Where are corporate payment methods headed?

JESSICA PÜTTMANN. Director of Marketing and Communications of DINERS CLUB SPAIN

 

 

Credit cards used by companies to pay for travel and representation expenses can provide multiple advantages to their corporate customers:

-Elimination of cash advances and cash payments and their subsequent   administrative control.
-Financing of payments.
-Accident and assistance insurance coverage.
-Automation of processes through the integration of data in the companies' ERPs
-Ad-hoc reports regarding expenses incurred in travel.
-Informative mobile applications.
-Customized service through an account manager.

In recent years it has been taken for granted that card providers should provide these services without obtaining any type of compensation;economic consideration, perhaps based on the reasoning that they already receive commissions from the establishments that accept them.

However, things have changed. For years now, there have been continuous decreases in commissions from establishments. In Spain, there have been agreements between the Ministry of Industry and the VISA and MasterCard brands to lower interchange fees, legislative reforms limiting consumer fees and the introduction of a card payment fee by airlines. These changes affect all credit card brands and the trend continues to be downward.

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?What does this mean? A change in the business model, similar to what travel agencies went through in Spain at the beginning of this century, when airlines decided to first reduce and then completely eliminate the commissions they received for selling their flights. It was then that the concept of the “issuing fee” was imposed, whereby agencies charged their customers a price for the service of booking and issuing airline tickets.

That is, if corporate customers want to continue receiving the same services from payment methods, they will inevitably have to assume that these services have a cost and, therefore, have to be paid for. It is no longer worth the “I give you everything for free”.

Probably, when this happens, companies will ask themselves, for the first time, if they really need such long payment terms or if they will start to be aware of the extra cost involved in acquiring a good assistance insurance in the market.

Maybe they understand that the integration of data into their ERP systems generates a cost saving that justifies the payment of this integration and that having an assigned account manager is not the same as working with an impersonal bank office.