Commercial Card Rebate Trends

Navigator Edition: Commercial Payments: Special Edition Navigator
By: Brian Rutland

(excerpted from September, 2013 First Annapolis Consulting presentation “Rationalizing Rebates: Current Market Realities” at the Middle Market Americas CPI Conference in Chicago, Illinois – a presentation deliberately advocating provider reductions in rebates to help improve market focus on true drivers of commercial card program value)

Many commercial card issuers offer financial incentives (“Rebates”) to entice end-user organizations to utilize a commercial card program. Organizations with card programs often receive these Rebates from issuers on a percent of spend basis for spend placed on their commercial cards. As Figure 1 demonstrates, this percentage has grown substantially in recent years.

Figure 1: Average Rebates
R-2-Commercial-Card-Rebate-Trends_Fig-1 Source: Analysis of publicly disclosed contracts.

This increase has led to end-user organizations placing a higher emphasis on Rebates when considering a commercial card program.

By focusing so much on Rebates, as seen in Figure 2, organizations are placing less emphasis on other important factors (e.g., online solution usability, data integration) that can actually drive more substantial savings. As demonstrated by Figure 3, savings from automation, which are driven by a card program, can significantly outweigh the savings achieved from Rebates.

Figure 2: Issuer Selection Criteria

Source: First Annapolis Consulting 2012 B2B payments survey (n=44).

Figure 3: Commercial Card Program Savings

Source: “Globalization of Corporate Travel Programs,” AirPlus survey of ACTE buyers (2011); “European Expense Management Study,” Amex & A.T. Kearney (2008); 2013 Business Travel News “Travel Leaders: Total Trip Costs Down Sequentially in 2012.”

By de-emphasizing such program factors as data aggregation, online reporting, and control and compliance capabilities and focusing so much on the ever rising Rebate, organizations are forcing commercial card issuers to change their investment strategies and giving them less incentive to improve the functionality of their offerings. Organizations are also thereby less focused on taking a consultative approach with their providers to building a commercial card program, leaving inefficiencies and wasted savings opportunities.

It is important for commercial card issuers to educate end-user organizations on the true merits / differentiators of commercial card programs. A focused effort, along with updated marketing, web, and case study collaterals could help steer end-user organizations away from a singular focus on Rebates and more towards the true value of a commercial card program.

For more information, please contact Brian Rutland, Senior Analyst specializing in Commercial Payments,

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