Interest In Single T&E, Purchasing, Fleet Card Rises
<B> Interest In Single T&E, Purchasing, Fleet Card Rises</B>
By Lynn Woods
As more companies seek to streamline the expense reporting process and consolidate their payment systems, commercial card vendors report that demand is growing for a one-card solution that consolidates their spending on travel and entertainment, purchasing and fleet.
It's a trend that seems to fit the basic rule of corporate purchasing: moving to a shorter list of vendors yields greater clout, better data and lower cost. But so early in the development cycle of the products, industry insiders are not sure vendors are yet ready to deliver on the promise.
Without question, the customer interest is there. At GE Capital, purchasing and fleet card vice president Craig Watson said a third of the requests for proposals the company now receives are for a combined T&E and purchasing card, and Paymentech's David Cramer, business development and sales and marketing senior vice president for the commercial card unit, put customers' interest at 20 to 30 percent.
Most corporations seeking a one-card solution are interested in combining T&E and purchasing, though industry experts expect more requests in 1998 will include fleet as well, as new offerings hit the market. "Fleet and travel are answering to the same person or department at 25 percent of our customer companies," Watson said.
When it comes to the advantages, however, the players start to hedge their bets. "There's probably a lower service fee per card in a combined program," said one industry executive. And it seems logical that such a program also would be simpler to administer, and make it easier to consolidate data, said Mark Walton of the Travel Systems Group, an expense-reporting consulting firm in Rolling Meadows, Ill.
Still, some formidable challenges remain. One of the biggest deterrents to instituting a one-card program is the issue of liability. "There's the fear that an employee will buy jewelry on the card and then quit," said Michael Godley, director of business development at Necho Systems Corp. in Canada.
Indeed, suggested Steve Putney, president of corporate payment systems at U.S. Bank in Minneapolis, "More companies would adopt a one-card program if they had the ability to define liability for each transaction."
Companies do have the ability to gain a measure of control by restricting the merchant SIC codes for which the cards can be used, limiting the type of stores at which employees can use them. But, Putney noted, T&E cards are by definition more difficult to restrict and regulate than purchasing cards, involving gray areas like in-room movies and size of rental car.
Phil Dunphy, manager of corporate travel at Pfizer Inc. in New York, suggested that from the corporate customer's perspective, the solution might lie in a combined "employee payables" card billed to the employee's T&E card, making the cardholder liable for all charges. But so far, no charge card vendor is biting.
Another issue is the inability of bank cards to provide the detailed T&E reporting available from charge card vendors. Furthermore, "some merchant category codes can be mixed between T&E and purchasing, but the system wouldn't make a distinction" between the two functions, said David Hillman at Deloitte & Touche in Parsippany, N.J. A more practical answer might be to unify data into one stream--but that would involve "a possible loss of functionality" in the quality and completeness of reports, he said.