Are U.S. Card Programs Focused on the Wrong Things?

Sometimes it is hard to know what we are missing unless we look beyond our own borders. In the United States, we often focus on just one or two benefits of Commercial Cards, such as revenue share, and lose sight of the valuable big picture. Not so in other countries, as described below in the article by Mark Silverman, PayTech Group, What the U.S. Commercial Card Market Can Learn from the Rest of the World. Recharged Education invited Mark to share some of his vast global insights, so we can all broaden our horizons and, in the process, strengthen our card programs.

What the U.S. Commercial Card Market Can Learn from the Rest of the World

by Mark Silverman, PayTech Group

U.S. commercial card usage, both for physical cards and virtual cards, continues to grow at a healthy pace year over year. The marketing of these product lines in the United States relies heavily on two factors:

  • The dominance of checks, which are perceived to have fewer advantages than card-based solutions, in the B2B payment space (roughly 50% of all U.S. business-related payments are still made by check)

  • The continued reliance on aggressive rebate/revenue share back to the end-user organization

What’s interesting is that these are two advantages that most other commercial markets in the world are not able to take advantage of. In many if not most European markets, the dominant B2B payment methods are already electronic, not check based. And the financial incentives that corporates receive in markets outside North America are nowhere near the 100+ basis point levels seen in the United States. The pillars for success in these global markets include:

  1. A focus on capturing transactions versus volume ($) 

    Without the ability to look primarily at card programs as having a straight financial benefit, the value then shifts to other benefits that are more volume agnostic like compliance (e.g., travel/purchasing policy) and fraud mitigation, where the benefits of capturing a small transaction via card are equal to a big-ticket item.

  2. More emphasis on T&E 

    Similarly, in the U.S. where rebates are king, there is often an emphasis—both from buyers and sellers of card programs—on big-ticket payables when it comes to implementing a card program. Conversely, in other markets like Europe, T&E card programs have not lost their prominence in relation to AP spend.

  3. Marketing of card programs as a technology solution   

    This is also related to overseas providers’ inability to sell card programs purely as a rebate-centric solution to the end-user. For payables-based solutions, these companies have to rely on other benefits and, in most cases, especially among FinTechs, the way these offerings are marketed often revolve around their respective technology.

Similar to other industries, in commercial payments the U.S. is often seen as somewhat of a front runner. Yet as regulatory and market pressures here continue, the U.S. might be best served to look abroad to “future proof” the marketing and selling and buying, of commercial payment solutions.

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About the Author

Mark Silverman is a Senior Consultant at PayTech Group, a payments advisory and consulting firm, specializing in helping both issuers and buyers of commercial payments via engagements ranging from sales effectiveness to research to vendor selection. He has shared his expertise in commercial payments while chairing and moderating panels at payments conferences sponsored by EuroFinance and NAPCP. Prior to consulting Mark spent several years at both American Express and U.S. Bank in a variety of leadership, business development and marketing roles. Mark can be reached at mark@paytech.no.

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Lynn Larson, CPCP, is the founder of Recharged Education. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. 

Making a global card program pay off.

When building a global Commercial Card program, a solid internal foundation, including executive support, sets the stage. However, plans can still go awry if you overlook an important element that influences every region/country on your expansion list. Industry veteran Bogdan Roman describes the impact of local culture and provides some country-specific examples. The following content (part two) concludes my recent interview with him; see also part one

Bogdan Roman has more than seven years of Commercial Card experience. His specialty is managing and growing global card programs. In addition to the United States and Canada, his experience spans multiple regions/countries including India, Singapore, Australia, UK, France, Germany, Israel, and Brazil. He is currently seeking new opportunities to apply his expertise in helping other companies avoid common pitfalls when embarking on global programs. Email Bogdan or get in touch through LinkedIn.

Cultural Differences

Q: What advice do you have for managing cultural differences? 

A: Always be open to multiple methodologies for implementing changes within other countries. In my experience, communication, change management and training must be well thought out. For example, in a previous system upgrade for the North America employees, the core team decided to use a great infographic poster in all locations, but the language had to be customized to make sense in each country. The fun and exciting way to communicate the changes didn’t translate well in India, so the team had to localize the language to each location to ensure the intended message wasn’t lost in translation. The best way to think about it is a global card program with a local touch.

Q: What are some other country-specific recommendations?

A: In Brazil, I would focus on language requirements and also ensure one’s organization is doing its own diligence, receiving input from a legal counsel that is in line with the organization’s risk appetite. 

With respect to India, I learned that automated emails from the global card program office didn’t garner the same attention as the ones received from the local executives. I had to engage with our local executives and ask them to send critical messages. Stop trying something that culturally doesn’t work and employ what does work for that culture.

