Payment solutions provider AirPlus has moved to self-issuing of cards in its core German market. If the project proves successful, it will look to extend the idea to some of its other key markets, such as the United Kingdom and the United States.
AirPlus previously issued corporate cards in Germany through Bayerische Landesbank on a Visa platform. Under the new arrangement, AirPlus becomes its own issuing bank. It has applied for a banking license and is accredited to issue its own cards, which will be on a MasterCard platform.
AirPlus has a 69 percent share of the corporate travel payment market in Germany, which is home to about half of its clients.
Spencer Hanlon, managing director of AirPlus International, said the advantages of self-issuing are that it permits more flexibility and self-determination. "We can now plot our own destiny in terms of setting price, service levels and so on," he said. "For example, a corporate client might tell us it wants a lodge invoice and to direct any air purchases on the card to the lodge invoice. Now, we can design it exactly how they want without being stacked up in the issuing bank's queue waiting for it to happen."
Self-issuing means AirPlus has to take on new functions, such as dealing with the physical issuing and distribution of cards. This is one factor it will weigh before deciding whether to extend self-issuing into more markets in response to increasing demand for a single global card provider. Hanlon said AirPlus has experienced a 100 percent increase in global card requests for proposals over the past 12 months.
"The challenge we always face is that clients don't want to deal with lots of different issuing banks," he added. "On the other hand, local banks understand their markets very well. We feel the balance is right now, but over time global purchasers will increase their demand for a single supplier. It is highly unlikely there would ever be one global issuer— Japan is unlikely ever to have anything other than a Japanese issuer, for instance—but I can see more markets converting, such as the U.K. and the U.S. However, we have no plans for anywhere else right now. We want to get it right in Germany first."
AirPlus in 2004 cobranded a corporate card for U.S. customers with MasterCard and GE Capital
(BTN, July 19, 2004), similar to an earlier arrangement for U.K. customers with British Airways and Visa International
(BTN, Feb. 9, 2004).