Mercator Blog

Payables Is the Name of the Game in U.S. Commercial Cards
Date: October 2, 2017
Steve Murphy
Director, Commercial and Enterprise Payments Advisory Service
In the absence of either strong growth of gross domestic product or major economic disruptions, the growth of U.S.-based spending on commercial cards has been fairly steady in the last several years. Despite a minor downturn in spending during the second half of 2016 as a result of pre-election uncertainty and sector behavior, the industry managed to achieve continued good growth overall. 

Global business travel in 2016 reportedly reached $1.3 trillion. The Global Business Travel Association (GBTA) reported that U.S.-based travel grew to $424 billion. This would indicate additional opportunity in cardable travel spend given our estimates of 4.2% corporate card growth. General economic activity in the United States continued at a tepid pace during 2016, with full-year GDP below 2% and trailing off substantially in the second half of the year. Mercator Advisory Group continues to estimate growth of business-to-business (B2B) payments overall in the 3–4% range, with electronic payments picking up the shift from paper to gain between 6–7% per annum. Given the continuing trend toward digital payments, growth of corporate purchasing cards (P cards) remained steady but not robust at 6.5% while virtual card volumes increased by an expected 19.9%.

The critical factor for commercial cards is to gain a faster rate of growth of share of B2B payables during the next five years as the changing e-payments environment presents easier and faster alternatives to paper-based solutions. In a recent research report titled Complex Business Relationships Drive the Commercial Card Business, released in September 2017, Mercator provides a detailed discussion of how the various interrelationships in this sector of the B2B payments industry contribute an almost seamless real-time payments execution system.

According to Mercator’s estimates, in 2016 the U.S. commercial credit card volume for mid-to-large corporates reached $461.8 billion, which represented year-over-year growth of approximately 8.3%, a consistent rate for the past two years. While the commercial card industry continues to benefit from this ongoing shift and increase in purchase volume, vast opportunities for growth still exist. The present Mercator Advisory Group research report, U.S. Commercial Cards: The Drive Toward Mainstream Payables, examines a number of critical factors in the state of the U.S. commercial card market, including market size, changing dynamics, emerging trends, and the challenges around accelerating B2B spend share for cards.