Card use and capabilities keep expanding
By Agatha Ciancarelli -- Purchasing, 3/25/1999 2:00:00 AM
Procurement-card companies are responding to customer demand for increased functionality. Card providers say that procurement cards now offer more in terms of accuracy, detail, and quality than they have in the past. Within the established user base, procurement-card use is expanding, and one provider reports that card use has moved beyond large corporations into mid-size firms.
John Yates, senior vice president of purchasing cards with American Express says, "We have signed more clients in 1998 than we have in previous years. We are seeing more middle-market clients."
Steve Abrams, senior vice president corporate products with MasterCard, has seen fewer new customers, but an expansion of the existing customer base. He also notes that customers are becoming more sophisticated. "The purchasing market is growing at a very fast pace, but there are not as many new entrances," he says. "Instead, there is growth in dollar volume. In the early stages there were a lot more programs implemented, but now there are more quality programs."
Also, according to Marcie Verdin, vice president purchasing card with Visa, programs will continue to expand in the future. She says, "Procurement-card programs are not completed, and they still have a long way to go. A lot of companies are in the process of rebidding; the intent with rebids is to expand the program."
Adding functionality
Companies are looking for more than one card or multicard solutions to simplify their back-end and management information systems. There also is a trend for one provider. Says Verdin, "There is a trend of people using the card looking to expand its capabilities. People are looking for new functionality and new ways to help their programs expand. They are looking for an end-to-end solution. They want the ability to offer a fleet card or a combined T&E and purchasing application."
Data accuracy also is high in demand. Says Yates, "Corporate purchasing managers expect data to be accurate 100% of the time. Instead of looking at utility, they are looking at the value the information can bring."
Most companies now have the capabilities to pass level-one and level-two data on purchases. (Note: Level-one data consists of supplier and price; level two contains additional transaction data, such as taxes.) Says Verdin, "We have 360,000 suppliers passing level two. A year ago, we had less than 50. A lot of companies are now passing level-three data." Abrams agrees that more level-two and level-three data is at the heart of the purchasing-card programs. He says, "85% of our transactions now carry what is known as level-two data, and we are seeing a lot of our transactions coming through with complete item detail (level three)."
Card programs also offer new features such as new end-user functionality. They now allow users to look at their statements online, make changes, and allocate to different cost centers. Says Verdin, "Banks are starting to offer their own procurement cards. For example, Citibank has a package called citidirect. US Bank has a similar system, the Care System. US Bank not only gives you a card and service, but also gives the customer the ability to get their software when they sign up."
To satisfy customers, other applications are also being developed on card programs such as temporary services and computer equipment, which are items that were not able to be put on the card before.
Broader commodity base
Customers are broadening their expectations. Says Verdin, "We are looking at the card as a system, as a card solution, not just as a stand-alone thing that you use only for petty cash. It is looked at as the strategic replacement for either a traditional purchasing system or as a compliment to something like an ERP (enterprise resource planning) system. ERP is used for direct materials, inventory, and capitol, while a card system is used for all the low-end, MRO items."
Says Yates, "We are looking at expanding the product offering into other commodities. As we look at the growth of existing purchasing-card programs on a commodity-by-commodity basis, we are starting to see some real traction in the marketplace. Contracted labor is a significant commodity that we have been supporting with a high degree of success as well as office supplies and better office management."
Presence overseas
Multinational programs have been established overseas. However, according to Verdin, "We still are not seeing a huge amount of global purchasing-card programs abroad." Cultural differences, language barriers, and banking laws are some of the reasons companies are having difficulty with the implementation abroad.
Abrams argues that it is regional based and the program's development depends on the country. He says, "The first major expansion we have seen is in the Canadian marketplace. If you look throughout the globe, different countries have different levels of investment business to business."
American Express has been successful in their program overseas. Says Yates, "We have been endorsed by the value-added tax commission in the UK, France, Germany, and Sweden. We have rolled out the product in those countries and we are looking to continue developing the same model of success with the other countries in Europe."
Purchasing squeezes more value from p-cards
08/15/2007Growing a p-card program
02/09/2000
Now Playing: 