Corporate cards: global evolution

They say that a week is a long time in politics, and while the corporate card industry may not move quite that fast, the last 12 months has heralded significant changes in the sector. These developments include the consolidation of some of the major global card players, the introduction of new European Union (EU) regulations and the ceaseless advance of technology in the form of virtual cards and mobile payments.

And this is just to scratch the surface of what has happened since last year’s BBT Corporate Cards supplement. “The last 12 months have been some of the most dynamic for the industry,” explains Melissa Gargagliano, head of EMEA commercial cards at Bank of America Merrill Lynch (BoAML).

“We saw a major issuer exit from the international markets, which reinforced the sheer focus that issuers need to have on their margins while surpassing client expectations,” she says, adding that the industry “is facing increased regulatory pressure, in the form of a number of key directives and regulations that directly impact the card industry”.

So let’s look at some of those issues in more detail and how they have affected – and will continue to impact – corpo­rate travel buyers and their companies when it comes to their payment options and programmes.


It’s often said you can tell a lot about the state of the world economy by looking at spending trends within the corpo­rate card market. This outlook has not been particularly rosy recently, with a slowdown in growth in key emerging markets, such as China, and US GDP also sluggish. Even the UK, which has been a relatively good economic per­former in Europe during the last couple of years, saw its growth estimates being cut back during the budget in March.

American Express CEO Ken Chenault admitted to investors earlier this year that the corporate market has been the segment he was “most disappointed in”. Amex saw card-billed business for its Global Commercial Services division fall by more than 2 per cent to US$182.1 billion last year.

Chenault put this down to travel and entertainment (T&E) being the “easiest expense category to cut”, and added that corporate card spending had been in a “pretty consistent decline” since the start of 2014. Although he does believe there will be “improvement in the growth in commercial in 2016”.

Steve Robson, Citi’s head of commer­cial cards EMEA, agrees that “general eco­nomic woes are a challenge” and points out that one of the major reasons for low oil prices has been a slowdown in China and also world trade gener­ally. “We have a situation where ev­erybody is losing a bit of confidence. When this happens we see compa­nies cutting back on travel and we’re definitely seeing that in the market generally,” he adds.

“Overall, there’s been a flat level of travel – some companies are travelling more and others are spending less. In the commodities sectors, there is definitely a lot of M&A [mergers and acquisitions] activity, such as the Shell and BG Group merger. This means there will be fewer people working for these companies and that will result in less travel.”


These tough market conditions have undoubtedly played a part in the con­solidation within the sector over the last 12 months, with US banking giant JP Morgan Chase ending its corporate card programme outside the US, and Visa Inc swooping to acquire Visa Europe to create a single global Visa company.

JP Morgan withdrew its corporate card services from the EMEA region in December 2015, so that it could “concen­trate on areas where we can best meet clients’ needs for a competitive offering and superior client experience”, which means the US.

This decision led to many non-US companies having to find new card providers in the last few months of 2015 before the withdrawal of this service. JP Morgan had been offering an interna­tional commercial card service through a partnership with Airplus, which was originally launched in 2012.

Meanwhile, US-based Visa Inc is spending up to €21.2 billion to purchase Visa Europe – a move which will see Visa Inc add more than half a billion card accounts and more than €1.5 trillion in annual card payments. The sale is due to be completed during the current financial quarter running from April to June 2016.

How this will impact the corporate card market is obviously unclear at this point. But Visa Europe’s UK & Ireland managing director, Kevin Jenkins, says the deal will allow a combined Visa to “accelerate the next generation of pay­ments in the UK”.

He adds: “The deal will give consum­ers and financial institutions across the UK greater access to global scale, technologies, investment and resources.”

While the UK’s referendum on June 23 on whether to stay within the EU or leave (the so-called ‘Brexit’) has been dominating British headlines in recent months, the corporate card industry has been scratching its collective head over the impact (or not) of the introduction of capped interchange fees by the EU, which is discussed in detail on p10.

On the EU referendum, most cor­porate card providers are unwilling to put their heads above the parapet when it comes to declaring whether they support remaining in the union or leaving. Some are at least willing to discuss what impact leaving the EU may have on the cards sector.

One industry leader says that those banks with their European headquarters in the UK may be forced to establish a new base in another EU country if the UK votes to leave.

“Certain benefits in the card world are the result of there being a har­monised EU, which allows card issuers to use cross-border rules to enable them to issue cards in all the EU countries,” he explains. “If the UK suddenly sits outside the EU, it’s quite possible they couldn’t do that any more.”

Caroline Haywood, UK manag­ing director of Airplus Interna­tional, says corporate payments are “already globalised and not EU specific”, which means there should not be “a huge change in pro­grammes, card policy or structure” if the UK votes to leave. “The impact of leaving the EU on running a day-to-day corporate card programme would be minimal,” she says.

But Haywood adds that the situation would be “more complicated” for card issuers because it is not clear whether the existing EU regulations that com­panies already comply with would still apply in the aftermath of Brexit.

“The government would have a huge amount of work to unpick EU law and either keep it in place or create our own policies and legislation,” she says. “Rules would need to be refined and if the UK does leave the EU this will be a long process.”


Corporate card companies are on much less contentious ground when it comes to discussing technology – you’ll find the virtues of virtual cards and mobile products explored on p14, as well as the impact of other new tech-based developments (p20). One of the main factors driving this advance in corporate payment technology is – as in most parts of managed business travel – the influence of the tech-savvy, so-called ‘millennial’ generation (those employees who were born from the early 1980s to around 2000).

Alan Gillies is vice-president of UK sales for American Express Global Cor­porate Payments. He says: “One of the biggest, and ongoing, changes is the growing proportion of millennials in the workforce. This is driving change in the usage of corporate cards, and to expec­tations of access to digital and mobile experiences. Today, the business traveller expects seamless payment experiences and flexible solutions that meet their needs, wherever they are.”

Mobile is a huge part of the technol­ogy improvements being introduced by payment companies and this should only accelerate with the use of smartphones or even wearable technology, such as the Apple Watch, to pay for smaller transactions.

Apple Pay has already been launched in the UK, although most providers say that use by corporate cardholders has been minimal so far – but this trend is only likely to grow with Google’s Android Pay and Samsung Pay, both due to arrive on these shores later this year.

But will technology – in all its forms – eventually sound the death knell for long-established corporate payment practices such as lodge cards or hotel billback services? Opinion is divided but most believe these traditional methods may still have some life left in them.

Maria Parpou, Barclaycard’s commer­cial cards product director, says: “They will undoubtedly continue to decline as the payment technology maturity of the travel management company/supplier embraces the new technologies. But given the sheer breadth and complex­ity of the industry supply chain and the differing corporate cultural approaches, this may be some time away.”

Even what seems like the explosive growth in the use of virtual cards may not mean the end of lodge cards, says Ashwin Joshi, travel and entertainment product manager at Bank of America Merrill Lynch. “Most of the spend seen on virtual cards is for consolidating stra­tegic business travel expenditure that was not previously captured on lodge cards,” says Joshi. “This solidifies our view that virtual cards and lodge cards complement each other, and their usage is driven by the clients’ needs.”

The corporate payments industry may be on the cusp of a new digital revolu­tion, but it’s clear that it will take some time to get there. This makes the sector one of the most important to watch within the world of business travel over the next few years.

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