A new report from Mastercard links use of commercial cards to cost savings for businesses, according to reports in Verdict.
Mastercard and Kaiser Associates surveyed 26 medium-sized businesses across the Middle East and Africa, and found that use of commercial card products reduces travel and expense management procedures compared with per diem employee expense programs. Costs associated with fraud, errors, and dispute resolution account for more than 8 percent of operational costs associated with per diem trips, which entails a manager allocating a certain daily allowance for traveling employees, the report found.
Use of a commercial card program to manage employee travel expenses, however, reduces these operational costs and is linked to add-on benefits like travel insurance and rewards. Companies that switch from per diems to corporate cards save the equivalent of 7.8 percent of the average total T&E spend, Mastercard found.
“The value of commercial cards to deliver automation, transparency and governance to a CFO has never been in question,” said Mastercard head of commercial products for Middle East and Africa, Adam Jones, in a statement. “What we have also seen quantified from this research is that T&E budgetary savings can be added when these business tools are used.”
While the report suggests the Middle East is an opportunity for commercial card growth, the Asia Pacific region was named in a 2016 report by Mercator Advisory Group about commercial card growth as a particularly active region for the business card market.
“The diverse region is not necessarily an easy place to do business for financial institutions, but expectations for growth of purchasing cards and virtual cards are positive,” the report said, pointing to strong economic growth that has resulted in nearly 20 percent of business spend landing on commercial card products.
The travel and expense-management focus for commercial cards is also a high-growth area, Mercator found.
Mastercard expanded its commercial card operations with a partnership with Boost Payment Solutions earlier this year in the Caribbean. Together, the companies launched an initiative to promote the use of commercial cards across the Caribbean market and ease supplier acceptance of cards for B2B payments.