A collaborative research study conducted by First Annapolis Consulting and the National Association of Purchasing Card Professionals (NAPCP)
June 2010
During the fourth quarter 2009, the National Association of Purchasing Card Professionals (NAPCP) and First Annapolis Consulting collaborated on a 53-question survey to address suppliers’ acceptance of card payments from the end-user (buyer) organization’s point of view.
Survey Focus
The survey captured information about the respondents (e.g., background and experience), their organizations and their card programs. The broad topical areas covered within the survey were: card acceptance rates, attitudes and perceptions; requirements imposed by end-users and suppliers; card acceptance challenges and issues; approaches to educating, assisting and working with suppliers; and available resources.
Survey respondents were asked to focus on traditional card products (e.g., P Cards, One Cards, etc.) and exclude card alternatives, such as electronic/automated payables occurring through the card infrastructure/networks, which often use a different settlement process. In quantifying annual card-related spend, respondents were also asked to exclude travel and airfare spend.
Respondents
In total, 146 responses were received from end-users (NAPCP members and subscribers) in various sectors—42% corporation (i.e., business/company), 27% government, 27% education and 5% non-profit. The majority of respondents (82%) fulfill the job role of card program administrator or manager, but their years of card-related experience vary. Most (48%) have three to seven years of card experience, but another 31% have seven or more years. A “High Capture” group of respondents was identified and defined as end-users who have demonstrated more success in capturing spend on cards. This designation is based on P Card spend compared to organization revenue or budget. Isolating this group provided a basis for comparison to the overall survey response to help highlight what the High Capture group does differently.
Card Acceptance
Overall, nearly 75% of respondents reported that more suppliers accept card payments than in the past. More than 50% of the respondents indicated that 75% or more of their U.S. suppliers are card acceptors (reported rates for other markets/regions are notably lower). However, acceptance still varies significantly by supplier industry and supplier resistance tends to increase as transaction size rises.
When end-users select suppliers, most indicated that card acceptance is important to some degree (for approximately 50%, it is “important” or “very important”), clearly demonstrating organizations’ interest in card payments. Only 13% relayed card acceptance is “not very important” to supplier selection.
Key Challenges
In terms of impeding an organization’s card program growth, 61% reported that suppliers’ resistance to (or non-acceptance of) card payments is, at a minimum, somewhat of a problem. Not surprising, the transaction acceptance fee factor is overwhelmingly the number one reason suppliers give end-users for resisting or not accepting card payments. Further, nearly 50% of respondents stated they sometimes or frequently encounter suppliers that impose a surcharge in conjunction with card acceptance. End-users employ varying approaches in response to the challenges; for example, educating suppliers on the benefits of card payments—a task that is often completed by program management and/or procurement staff.
When rating organization success at convincing suppliers to accept payments, 35% reported success. A greater percentage (49%) reported they are only somewhat successful or generally not successful at this endeavor, signifying this quest can, indeed, be a challenge for end-user organizations.
Opportunities
Survey results revealed a notable opportunity for end-users to learn more about the economics of card acceptance and to consider suppliers’ needs when selecting a payment method. Armed with more knowledge and increased sensitivity to the supplier side, organizations can improve their communications with suppliers on the topic of card acceptance. Other opportunities include:
• process efficiencies (e.g., discontinuation of paper invoices, which are still common in conjunction with traditional P Card payments)
• inclusion of card-related terms and conditions within supplier contracts
• increased support by providers
The full report (complimentary to NAPCP members at www.napcp.org/resourcecenter [4] and available for sale to non-members at www.napcp.org [5]) explores all of these elements and much more.
About the Authors
Lynn Larson, CPCP, has been the content manager for the National Association of Purchasing Card Professionals (NAPCP) since September 2003. She has more than ten years of P Card experience, including serving as a P Card program manager for an organization within the Minneapolis area from 1998 until 2007. She regularly speaks on Purchasing Card topics at NAPCP events, as well as events hosted by other organizations. In June 2007, Lynn earned the Certified Purchasing Card Professional (CPCP) credential. In addition, Lynn has more than ten years of experience in the procurement field.
Frank Martien, partner, First Annapolis Consulting, works with end-users and providers on client engagements related to Purchasing Cards, Corporate Cards, One Cards, Fleet Cards, supplier-specific payment accounts, and small business cards. Frank received his M.B.A. from the Darden School at the University of Virginia (Faculty Award for Academic Excellence for class ranking in top 10%) and his undergraduate degree from Washington & Lee University (Phi Beta Kappa, Magna Cum Laude).
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