The commercial payments business has tremendous room for
growth, but international regulatory issues can be a burden and competition and
technology are changing more rapidly than ever, speakers told attendees to the
Commercial Payments Summit in New York in March.
"The overriding theme was that the B-to-B payments area
is enormous," said Joanne Robinson, founder and CEO of event host
Commercial Payments International.
MasterCard Worldwide group executive for global commercial
products Ed Glassman said annual spending handled by all the card networks
totals about $1.7 trillion. "But if you look at total spend by corporates
and governments around the world, it's nearly 100 times that size. It's about
$109 trillion, which is kind of everything—it's checks, cash, cards, automated
clearing house or the equivalent electronic funds transfer, it's wires, both
domestic and cross-border."
As usual, with opportunities come challenges. Part of the
opportunity is in global expansion and growth, but the relevant regulatory
issues are powerful and complicated. Different government interests—in
regulating prepaid cards, endeavoring to combat money laundering, protecting
individual privacy and ensuring competition—have the potential to thwart
multinational expansion, speakers said. Commercial cards, meanwhile, are at
risk of getting tripped up in regulation designed to protect consumers.
Specific to corporate travel, a panel discussion including
two corporate travel buyers featured a debate on individual liability versus
corporate liability. "Most of the panelists were in favor of individual
liability, though it was noted that the liability really falls back on the
company in the end," according to a CPI report. "It was also
suggested that corporate liability allowed for mandated card usage more easily."
Citi global head of commercial cards Manish Kohli said that
corporate liability is on the rise around the world. But he acknowledged the challenges
of creating a consistent program: "If you went into some markets,
individual liability was the norm, while for other markets, individual
liability was banned by the government and even joint and several liability was
discouraged," Kohli said in an interview.
Meanwhile, discussions about technology were everywhere.
"Rapid innovation [is] creating challenges for the
industry," according to a presentation by Visa Inc. global head of
e-commerce Jennifer Schulz. "The payments ecosystem has become very
complex and [is] getting more complex every day [with] new technologies and new
business models. Timeframes are condensed, and condensing. The digital
landscape is impacting the payment network through changes in consumer
behavior, new ways to make payments, and new ways to accept payments."
Facilitating expense reimbursement is both a challenge and
an opportunity facing payment system providers as smartphones proliferate,
according to a research paper presented at the event by payment system provider
TSYS International. While the study's authors described as inevitable "increased
coordination between payment cards and mobile phones," payments providers
are struggling with where to invest.
For First Annapolis Consulting partner Frank Martien, there
are three main areas of mobile and payment convergence: mobile applications for
account access, reporting and controls; buyer authentication, as exemplified by
the Starbucks app that allows customers to pay with smartphones; and acceptance
of cards through a mobile phone, as illustrated by smartphone hardware
attachments like Square.
Martien said that his "somewhat conservative" view
is that "commercial payment providers should invest in the first segment:
controls, access, reporting, expense management, account activity, alerts. All
that is important to have in today's market for corporate travel walking cards.
On the other two—authentication and acceptance—it's my strong view that
commercial payments providers are better off taking a wait-and-see approach and
seeing where the consumer market evolves."
"For commercial card programs," the TSYS report
suggested, "mobile technology has great potential to simplify the overall
process for business travelers and procurement professionals. Mobile is not
only a catalyst for momentous changes in organizations' approach to consumer
engagement, but also with how businesses and their employees interact, creating
new opportunities and benefits for the commercial card market."
This report
originally appeared in the May 2013 issue of Travel Procurement.