Another global example is doing business in Israel. Due to network partner agreements, I experienced that some global P-Cards might have limited acceptance. As a program manager, what is your backup plan? Have you considered an agreement with a local bank?

In the UK or any other country with a value added tax (VAT) system, I found the tendency of the local finance/accounting teams was to ignore P-Card as a payment method due to cumbersome VAT amount capture. They would move the procurement/payment to a traditional purchase order (PO). I reiterate my earlier recommendation for continuous communication, training and change management with these remote teams to highlight the true P-Card potential, such as speed and convenience. One should always consider what is important to the customer, not just what is important to the administration team.

To make your global card program pay off, understand cultural differences, tailoring your actions and communications accordingly.

To make your global card program pay off, understand cultural differences, tailoring your actions and communications accordingly.

Stop trying something that culturally doesn’t work and employ what does work for that culture.
— Bogdan Roman, industry veteran

Final Advice

Q: What else would you add in conjunction with global Commercial Card program success?

A: The best advice I can offer without jumping into too many details is to use your existing resources like your specific bank and network providers. I managed many Commercial Card programs with many different banks and networks. All of them were eager to help and extend as much information as possible.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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Global Commercial Card program advice.

Challenges, considerations, tips. My recent interview with industry veteran Bogdan Roman covered all of these aspects related to global Commercial Card program implementation and management. Whether your organization is considering global expansion or is already on this path, gain insight from someone who has been there. Following is part one of two.

Bogdan Roman has more than seven years of Commercial Card experience. His specialty is managing and growing global card programs. In addition to the United States and Canada, his experience spans multiple regions/countries including India, Singapore, Australia, UK, France, Germany, Israel, and Brazil. He is currently seeking new opportunities to apply his expertise in helping other companies avoid common pitfalls when embarking on global programs. Email Bogdan or get in touch through LinkedIn.

Considerations 

Q: What should an organization consider before it expands its card program outside North America?

A: It is important to focus and make informed decisions, with key stakeholders aware of, and on board with, the global milestones. I should not answer a question with many questions, but answers to the following are important for global expansion:

  • What should the program look like? Be specific in defining this.  
  • What is the program architecture (e.g., One Card program, segregated travel and P-Card programs)?
  • What is the management structurecentralized or decentralized?
  • What is the global support model?
  • What is the global policy?
  • What is the communication, training and change management model?
  • What technology should be deployed?
  • What would success look like and how should it be measured?
  • What resources are available in the organization and what should be employed/contracted in case country-specific challenges arise? 

Keys to Success

Q: What do you see as common challenges or critical elements in building a global Commercial Card program?

A: It would take a book to answer this, but it is important to address it because it is raised frequently when contemplating the challenge of building a global program. For simplicity, I am limiting my answer to three main things, but there are more.

1. Executive Support

Executive support at the corporate level is paramount.  Any executive sponsor ought to understand and believe in the value derived from building a global card program. This is accomplished by answering the why. Why do we need such a program? Why is there value in it for the organization? The key sponsors should be able to understand and measure the value. 

2. Technology

Technology is also a key part of building a great program. Card spend, data centralization and controls are made easier with tools available today. The administration challenge to capture and report spend in multiple currencies could be easily accomplished by many existing travel and expense management systems. The trend in software as a service (SaaS) is influencing this market with many strong offerings, but large enterprise systems have great options as well.

Widen your Commercial Card lens and consider additional countries or regions to add to your program. 

Widen your Commercial Card lens and consider additional countries or regions to add to your program. 

 

3. Appropriate Expectations

One could view this as proper mindset. A global program isn’t as simple as replicating a U.S. card program in another country/region, whether Asia, South America or EMEA (Europe, Middle East, Africa). The reality and challenges of the financial and global legal card requirements vary from country to country. It is important to understand that a card program in the U.S. might not have the same impact, expectation, support and acceptance in another country. Mindset and localization are always hot topics at NAPCP conferences, and the stories and experiences from many colleagues in the Commercial Card industry are insightful.

Program Management Tip

Q: What tips can you share regarding program management? For example, does it work well to have a central person who oversees all countries in addition to some type of local program manager in each?

A: The size of the company, its culture and perhaps industry come into play. I believe a centralized person to oversee all countries makes sense, but the executive support has to be already in place and well understood by all stakeholders. In the technology space for global organizations that are best-in-class or striving to become best-in-class, the centralized global program manager role works well. 

The next blog post features the rest of Bogdan’s advice.


Opportunity for Providers

If you are an industry provider who can support Commercial Card programs outside North America, please submit a contact form about having your company listed in a future blog post.


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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