Magazine article American Banker

Small Businesses' Use of Company Cards Growing

Magazine article American Banker

Small Businesses' Use of Company Cards Growing

Article excerpt

Growth-hungry card companies have set their sights on new blood small- business executives who are more willing to put expenses on company plastic.

With spending on business cards increasing at a faster rate than on general-purpose cards, some issuers are casting more marketing dollars behind these cards, while developing existing card portfolios.

Small businesses, in turn, are lured by high credit lines, the ability to revolve, and reduced administrative costs.

"Using business credit cards reduces internal costs per transaction by 50% to 70% and is more efficient than other methods of payment," said Stanley Anderson, president of the Denver-based consultancy Anderson and Associates.

A recent survey from MasterCard International shows where small-business executives use credit cards the most.

The use of cards to purchase meals showed the most marked increase - to 49% from 38% last year. Business travel expenses charged to business cards increased slightly, to 48% from 45%.

At the end of the second quarter, MasterCard said its commercial card products purchasing volume grew 42% from second quarter 1995, to $9.2 billion. By contrast its gold card product volume for the same period increased 25%, to $64 billion.

"The past four or five years of strong economic growth have put small businesses in a healthier position to work with associations in the area of issuing cards, " said Al Diamant, MasterCard International vice president, commercial products management.

"MasterCard's advertising efforts have helped to produce good growth results," he added.

Visa was not available to provide volume figures, while American Express declined to do so, saying only that its business card program was "growing healthily. …

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