H-P Cites Need For Three Cards In Contract Renewals

<I>Palo Alto, Calif.</I> - After putting its corporate card business out for bid last summer, Hewlett-Packard has renewed its contracts with American Express for T&E, First Bank Visa for purchasing and PHH for fleet.

The company had hoped to simplify the management of three separate cards. But, said corporate card administrator Jeff Kurn, "there is no single piece of plastic that can meet all of our needs. Accounting really wants a single solution that combines fleet, purchasing and travel."

While several bank-card vendors offer one-card solutions, Kurn had serious concerns about the lack of data the bank-card associations can provide. The biggest concern is that the bank cards can't identify vendors by zip code, meaning that H-P would have no way of identifying exactly which Holiday Inn or Marriott a traveler used in a particular city.

"We need some indication of the location of a property," Kurn said. H-P spends more than $150 million a year on hotels.

As it reviewed proposals for the T&E card from Amex, Citicorp Diners Club, Citibank and GE Capital MasterCard, H-P also was concerned about the vendors' ability to provide cards worldwide. H-P has 30,000 cards distributed in the United States and another 20,000 outside. Amex and Diners issue cards around the globe, but issuers of MasterCard and Visa must own or develop marketing alliances with a bank located in the country in which it wants to issue cards. Issuers are working on solving this problem, but to date are unable to meet most companies' global needs.

On the purchasing card side, American Express isn't accepted by enough merchants to meet H-P's needs, Kurn said. Consequently, H-P ended up remaining with its existing three vendors.

Still, Kurn doesn't consider the exercise for naught. "The bank cards were more willing to discuss incentives this time around," he said. "Vendors also were more willing to talk about cash advance alternatives, such as travelers checks, and more willing to work with us to help reduce our administrative costs."

The more favorable market conditions certainly enhanced H-P's negotiating ability, although Kurn declined to provide details.

In its new agreement with Amex, H-P promises to work harder at encouraging its travelers to use the green card, which is not mandated. Usage has been only 65 percent, Kurn said, as many travelers opt to use affinity cards to collect frequent flyer mileage.