Interview: Citi Global Commercial Card Head Manish Kohli

When Commercial Payments International brought its annual Commercial Cards & Payments Summit back to New York City last month, BTN Group editorial director Jay Campbell met with a handful of corporate card executives, including Citi global head of commercial cards Manish Kohli. Kohli, who first spoke with BTN last year after taking the job in late 2011, shared his views on trends in individual liability, chip-and-PIN technology, globalization and the influence of finance departments on card selection decisions. Excerpts of the discussion follow.

One thing I hear from corporate travel administrators and corporate purchasing managers about cards is that globalizing a card program is incredibly challenging. What can issuers and networks do, given that not everything is in their control, to help smooth that out?

Yes, globalizing a card program can be incredibly challenging—depending on the card program. If you look at the spectrum of card programs, there are two main categories: travel card programs and procurement card programs. In procurement card programs, what you said is spot on. In travel card programs, however, the challenges have significantly lessened due to a shift in market trends toward a preference for global consolidation.

Since 2008 and 2009, when the world went through the financial crisis, a very interesting trend emerged: global consolidation of commercial card programs by corporations. Rather than working with different providers within the region and across regions, corporations actually started focusing more on creating global programs. At that time, the concern with creating a global program was real, due to the differences across regions. For example, in Europe, you have more concerns about worker councils. 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. This makes sense—the rationale for banning individual liability and discouraging joint and several liability by some markets is because the governments don't want employees to take on liability for corporate expense, which I think is absolutely correct.

So over a period of time, corporates consolidated programs with issuers, which has led to truly positive industry trends, such as the move away from individual liability programs in preference of corporate liability programs across all markets. This big shift in the industry, from individual to corporate liability, is an example of how the Industry has worked together to smooth out differences market by market for a more consistent global program offering.

That's one of the most fundamental decisions in the beginning of a card program. Is that shift apparent globally or only in certain markets?

It is a trend globally. I think corporates are realizing that if they want to have successful programs, they have to address the employee credit issue, when employees may not be approved into a program due to their personal credit history. Employees, once approved into a corporate card program, should not have their credit reports and histories earmarked against debt that is not theirs. This practice is increasingly becoming an issue in the new economic order, in which individuals struggle for retail credit. This is why corporates have looked to provide consistent practices leveraging corporate liability programs across all markets, recognizing that if they offer market exceptions, their program will never look or behave in a consistent manner. The issuing community actually has worked on those standards to create a desired level of consistency.

We also have worked on local issuance. If we issue a card in Romania, it will be in Romanian local currency. If we issue a card in Kenya, it will be in Kenyan shillings. It will be in the local language, and it will be a local currency card. It allows better adoption of the card program. The local businesses are going to say, "I don't want to roll out a dollar-based card program in my market and incur a [currency exchange] cost for every transaction." People once thought that to have a local currency program, it had to be different from what they offered in the United States. That's gone away now.

We have heard it's not really about globalization or multinational; it's about "multi-local." Do you agree with that?

I do agree with that. There is a distinction there, which is that clients do not want to buy a confederation of 100 programs. They want to buy a single program that is "global," with a singular administrator of the program at company headquarters. But the cardholder who uses his corporate card in a particular country often does not appreciate how the program works for his peers in the rest of the world. He only cares that he has a card and that his card looks like any other card from his local High Street bank or local credit card issuer—it often doesn't really matter to the cardholder if the corporate card he uses is actually part of a global program supported by his corporation's headquarters.

Local language, local currency payments, integration to local payment systems, invoicing systems—these are the important aspects of a card program to a cardholder of a corporate card. For example, we rolled out a program to one of the largest Swedish corporations. They said, "All of our employees are used to getting their card statements through a local e-invoicing system," which we understand. Basically, when these employees log in to their electronic banking, they see invoices from various companies, and that's where they wanted to see their invoice from Citi Commercial Cards. While that is non-standard globally, it is an important feature for the Swedish market. The rest of the world does not have that infrastructure. Sweden has it, and a few other countries have it. So we connected our statement capabilities to this infrastructure, creating a truly local solution within a global program. To the cardholders, this is a local solution, exactly like their retail credit card or their bank account. To the corporate office, this is a global program, with the administration of the program the same as all of their other markets. Think of this as being similar to the cardholder's local utility company–a local branch providing a necessary local flavor, but still viewed as part of the global program by the head office.

