Echoing the growing convergence between travel and procurement, the number of large-market companies using one cards will nearly double by 2006, according to a survey by Professor Richard Palmer of Eastern Illinois University and Professor Mahendra Gupta of Washington University in St. Louis.
Growth of one card usage among midmarket companies that have bank-issued corporate cards—where the penetration stands at about 75 percent—is expected to stay flat in that time, while nearly all other corporate segments are poised for growth, according to the 2003 Purchasing Card Benchmark Survey.
Based on 579 responses from companies that use a purchasing card issued by one of 19 bankcard issuers, the survey found that by 2006 45 percent of the large-market companies surveyed plan to use one cards, nearly doubling from its current 24 percent. Among Fortune 500 companies, 32 percent plan to use a one card by 2006, compared with the 23 percent that do now.
In recent years, one card solutions have grown significantly, as 57 percent of the survey's one card programs were implemented in the past two years.
Some in the industry considered the numbers to be overstated, considering that users of American Express—which does not issue a one card—were not represented in the study. Others noted the emergence of more one card penetration among companies of all sizes.
"We see those kinds of trends for sure," said Steve Abrams, MasterCard International senior vice president of corporate payment solutions. "There's much more willingness over time for the corporation to collapse departments and realize the benefits." MasterCard told BTN that "virtually all" requests for proposals that it sees explore the option of a one card solution. "While not all are going with that particular solution, there is definitely more awareness of the offering," a spokesperson said.
U.S. Bank—the largest issuer of Visa corporate cards—said 80 clients have signed on for its one card program since it launched in 1997, about 43 percent of which fall in the large-market category. JPMorgan Chase said that through 2002 it had issued 32,000 one cards on both the Visa and MasterCard platform, comprising more than 12 percent of its entire corporate card portfolio. Bank One said one card penetration continues to be focused in the midmarket, where the offering has found the most penetration.
An Amex spokesperson said the company's midmarket offering widely is used both for travel and indirect goods, making it a one card solution by default. Amex is exploring a more defined one card solution following customer requests.
The growth of the one card underscores the commoditization of travel and the increasing convergence between travel and procurement as it becomes more common for companies to bundle the management of two autonomous spend categories. "Because the strategic sourcing initiatives are so popular these days, it's increasingly going under one department," said Carol Salcito, president of Norwalk, Conn.-based consultancy Management Alternatives.
Proponents of the one card billed this as the headlining benefit of such a program. "The benefit of the one card is the corporate administration of the program," said Gary Schneider, global business manager for Citibank commercial cards, which offers both Visa and MasterCard. "I view T&E to be another commodity that's purchased. Historically, T&E was not looked at in that vein. There's been a lot of focus on cost savings and bringing these disparate programs—purchasing, travel and fleet—into a common environment. It makes sense to manage it as one program."
General Motors was at the forefront of legitimizing one card solutions in the large market, when in 1999 the company went with a one card that now boasts more than 35,000 GM cardholders.
Schneider said the one card picks up on potential leakage when dealing with separate card programs. "There are commodities purchased on the purchasing card or the T&E card that overlap," he said. "For example, there are some people who use the purchasing card for events and travel-related purchases, so the travel manager may not know that the guy with the purchasing card booked a conference at a hotel and spent $150,000 with Marriott."
American Electric Power collapsed the administration of two programs into one when it moved to a one card environment in 2000
(BTN, July 7). Prior to the switch, the company had been using an American Express card for T&E and a Visa purchasing card—both of which were managed under different departments. After moving to Bank One's MasterCard MultiCard, AEP put the program under one account manager and bolstered its annual rebate up to $500,000 by merging the travel and purchasing spend into one volume.
The purchasing card survey highlighted two of the most commonly cited barriers that threaten a company's willingness to put in place a one card program: the need for separate processes—particularly reporting—for managing T&E and purchasing expenses, and the issue of corporate liability for T&E accounts. To overcome these obstacles, MasterCard and Visa offer the ability to break out different spend categories, as well as flexible liability and billing options.
While the issuers and networks contend their reporting platforms can put the right spending into the right buckets, Salcito said the technology is not yet sophisticated enough to consistently distinguish differences between procurement and travel purchases.
In addition to ad-hoc reporting tools offered by bank issuers and card networks, expense management companies also have bolstered their software to accept and differentiate disparate data sets.
"When you take a quick look at Concur, Gelco and the like," Abrams said, "they all started out as travel expense management companies, now they're morphing into total expense management software companies."