Credit cards are a challenge for finance and procurement teams due to their fees and inability to provide granular data.
Credit cards are a challenge for both finance and procurement. Cards were designed for the consumer world and their adaptation into the business world requires breaking some procurement rules.
Credit cards provide Level 1 and Level 2 data, which details who the vendor was, and how much was spent. Because they do not provide granular data, using credit cards can hinder a procurement teams’ inability to effectively do strategic sourcing. While Level 3 data is possible through credit cards, it is not very well used; it does not have to be great data, and the data can be quite limited. Therefore, one of the main limitations is the quality of the data.
Another limitation is the business model, which was designed for the consumer world, and does not adapt quite as well between known parties of buyers and suppliers. Credit card transactions can be expensive, so cards have never penetrated more than about 5% of all business-to-business transactions. In summation, bad data, limited acceptance and high fees result in low credit card usage in the business world.
To Recap:
- Credit cards do not provide quality, granular data for finance and procurement purposes.
- The business model was designed for consumers and is difficult to adapt to the business world.
- Cards have not penetrated more than 5% of B2B transactions due to transaction fees.
