U.S. corporate card issuers Bank of America Merrill Lynch, Citibank, JPMorgan Chase and U.S. Bank are increasing their global scope, reporting greater demand from travel buyers to support global travel and entertainment needs from a single payment platform.
Most recently, Citibank last week launched a procure-to-pay tool that integrates its payments, supplier finance and commercial card capabilities in Europe, the Middle East and Africa into a single channel. Citi also will provide consultancy services with the tool. In July, Citi announced local commercial card issuance capabilities in South Africa, its 50th market.
Citi has long been an established issuer in multiple currencies, making it one of only three issuers--in addition to American Express and BMO Financial Group, following BMO's acquisition of Citi's Diners Club North American franchiselast year--that can truly support a global program, said David Hillman, principal and payment systems specialist at Consulting Strategies. "Those three can hit 80 percent for most multinational companies," Hillman said.
According to the American Express website, the company can issue commercial cards in local currencies in more than 40 countries.
Other issuers, however, are stepping up their multinational game as well. Next year, U.S. Bank will begin self-issuing corporate T&E cards in Europe, allowing companies with European operations to manage card programs through a single contract, credit approval process and reporting system. The bank also plans to open a call center in Europe, according to U.S. Bank Corporate Payment Systems president Rob Abele. U.S. Bank will continue to rely on partners to support clients in countries where it cannot legally issue cards, he added.
"We're first concentrating on the large countries: the U.K., France, Germany, Spain, Italy and Ireland," said Jeff Rankin, U.S. Bank's senior vice president and sales and marketing officer for the corporate payment systems unit. "After we have those in good shape, we'll look to expand outside of those markets."
U.S. Bank eventually may expand outside of Europe, but Rankin said that's further down the road. The plan is for "laser focus" in Europe next year, he said. "I would not see us issuing cards in another continent in 2011."
Bank of America, which has had a presence in Canada and Europe, this year expanded into Asia and is assessing opportunities in Latin America, according to card product executive Jennifer Petty. Earlier this year, the bank partnered with Singapore-based United Overseas Bank to issue corporate T&E cards in Hong Kong, Indonesia, Malaysia, Singapore, Thailand and Vietnam.
"We've made a massive investment in Asia to allow for customers to have local-currency opportunities there," Petty said. "We're really building our capabilities around the globe to be sure we have our cards in local currency and one reporting tool that can access wherever they are."
JPMorgan Chase also has made global expansion a priority, said head of international commercial card business Cate Luzio. The bank now issues in 95 countries and 28 currencies, she said.
"Whilst some of our competition in the market have done it for a while, in a very short timeframe we have grown from a U.S. and Canada supplier into the full European Union," Luzio said. "We're building out beyond Europe, the Middle East and Africa and will be into the Latin America market in the next 18 months."
Executives at JPMorgan, U.S. Bank and Bank of America said they been seeing provisos for global functionality popping up more frequently in T&E card requests for proposals. Executives from Citi were unavailable for comment.
Traditionally, even banks without widespread global issuance could respond to those needs through partnerships with established banks in the region. For example, BMO this year has relied on Diners Club relationships around the world but earlier forged eight other global bank partnerships to serve markets in Australia, Chile, China, Finland, France, Japan, Malaysia, Norway, Scotland, Sweden and the United Kingdom. Such structures have their drawbacks, consultant Hillman said.
"It's the weakest-link situation, if the partner isn't as strong as you are," Hillman said. "Consistency of data also is very important. There are third parties that can help with consolidation and reporting of data, but it's not as effective as an internal, consistent approach. Generally, if you have a significant number of divisions and employees that require locally issued cards, a single issuer is the easiest way of going about that."
Splitting up a revenue stream among several issuers also will lower rebates available to a company, although rebates usually are lower outside of the United States, Hillman said.
Even so, the banks are not abandoning the partnership strategy. U.S. Bank will continue to support its established partnerships and might continue to add more, Rankin said. "There's not one model that will work for every customer," he noted.
Data, adoption, regulatory climates and acceptance remain as challenges for global card programs. For example, while many companies request individual liability and allow U.S. travelers to accrue rewards as part of their T&E card program, laws in Europe restrict employee liability, and offering reward programs is less common, Bank of America's Petty said.
U.S. Bank's Rankin said T&E card adoption in Europe traditionally has lagged adoption rates in the United States.
Itemized card data, known as level-three data, also is limited outside the United States, Canada, the United Kingdom and Australia, JPMorgan's Luzio said. "We're working with merchants on how to make it real and evolve the rest of the markets, especially the top-tier markets," she said.
Acceptance becomes more of an issue in such emerging markets as Asia and Latin America. For most travel programs, however, acceptance at key vendors like airlines and major hotels will not be a problem regardless of geography, Hillman said. "You might have some countries, like India, where one card might not have the acceptance of another, but I would not accept that criticism on face value without going in and finding out where these stories came from," he said. "If you can't use cards at smaller hotels and restaurants, is that really critical?"