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Written by Cyndie Martini
on March 10, 2016
Commercial cards have been growing in popularity over the past few years, and this is a trend credit unions should take advantage of. According to FIS Payments Leader, some industry experts expect the commercial card market to grow at least 12 percent annually for the next few years.

A Packaged Facts report stated that, in 2013, commercial card purchases grew 13 percent, bringing the total volume to $888 billion that year. A 2015 report from Mercator Advisory Group explained that commercial cards are continuing to see positive growth, even considering the economic challenges many companies face today.

"The underlying elements of the U.S. commercial card market remain strong as a key component of corporate payable strategies," explained Richard A. Hall, the director of the Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group, and author of the report. "Despite the challenges to make significant impacts to often large and complex programs, the environment remains positive for stakeholders in the commercial card arena ..."

B2B card payments grow
FIS explained one of the biggest components of the commercial card market is purchasing cards, also called payables, used for making business-to-business purchases. Some industry experts believe this opportunity could be worth as much as $19 trillion.

According to Fraedom, a company that specializes in helping businesses manage spending, this trend is in large part a response to the challenges many companies face with trying to grow with limited budgets, and the high cost of processing invoices. This, in combination with the amount of control companies can now have over their purchase cards, has sparked a comeback of this level of responsibility entrusted to employees.
In the past, some employers were hesitant to give employees company credit cards for fear of misuse and lost revenue. However, new technologies allow businesses to monitor spending more closely, and some can restrict card usage to certain merchant categories or geographic ranges.

A survey from Deloitte in Australia and New Zealand found that many companies found that card payments reduce the amount of administrative work that needs to be done, and are much faster than processing through traditional purchase orders. Plus, using cards reduces the need to process invoices, which was recorded as roughly three times more expensive in the survey.

For these reasons, purchase card spending is expected to increase significantly going forward. Fraedom reported that some have estimated it to reach $318 billion in 2016 and $377 billion in 2018. This is compared to the $245 billion spent in 2013 and $196 billion in 2011.

This presents a great opportunity for credit unions to claim some of this market share. As more businesses find they would be better off issuing purchasing cards to their employees, more will begin to explore their options. Credit unions should reach out to businesses in their area and educate them on the products available to them. This will not only grow their purchasing card business, but could also deepen their relationship with their business members.

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