The Rise of Pre-paid, Purchase and T&E Cards

Payment cards are still the fastest growing payment system worldwide. Their growth is supported by a mature and fully operational global infrastructure, as well as account standards and clearing systems that are already in place. There is no need, as with SEPA, to develop new basic standards, clearing systems and services and then wait for everyone to adopt them. As the payment card market grows, the uses and applications of payment cards are becoming increasingly diversified and innovative. The articles discussed in this commentary look at some of the ways in which payment cards are now being used to improve control and information management of payments. Pre-paid cards are being used in increasingly innovative ways for public sector payment disbursements, as well as to improve the management of T&E corporate expenses.

Pre-paid Cards

Pre-paid cards are a good example of how quickly new payment card services can grow. They were developed using the payment card scheme’s global network of more than 22 million point-of-sale devices and the clearing and settlement systems, and are now experiencing explosive growth. The article Corporate Prepaid Cards: From Paper To Plastic, by Lee Britton, CEO at Altair, shows the wide range of applications for pre-paid cards. In the article, Britton writes: “Multi-functionality can easily be added to pre-paid payroll card programmes, integrating the functionality of personal spend cards, travel cards and MoneyShare cards.”

Two other articles on payment cards also look at the subject of pre-paid cards in specific markets.

Red Gillen, senior analyst at Celent, examines the topic of payment network-branded reloadable pre-paid cards suitable for unbanked individuals in his article Where the Banks Aren’t: Advances in Branded Prepaid Cards. He writes: “Payment network-branded prepaid cards represent the ‘next big thing’ in consumer payment cards. However, there is one area of branded prepaid card growth where traditional banks have been conspicuously absent: general-purpose reloadable cards for the unbanked population.”

The use of pre-paid cards in the public sector is the subject of the article Using Prepaid Cards Effectively in the Public Sector, by Kevin Phalen, accountable for developing and executing the expansion of card products for the treasury services division of JPMorgan in EMEA, Asia Pacific and Latin America. This article discusses the benefits that can be gained by public sector institutions and groups, such as the US navy or local government authorities, by using pre-paid cards for sailors travelling on duty, or for disbursing state benefits. The article notes: “The benefits of using a pre-paid programme are significant. The government can maintain control over the ways in which funds are used yet can eliminate the inherent administrative costs associated with cheque processing and the fraud risk of sending them by mail.”

Purchase Cards

Purchase cards (p-cards) can also cut costs and improve overall business efficiency. The article on p-cards, Implementing a Purchase Card Programme, by Ian Makgill, founder and head of consulting for the IT consultancy Ticon, develops appropriate strategies for fully exploiting the potential of p-cards. Again, as with pre-paid cards, p-cards have a much wider range of applications than many companies realise. Makgill says: “Purchase cards don’t just ‘mop up’ transactions that can’t be executed online; they can be used as an enabler for a wide variety of purchasing, from one-off large value spend to regular catalogue-based transactions.”

Case Study

Prepaid cards are not the only area where payment cards are effective. The article Driving Savings on T&E Spend: Philips Case Study is a corporate case study on how Siemens improved its corporate expense management for its air travel spend. The author, Karen Penny, vice president at the Business Solutions Group, American Express Commercial Card EMEA, demonstrates just how effective travel and entertainment (T&E) payment card programmes can be in achieving greater control, security and cost savings for corporates. She writes: “Some companies are specifically missing the opportunity to leverage spending power from their full air programme by ensuring their corporate card programme is fully implemented… companies may be missing out on the benefits of a corporate card, for example the extra air mile points.”


Related reading