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Payment Card Business Still Offers Variety of Opportunities for Growth

The future of cards is still bright, but the sky's the limit on just what form card payments will take.

Corporate Cards Create Value

A large part of increasing a bank's value to clients, particularly on the corporate card side, is the ability to provide them with clear bottom-line results, adds JPMorgan Chase's Dombroski. "Many players have become commoditized over the last five years. We try to educate our customers that there is a difference," he says. "Cards are not about plastic or getting rebates -- this is about efficiency, data, control and ultimate savings. This is what is important."

According to Dombroski, just a couple of years ago corporate clients viewed cards as a commodity. Now, he says, they realize cards are about driving efficiencies, and this is how JPMorgan Chase differentiates in the commercial card space. "Purchasing cards are the most efficient way for buyers and sellers to transact business today," he comments. "We want to offer actionable data for buyers and suppliers, and effective controls for use and processing on the front and back ends."

Data is key on the commercial card side, asserts SunTrust's Hammermaster. "There is a premium on data integration," he says. "Our clients made significant investments in their ERP [enterprise resource planning] systems. So a card management system has to increase the value and functionality so that it can integrate more with these modules."

In its most basic form, a card is an electronic transaction, Hammermaster notes. As such, it provides rich information that would otherwise not be available with other types of e-payments instruments. "When you bring transactions from the card management systems to the ERP systems, you get a greater level of detail on the transaction -- vendor name, tax -- line-item detail you would find on an invoice," he relates.

A Rewarding Card Experience

The needs of cardholders on the retail side, however, are a bit different. Loyalty programs, for example, which got their start in the 1980s, have gained wider appeal among banks as a stickiness play and consumers for their reward value. According to Mark Shipley, global practice leader for Loyalty Solutions Worldwide at MasterCard Advisors (Purchase, N.Y.), 60 percent of cards today have a loyalty program associated with them, and he expects this figure to continue to grow.

An issuer can't afford not to offer rewards, says First National's Johri. "People love to earn rewards on everything. It's human psychology," he observes. "But this is also a competitive marketing tool. Everyone is offering rewards today."

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