Commercial Card Market Will Grow at the Highest Pace Owing To Burgeoning SME Sector Adoption

Commercial Card Market

Commercial cards or corporate cards are financial payment cards that are issued to employees of an organization for business expenses and travel. They offer the advantage of consolidating reporting and streamlining the expense management process. Commercial cards have evolved to offer enhanced purchase control, spending limits, detailed expense tracking and reporting capabilities. Digital applications make review and approval processes efficient. The demand is rising from small and medium enterprises seeking simple expense management solutions.

The global commercial card market is estimated to be valued at US$ 5.3 Bn in 2024 and is expected to exhibit a CAGR of 5.9% over the forecast period 2024 to 2031.

Key Takeaways

Key players operating in the commercial card market include ABB Ltd., Fuji Electric Co. Ltd., Havells India Ltd., Powell Industries, Mitsubishi Electric Corporation, CG Power and Industrial Solutions Limited, Schneider Electric, Hitachi Ltd., Siemens AG, Meidensha Corporation, Eaton Corporation PLC, and Toshiba International Corporation (Toshiba Corporation).

Growing spending capacities of enterprises across sectors along with rising needs for streamlining procurement and travel costs has been driving demand for Commercial Or Corporate Card Market size . Global spend on corporate cards is estimated to grow by over 15% in the next five years.

Technological advancements have made commercial cards smarter with features like spending controls, dynamic spending limits, integrated expense management solutions and enhanced data analytics capabilities for real-time oversight of business spending patterns.

Market Trends

Increased issuance of virtual commercial cards: Contactless digital commercial cards are gaining traction due to convenience and security benefits over physical cards. Major issuers are focusing on virtual card issuance.

Growing popularity of prepaid commercial cards: Prepaid commercial cards which work like prepaid debit cards but for business expenses are witnessing increased adoption for budget management and ease of reconciliation.

Market Opportunities

Small and medium enterprise segment: Growing SME sector globally remains an largely untapped opportunity for commercial card issuers to gain new customer accounts. Customized offerings targeting unique needs of SMEs can drive further adoption.

Open banking and FinTech collaborations: Partnerships between commercial card issuers and FinTechs/banks implementing open banking initiatives can facilitate richer payment experiences, innovative value-added services and newer revenue avenues.

Impact of COVID-19 on Commercial or Corporate Card Market Growth

The COVID-19 pandemic has significantly impacted the commercial or corporate card market. During the initial months of the outbreak, spends on corporate cards declined substantially as business travel and employee expenses came to a halt due to lockdowns and social distancing norms. However, as businesses adapted to the new normal, spends gradually recovered from the second half of 2020. Now, corporate cards are seeing higher usage for remote working expenses of employees including subscriptions, equipment purchases and home office set-up costs. This has provided some support to the market. Nevertheless, the crisis has shifted priority of businesses towards cost optimization and cash preservation. Many companies have re-evaluated their card programs and portfolios and transitioned to tailored programs with lowered credit limits.

Going forward, the market is expected to witness steady growth driven by increased digitalization of payment processes and growing acceptance of virtual corporate cards for remote and digital transactions. However, uncertainties still remain about the pace of economic recovery in key sectors like travel, transportation and hospitality that drive significant corporate card spend. Vendors would need to focus on revamping card programs with flexible limits, optimized rewards and enhanced security features to align with evolving business needs in the post-COVID world. Collaborating with partners for seamless integration of payment solutions would also be crucial for market players amid accelerated digital transformation of B2B payments.

North America Dominates Commercial or Corporate Card Market in Terms of Value

The North American region accounts for the largest share of the global commercial or corporate card market in terms of value. High penetration of credit cards, strong presence of international card brands and active promotion of digital payment solutions by regional vendors have supported market growth. The US contributes majority of the regional market revenues given the large corporate sector, established credit card infrastructure and growing automation of B2B payments.

Asia Pacific Emerges as Fastest Growing Region for Commercial or Corporate Card Market

Asia Pacific region is projected to grow at the fastest pace during the forecast period in the commercial or corporate card market. This can be attributed to increasing demand from small and medium enterprises, rapid urbanization and rising spending power in developing countries like India and China. Governments across many APAC nations are strongly promoting non-cash payments through initiatives like Digital India, which is benefiting adoption of corporate payment cards. Furthermore, expansion of international players and growing digital capabilities of regional vendors are also augmenting market growth prospects across Asia Pacific.

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