Electronic payments of all types have experienced higher growth rates in recent years, according to Commercial Payments International (CPI), a payment consulting and analysis firm. CPI expects this trend to continue as more companies move away from inefficient paper-based systems.
The company conducted a survey in early 2008 to explore what drives growth in the use of commercial cards. The company found three key influences:
Commercial card products include any type of card product a company uses for business-to-business (B2B) payments, including purchase cards (p-cards), travel and entertainment (T&E) cards, fleet cards, and prepaid and contactless cards.
"P-cards and T&E cards are issued to a company employee for purchase of specific items from a preapproved vendor," said CPI Principal Joanne Robinson. "The government is big on them, and the control mechanisms on them are wonderful."
She noted that the benefits are less paperwork and the ability to collect aggregate data. "This is not only cost-effective, but it gives you an opportunity to go back to your suppliers and negotiate better terms," she said. "However, the ability to control 100 percent of your employee expenses is the biggest benefit."
According to CPI, there is a remarkable opportunity for a full range of electronic payment products and services to give organizations extra advantages.
In its recently published white paper, Driver of Growth in Electronic Commercial Cards and Payments, the company noted some of the key growth drivers for the payments industry:
CPI predicts the prospects for both electronic commercial cards and the payments industry overall will remain strong as companies increase controls, negotiate discounts and reduce costs by switching from manual to electronic processing. Commercial payments, including paper and electronic transactions, topped $80 trillion in 2006. CPI expects this figure to exceed $110 trillion by 2012.
However, Robinson said that in 2006 commercial cards accounted for only 1.1 percent of total commercial payment volume and is still a huge, untapped potential revenue source for ISOs and merchant level salespeople.
"I think those smaller businesses, by definition, are slower to adapt technology, but that's just due to a lack of knowledge about the products and their benefits, or due to the lack of skills within the business to implement it," Robinson said.
"I really think it's just going to be the industry pushing it more and making the smaller merchants aware of the advantages to switching over to electronic processing" for their B2B transactions, she said. "Most of the larger organizations have been converted. Now it's time to go deeper in their efforts to reach the smaller merchants."
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