Corporate cards: The next innovation on the go?

Staff Correspondent
Thursday, December 28th, 2017


In this supersonic era of business, banking is riding the highways globally and Bangladesh, though lagging behind, is trying to reach out and match the pace. With advances like e-commerce and mobile banking, managing wealth and finances seems a child’s play. Though technology has not grasped the banking industry of Bangladesh that strongly as of yet, we still can see a long awaited boom in the corporate sector which has brought about a drastic change in the banking practices in Bangladesh. This influence is quite evident when one gets to spot at least one ATM booth in every roadside of the well populated areas of Dhaka and the high notch eateries and shopping malls have all started to keep provision for debit and credit cards, a scenario that was well absent even some ten years back.


Now one thing for sure, and that being that there is more people right now than ever before who are owners of these corporate cards. But the question is, why is it such a good thing. Now credit cards are only issued to people with a certain annual income which ensures a certain living standard, which I must say is pretty high compared to our perception of average living standard. This means, that now there is a huge mass of people in Bangladesh who mach up to this standard, showing that the overall living standard in the urban areas of Bangladesh is increasing. Moreover, credit cards allow its carriers to exceed the monetary limit of their account and take short term loans which they have to pay back along with interest, while debit cards make transactions much more convenient. Hence, increase in demand for these cards means that people now are inclined towards spending more, and increase in consumer spending is always a positive wave for flourishing an emerging economy.


If we see to the West, the scenario for corporate cards is changing as well. The biggest advance in the world of corporate cards is the advent of prepaid cards and the growing use of virtual cards. Issuing prepaid cards is growing the fastest of all B2B (business to business) card vehicles, as companies demand such cards for payroll, incentive programs and health benefits. Their proponents say that companies like prepaid cards because they can provide enhanced control for HR processes. The virtual or ghost card, also called a virtual accounts payable card, allows different functional areas within a company to use a single account for purchasing. Various departments can order against the same virtual card and aggregate data for procurement purposes—including who is ordering what and when, and how much it is costing. This gives the procurement manager great leverage in dealing with suppliers and getting discounts. In addition, it encourages acceptance of larger purchases through the program, as it can be approved at the point of sale by the procurement manager. Moreover, companies are always looking to cut costs, but that desire has been heightened over the past year as they struggled with closed markets and liquidity concerns. As a result, many corporates are re-examining their commercial card programs, writing clearer policies to enforce card use and investigating new purchase card (p-card) programs on offer from their banks. We believe, these new advances are what is next to be seen next within the corporate industry in Bangladesh.


Issuance of international corporate cards is also vital in enhancing international business and beyond-the-border deals. But there are some outright inconveniences that seekers of international debit and credit cards have to face. It is really difficult to get an International debit or credit card in Bangladesh, though it is not impossible to get one. Some money laundering legislations from Bangladesh Bank, the Central Bank of Bangladesh, do not allow any Bangladeshi citizen to send money abroad from Bangladesh. This decision of the Central Bank is appreciable as it helps protect foreign currency reserve. Any commercial bank in Bangladesh cannot issue international debit or credit card to every Bangladeshi citizen. A Bangladeshi citizen must fulfill some criteria to get an international debit or credit card. However, this restriction does not apply to people who earn foreign remittance. The criteria require applicants to have a minimum status and standard of living which is pretty high, they must have their own TIN (tax identification number) or BIN (business identification number) and they might also be required to open an account with a minimum balance of $1000. It usually creates a huge problem for young students who at times need to pay for their GMAT/GRE exam fees through cards like Paypal. Paypal is not allowed in Bangladesh and these young individuals usually do not meet the criteria for getting an international debit/credit card from any commercial bank in Bangladesh. As a solution to this problem, a whole new business has taken off where holders of such international corporate cards help such people get their job done by charging a certain amount of money.


To know how the corporate card services are doing in Bangladesh, we interviewed some card providers who usually provide debit and credit cards. Debit cards are usually available to any customer who opens a savings account with a minimum required balance, while only people having a certain living standard and with a certain annual income are eligible to get credit cards. According to them, debit cards are really catching up the market and are quite popular within the younger generation who have just started earning or are new job holders. But credit cards, though much more popular right now than some years back, are yet to gain rampant usage. The reason might be the Bangladeshi culture where people usually learn to play safe and credit dependency is almost the last resort. When asked about what benefits they themselves get out of these services, they said that now transactions are made at a much larger volume which is always profitable for them. It increases customer satisfaction which in turn enhances their profit. Moreover, they provide special packages for high end corporate customers to attract them. Such customers are hugely profitable for them as at times they bring bulk of the business.


To hear the clients’ side of the story, we interviewed around 10 holders of such cards. These customers have shown a widely positive view to the usage of corporate cards. To them, the whole concept of not standing in lines for hours or carrying bulky cash with them, especially where security is such a concern in Bangladesh, is life changing. They feel that now they do not have to set out a time every month for going to the bank, but rather just visit the nearby ATM booth and get the job done within minutes which makes their life a lot easier. When asked about what improvements they seek currently, they said that if it was possible for all the banks to give out a card that is compatible with all the ATM booths, then all the booths present throughout the country could be used by all card holders, which will also make sure that people do not avail such service from a bank only because they have greater number of ATM booths, but rather for the quality of service they provide.


Both the clients and the providers have shown interest in making corporate card service a lot more tech savvy and incorporating more information, like ID card or health history, within them so that they can be used for multipurpose. The advancement of handheld smart phones and various compatible applications have led to the use of such technology in scanning business cards and increasing their usage in the western world. We all believe that such technology are what is  to be seen next in the scene which will revolutionize the usage of corporate cards as we see it today in Bangladesh.

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