But barriers remain to increasing electronic payments, and paper checks still predominate, Mercator reports
Natick, MA — December 1, 2004 — As the growth in consumer credit card volume has slowed, commercial cards have been a major driver of growth for the U.S. card market, but barriers remain to the increasing use of electronic payments, and paper checks still reign as the dominant payment method, according to a new research report from payment industry watchers Mercator Advisory Group.
Commercial card purchase volume has seen double digit growth rates over the last decade, and commercial card purchase volume reached $264 billion by the end of 2003. The share of commercial cards within the Visa and MasterCard total general-purpose card volume also increased continuously in recent years, moving from 5.34 percent in 1997 to 11.28 percent in 2003, Mercator reported.
Despite the remarkable growth and the intense competition, the advisory group believes that the market potential is still far from being tapped. According to Visa's new Commercial Consumption Expenditure (CCE) index, the U.S. commercial spending will reach $14.3 trillion this year; almost twice the size estimated by its Personal Consumption Expenditure (PCE) index, which forecasts $8.2 trillion for 2004.
However, commercial cards are not often used as a primary payment method and account for a relatively small share of total commercial spending. There are major barriers to increasing use of electronic payments, such as data integration challenges, and checks continue to be the dominant payment method in the B2B environment.
"In order to increase the share of commercial cards within B2B payments, issuers should recognize the complex needs of organizations," said Evren Bayri, director of Mercator's Credit Advisory Service. "Barriers to increasing the use of commercial cards can be removed by delivering data-rich/process aware solutions such as the American Express Variance Report, Bank of America Payment Manager and MasterCard e-P3."
The Mercator report, "The State of the U.S. Commercial Card Market," provides a review of the commercial card market, its segments and key business requirements of medium to large corporations.
Natick, MA — December 1, 2004 — As the growth in consumer credit card volume has slowed, commercial cards have been a major driver of growth for the U.S. card market, but barriers remain to the increasing use of electronic payments, and paper checks still reign as the dominant payment method, according to a new research report from payment industry watchers Mercator Advisory Group.
Commercial card purchase volume has seen double digit growth rates over the last decade, and commercial card purchase volume reached $264 billion by the end of 2003. The share of commercial cards within the Visa and MasterCard total general-purpose card volume also increased continuously in recent years, moving from 5.34 percent in 1997 to 11.28 percent in 2003, Mercator reported.
Despite the remarkable growth and the intense competition, the advisory group believes that the market potential is still far from being tapped. According to Visa's new Commercial Consumption Expenditure (CCE) index, the U.S. commercial spending will reach $14.3 trillion this year; almost twice the size estimated by its Personal Consumption Expenditure (PCE) index, which forecasts $8.2 trillion for 2004.
However, commercial cards are not often used as a primary payment method and account for a relatively small share of total commercial spending. There are major barriers to increasing use of electronic payments, such as data integration challenges, and checks continue to be the dominant payment method in the B2B environment.
"In order to increase the share of commercial cards within B2B payments, issuers should recognize the complex needs of organizations," said Evren Bayri, director of Mercator's Credit Advisory Service. "Barriers to increasing the use of commercial cards can be removed by delivering data-rich/process aware solutions such as the American Express Variance Report, Bank of America Payment Manager and MasterCard e-P3."
The Mercator report, "The State of the U.S. Commercial Card Market," provides a review of the commercial card market, its segments and key business requirements of medium to large corporations.
