Across the world, organisations use corporate cards to manage expenses and for procurement purposes and the Middle East is gradually realising these benefits."

"The pace at which the region is developing is giving rise to increased commercial activity. Business-related travel and procurement for organisations is increasing and in turn is creating the need to manage business expenditure efficiently and transparently - Visa can meet the needs of this under-served sector through its portfolio of commercial products which provide an easy, convenient way to purchase goods and services while saving money for the organisation in the long run,"

continued Siddiqi.

The Global Commercial Payment Cards survey, underwritten by Visa and ACTE Global, the association of corporate travel executives, and conducted by analyst firm Aberdeen Group, explores the practices and strategies around the use of commercial payment programs, specifically around corporate cards and P-cards for organizations in four major regions, including Asia Pacific, Europe, Latin America, and North America. Corporate cards are used primarily for T&E expenses, while P-cards are primarily used by companies for expenses related to maintenance, repair, operations, and office supplies.

"We're happy to bring this valuable body of global research to our members to help them better understand the commercial payment card practices and strategies that are effectively implemented by companies around the world," said Susan Gurley, Global Executive Director, ACTE Global. "Key survey findings like these help our member organizations to be more efficient and successful."

"In an age where corporate spending is subject to the highest level of scrutiny and control, commercial cards, such as Visa corporate and purchasing cards, offer enterprises a means of closely tracking spending while providing a faster and more efficient payment process," said Vishal Patel, senior research analyst, Global Supply Management Research, Aberdeen Group.

Visa is conducting forums around the globe to highlight their benefits to banks. In the GCC, Visa Commercial has recently held such forums for local and regional banks including in Kuwait and the UAE.

Spend Increasing

Corporate Cards
According to the survey, annual spending for T&E expenses varies by region. Spending has increased by 17.5 percent in Latin America and 44 percent in Asia Pacific from 2005 to 2006, compared to the average worldwide increase of approximately 20 percent (22 percent in North America and 24 percent in Europe).

Purchasing Cards
The increasing amount of expenditure being processed via P-cards (average compounded growth rate of nearly 25 percent over the previous four years) is attributed to the diligence of program directors deploying card payments in an increasing number of categories with assistance from card issuers to improve supplier acceptance.

Growth Drivers

Corporate Cards
Among the different regions, organizations have slightly differing views on the factors that will drive growth in their corporate card programs:
•In Asia Pacific, 69 percent of organizations require the usage of corporate cards for T&E expenses, and 78 percent of organizations are looking to expand corporate card use to non-travel-related categories as a way of driving growth.
•In Latin America and Europe, organizations cite the number of employees given a card (56 percent), increasing travel budgets (approximately 60 percent), and the expansion of spending to non-travel-related categories (53 percent), as factors that will drive growth.

Implementation Objectives

Corporate Cards
A large majority of organizations in Europe and Latin America (69 percent and 70 percent, respectively) cite eliminating cash advances as a significant objective.

Purchasing Cards
According to the survey, the second highest priority worldwide is to ensure auditable procedures, controls and fraud protection (62 percent).

Other goals for implementing P-card programs vary slightly by region:
•Cost reduction is of significant importance to organizations in Asia Pacific (80 percent).
•Increasing the transaction volume and dollars is important to companies in North America (65 percent).
•Improving cash management is one of the top priorities to organizations in Latin America (63 percent).

Program Longevity

Corporate Cards
Corporate card programs have been well-established, although they vary in duration of implementation by region:
•The majority of North America organizations using corporate cards (63 percent) have had their programs in place for more than six years, including about a third that have been in place for more than 10 years.
•On average, European programs have had a shorter tenure than their North American counterparts; however, 17 percent have had card programs in operation for more than 10 years.
•Organizations in Asia Pacific (42 percent) and Latin America (40 percent) have been running programs for between three and five years.

Purchasing Cards
North American organizations have a longer history with their P-card programs than organizations in other regions. Seventy-five percent of card-using companies have had a program in place for at least three years and 50 percent have had one in place for more than six years.
•Both European and Asia Pacific regions are nearing the program longevity of North American organizations since the majority of companies in both of these areas have had P-card programs in place from three to 10 years (63 percent and 51 percent, respectively).
•Latin American companies are just recently emerging as users of P-cards. Forty percent of card-using organizations in this region have only had a card program in place for less than a year.