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Five commercial banks around the world announced a new marketing alliance to help multinational corporate customers provide payment solutions across 25 countries in which its members operate. Zenix Card Alliance was formed last month by HDFC, Nordea, Royal Bank of Scotland, Societe Generale and United Overseas Bank.
The five partners will serve as lead banks to issue both MasterCard- and Visa-branded cards in specific countries in Asia, Europe, India, the Nordics and the United States. If a client needs to issue cards in other countries, officials promise to find an issuing bank.
The name Zenix likely will not appear on individual cards, according to a spokesperson for Royal Bank of Scotland. Cards will carry the branding of the local issuer in that region: RBS for Austria, Germany, Ireland, United Kingdom and the United States; Societele Generale in Czech Republic, France, Greece, Poland, Romania, Russia, Slovakia; Nordea in Denmark, Estonia, Finland, Latvia, Lithuania, Norway and Sweden; HDFC in India; and United Overseas Bank in Hong Kong, Malaysia, Singapore and Thailand. In the United States, Royal Bank of Scotland issues cards under its RBS brand, as well as with its wholly owned Citizens Bank brand.
The lead bank would coordinate with a corporation to determine whether issuance of MasterCard- or Visa-branded cards would best serve the client, perhaps on a county-by-country basis, said a spokesperson for RBS in London.
The alliance said it intended to tap all data consolidation tools available, including those of MasterCard, Visa, Zenix's proprietary management information systems and data feeds from third parties to support clients' needs for global management information. Online statements would be provided to cardholders.
RBS head of commercial cards Raghav Prasad in a statement said the alliance combines "local capabilities with global reach to create programs tailored to our clients' needs. Not only will this aid an employee working in an international environment but also provide invaluable data analysis and control, which will enable financial directors to go out into the marketplace and source more cost-effective and efficient solutions for their business."
As corporations have extended their travel programs across borders, banks have either had to form alliances or acquire issuing banks to serve customers. While employees theoretically could use a card issued in one country for travel expenditures around the globe, multinational corporations need a local issuing bank to provide implementation and customer service support, settle in the correct currency and ensure compliance with tax and local laws, among other concerns.
In 2001, seven Visa-issuing banks and Visa formed a joint venture headquartered in London called Global Commercial Payment Solution (GCPS). Owners include ANZ Group, Bank of America, Barclays Bank, BBVA Grupo, BNP Paribas, Royal Bank of Scotland (in Germany) and US Bank. In addition to its owners, the joint venture lined up more than 20 banks around the world to serve the needs of its more than 70 global corporate clients in 45 markets, according to GCPS CEO Keith Monaghan.
Monaghan called the Zenix alliance "interesting" and noted that "competition isn't a bad thing." However, he emphasized that GCPS isn't just a marketing alliance, but a separate legal entity into which the partner banks have invested. Member banks issue cards to serve global clients, but also spend considerable time "sharing best practices and information" to improve the consortium and corporate programs.
Working through their owned banks, or alliances, American Express, Bank of America, Citi, GE Money Corporate Payment Systems and JPMorgan Chase likewise have been serving multinational corporate needs. JPMorgan Chase delivers "commercial cards in over 42 countries around EMEA, APAC and LATAM to meet the needs of our U.S. multinationals," said a company spokesman in an emailed response. "We may use any one of or a combination of delivery channels, including our own products we directly issue in-country, products delivered by our strong network of alliance banks or a cross-border solution in a global currency."
The JPMorgan spokesperson noted that the commercial card space is evolving rapidly outside of the United States, and that "the market will be big enough for many players to participate ... the key will be which can do so profitably and efficiently. We're confident that we're best positioned to win as our vast portfolio of U.S. multinationals expands overseas. We've invested in our people, processes, technology and support teams for years to create a compelling program."
American Express has touted its global card programs for decades and most recently worked to streamline global data reporting for its customers.
GCPS' Monaghan said demand for global programs hasn't lessened any--a point echoed in a recent article published at online finance knowledge base gtnewsby Vincent Eavis, director and head of international business development and sales for Citi Commercial Cards in Europe/Middle East/Africa.
"T&E expenses comprise the second largest controllable expense item for companies after salaries, consuming approximately 50 to 80 basis points of a company's revenues. Multinational companies are becoming more aware of this, resulting in an effort to globally consolidate their T&E expenses to make savings. Many of Citi's customers are already taking action with an estimated 68 percent having implemented global programs," according to Eavis.
MasterCard reported in a webinar last fall that more than 60 percent of 470 multinational executives it surveyed had yet to implement a multinational T&E card, while 32 percent already had done so. MasterCard hired research firm nxtMove to conduct the interviews between October 2006 and January 2007 with executives from multinational companies with at least two locations and revenues exceeding $2 billion. "This research indicates that the number of MNCs implementing a global card strategy will continue to grow, and at an increasing rate, said MasterCard's Leigh Bochicchio.
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