There's consistency in the platform and the data on the client side, but some corporations find the different technologies in different markets a challenge. U.S. travelers going to Europe are finding their magnetic-stripe cards are not a preferred physical method of payment. What's happening there? Will we have chip-and-PIN in United States?

The industry is now moving at a very rapid pace toward harmonization and adoption of best practices. Chip-and-PIN is a best practice. It was launched in Europe many years ago and increasingly became the norm. It is used to mitigate fraud, enhance the card experience and give more personal security to cardholders. The U.S. has adopted it. In fact, Citi was the first commercial card issuer to launch chip-and-PIN in the U.S. and Canada about a year and a half ago.

In conversations with industry partners and networks, we've asked the same questions you're asking me now. And although we don't like having some parts of a corporation's program chip-and-PIN and some parts mag-stripe, we know we can't make all cards across all markets chip-and-PIN right now because the acceptance networks aren't fully enabled yet for chip-and-PIN. However, when our clients say, "Here is the top 10 percent of the traveling population that goes to Europe, and we want them to have chip-and-PIN cards," we can easily re-card that population because we have the ability to do either: our chip-and-PIN card is both chip-and-PIN and mag-stripe enabled. Still, some merchants get confused and don't know what to do with the card as it has both chip-and-PIN as well as mag stripe capability, which I think is what is making the industry keep moving toward replacing mag-stripe fully with chip-and-PIN. I don't think the state that we are in, where we have both types of cards, is a long-term solution. We have asked the networks to expedite the migration to chip-and-PIN, in line with the industry trends. Our strong view is that chip-and-PIN is a better solution for not just the United States but for every other market, too. Most of the world has already moved to chip-and-PIN as the standard option.

Why not just give to all the corporate employees rather than 10 percent? Is it more expensive?

It is more expensive, but that's not the concern at all. The concern is that giving it to people who don't need it compounds a negative experience. If a company feels they need 20 percent of their cardholders to receive chip-and-PIN, we will enable that 20 percent with chip-and-PIN. European companies who are based here in the United States have many people who travel back and forth to Europe. Therefore, the percentage of chip-and-PIN-enabled U.S. cardholders for these corporations will be higher than for others.

I heard a suggestion that banks can do a better job of tying in all touchpoints. In other words, if they are serving the corporate client's banking needs, they should have success servicing the client for its card needs. Yet, a lot of companies choose a different bank for their cards.

That is absolutely true. What corporates around the world are looking to do is consolidate and streamline relationships to obtain efficiencies. They have an efficiency agenda, and that agenda does not just begin and end with travel. Corporations want to take efficiency further down the payments spectrum. Travel is only one type of payment. Micropayment is only one type of payment. Corporations are looking at creating efficiencies for both, and with one bank provider for both, they can facilitate the provision of those efficiencies.

Additionally, in a credit-constrained environment, corporates want to make sure that bankers are getting a return for the credit they are laying out. That's why, on the client side, there's also a convergence of those two relationships.

That means a different orientation as far as who the decision-maker is, right?

Yes, it is a committee. And now, increasingly, the corporate treasury is part of these committees with CFOs also wanting to be part of these decisions. CFOs realize they can gain synergies by including the travel provider decision into their overall financial discussions.

From your side, is there a reorientation of your sales and account management folks to work together even though they're in such different departments?

I think the benefit for Citi is that our card business is part of the wider treasury and trade services solution set. It's part of transaction services and sits within the transaction services family. This internal structure is very helpful because the Citi sales and coverage teams, when they talk to our clients about all of our solutions, raise the efficiencies and synergies that can be experienced by using one issuer across an array of financial solutions as a key talking point. We have spent a great deal of time educating treasuries on why they should have an interest in the choice of their corporate travel program—how by doing so they can also influence these other parts of the payment flow that their back offices are directly overseeing. In the last two or three years, I have seen a very significant shift towards increased treasury interest in deciding, influencing, and playing a role in the choice of their organization's corporate card provider.