Interview with Steve L. Abrams
CFO: What are some of the trends youâre following at MasterCard?
Steve L. Abrams: The most significant trend involves global integration of card data into a corporationâs expense or enterprise system. For example, travel and entertainment cards and purchasing card programs have evolved from being vehicles that assist organizations in streamlining the expense payment process to being real enablers that provide an end-to-end solution for the entire purchasing process, including capturing data, negotiating preferred pricing and ensuring policy compliance. This is where the real power comes from â when you combine and integrate information with an existing system to get a holistic view of your companyâs spending. The consistency and quality of the data provided by your card program is absolutely critical to success.
We are also seeing an increase in the demand for enhanced travel card reporting to manage policy compliance and negotiate with travel suppliers. The information that accompanies card payment transactions has been significantly enhanced over the last five to seven years. Payment information is now incorporated into hotel folio details, airline itinerary information and enhanced car and rail information. Travel managers can manage travel policy, review expenditures, monitor vendor performance and spend against plan by accessing their card reporting system. Because corporate cards are used now for more than 90 percent of travel spending, the card reporting systems have evolved into travel management systems.
CFO: How fast are multinational card payments growing?
SLA: Four years ago, four out of every 10 RFPs requested multinational capabilities. Today itâs eight out of 10. These corporations are requesting functionality like multilanguage reporting capabilities and translation from local currencies into the currency used for corporate reporting. The existence of these requirements by corporations, along with the rapidly increasing pace of globalization in the economy, results in the need for a multinational program that serves multinational companies.
We launched the MasterCard Multinational Corporate Program more than five years ago because we recognized the implications of the global market trend as well as the opportunity to help corporations, through our issuers, better manage their payment programs. This program is differentiated from others in the marketplace by four key pillars: superior products, strategic global alliances, unique market insights and best-in-class customer life cycle support. Our goal is to remain ahead of current market expectations and competitor programs, by offering innovative and flexible solutions within these four pillars. This will result in an enriched level of data to corporations so they can harness the information to achieve better program results and increased compliance.
CFO: What is MasterCardâs strategy to serve these corporations?
SLA: Our strategy is focused on information, integration and optimization. For information, MasterCard provides a comprehensive set of tools, including resources to deliver robust data capture, advanced processes to help ensure the highest levels of data quality and a full suite of reporting and analytical solutions that turn the data into meaningful information that can be used globally for effective management of compliance and sourcing initiatives. The payment system is, at its core, a data network. Advancing technology now enables the network to transmit a significant amount of additional detail along with basic transaction information. In addition to purchase information, such as merchant ID, transaction date and dollar amount, the network can transmit detail such as hotel folio data.
CFO: Would you give us an illustration of how information plus integration leads to optimization?
SLA: Certainly. A good example is VAT recovery. One of the hidden expenses of conducting international business is the value-added tax, or VAT. Most travel and entertainment expenses are eligible for VAT recovery. T&E expense is a significant cost of conducting global business, particularly for large multinational companies. Recovering the VAT on those expenses can have a major positive impact on a companyâs bottom line. Corporate card programs are increasingly vital to businesses seeking to recover VAT expense because they can help to substantiate the legitimacy of business expenses, especially those paid on invoices. By combining corporate card data with VAT intelligence, we enable companies to both size their potential recovery opportunity and maximize the amount they can recover. Thatâs optimization.
CFO: What are some ways to further integrate card programs?
SLA: Card companies can work with leading solution providers in the travel management and procurement arenas to enable the seamless integration of payment card transaction and enhanced data into their applications. This extends the universe of eligible transactions and helps optimize card programs. Commercial card programs have been designed to drive policy compliance by making it easier for employees to adhere to both travel and purchasing policy, giving managers negotiating leverage with their preferred suppliers. By integrating the card data into the financial management application, the travel manager can leverage one system to analyze spending, review trends and monitor employee compliance across various programs.
Card payment functionality can also be integrated with electronic invoicing and purchasing solutions. And purchasing card programs can include in-store, telephone, online and electronic invoice payment and presentment solutions.
CFO: What is MasterCard doing to help companies improve their multinational card programs?
SLA: There is a significant opportunity for companies to maximize their current programs. According to a 2005 RPMG U.S. Purchasing Card Benchmark survey, some companies reported having the potential to triple their current program spending with transactions under $2,500. Customers are demanding to expand their programs, yet the biggest challenges are time and financial resource constraints or other priorities that take precedence in enabling them to achieve their programâs potential.
Program optimization tools can minimize the time and cost companies spend analyzing and improving their programs. For example, the MasterCard Purchase Optimizer is built on a benchmark database of hundreds of companies that is size- and industry-specific. It provides an initial benchmark as well as tactical recommendations to help improve a companyâs programs based on best practices.
CFO: What are the target markets that you and your issuing banks focus on?
SLA: We see significant opportunities in various market segments. However, the ability to strategically prioritize markets can help issuers more effectively capture profitable opportunities and better manage resources. To this end, our Purchase Optimizer enables issuers to segment on an industry-specific basis. It contains industry-based benchmarks for 36 distinct categories, such as consumer package goods, construction, universities, government and telecom. The tool helps issuers target industries by providing them with realistic and actionable information and best practices.
CFO: Please share with us your final thoughts about multinational programs.
SLA: To succeed in todayâs global marketplace, multinational corporations must look to leverage efficient processes, create synergies and integrate operations globally. They must improve their ability to manage worldwide travel and procurement expenditures. At MasterCard, we have a long history of developing products that provide a compelling product proposition for our issuers and multinational corporations. Going forward, we will continue to advance commerce globally by providing solutions that deliver value to our customers.
