Commercial cards have huge growth potential, especially in SME sector

[SINGAPORE] Even as banks in Singapore have seen double digit growth in the take-up of their commercial cards, there is still significant space for growth, particularly from small businesses.

Commercial cards - which encompasses both credit cards and debit cards - are issued for business use and often offer a range of rewards, including business-oriented discounts, cash rebates and travel benefits.

According to a survey conducted by Visa in 2011, 43 per cent of the 301 SME respondents said they use commercial cards. However, actual usage was low. In the category of travel and expenditure spend for instance, only 21 per cent of spend was captured on the commercial cards while 54 per cent was conducted via staff expense claims.

According to Jacquelyn Tan, managing director and head of credit payment products at Citibank Singapore, the number of Citibank Commercial Card customers have increased by more than 30 per cent and sales volume has more than doubled in the past four years. Small and medium enterprises (SMEs) make up about one third of the commercial cards base.

"The potential to capture corporate expenditure on commercial cards remains high at US$200 billion and we have seen strong growth in both take-up rate and sales volume on our portfolio," said Ms Tan.

Citibank has three commercial cards - the CitiBusiness Card, the Citibank Corporate Card and the Citibank Purchasing Card.

"Take-up for this segment could continue to rise as SMEs become more aware of payment solutions that are available and gradually look to improve business efficiency through the use of commercial cards," she added.

At DBS, the take-up rate of commercial cards has grown by 40 per cent in the last three years, and Anthony Seow, head of cards and unsecured, said he expects double digit growth in the near future.

The bank has two credit cards - the DBS MasterCard World Business Card and the DBS Visa Business Platinum Card - targeted at SMEs.

"The DBS MasterCard World Business Card is targeted at our SME Banking's key customers, packed with travel benefits such as complimentary VIP memberships to airport lounges," said Mr Seow.

"The DBS Visa Business Platinum Card caters to SMEs and is specifically structured to bring about cost savings through our points rewards programme," he added.

Financial institutions here are optimistic that usage of these cards by SMEs will continue to increase.

"Traditionally, corporate cards have been issued primarily for employees' travel and entertainment expenses such as purchasing airline tickets, paying for hotel rooms and corporate entertainment," noted Gan Ai Im, head of cards and payments of UOB Group.

"Today, there are also cards designed to simplify business-to-business transactions, particularly those of a recurring nature, such as monthly ordering of office supplies from the same vendors, or IT equipment purchases," she added.

Currently, UOB is the only bank to offer a multi-currency corporate card in Hong Kong dollar and US dollar, issued and serviced from Singapore. Corporate customers can also leverage the bank's network as UOB is also a card issuer in Indonesia, Malaysia and Thailand. The bank has seen double digit growth in its billings over the last three years.

Last year, it introduced the Business Debit MasterCard, aimed at new and aspiring businesses. UOB has the industry's largest number of corporate card offerings.

Citibank's Ms Tan too has seen a shift in the use of corporate cards. Noting that companies are more receptive to commercial cards now compared with ten years ago, she added that Citibank has seen "significant increase" in the take-up and usage of purchasing cards for payment of office expenditures.

Said Akita Somani, director, small business products, Asia Pacific, at Visa: "While electronic payments and cards are a proven payment tool for many consumers and large corporates, they are still relatively new for small businesses. As small businesses mature and look to technology to improve their efficiency, processes and provide cost savings, we are seeing a rise in the use of commercial cards."

To further aid small businesses, Visa is introducing two new platforms: Visa Intellilink for Small Business which allows the businesses to track and manage their expenses more efficiently, and Visa Payment Controls which allows business owners to set rules based on merchant categories and various other criteria.