Unexpected buys lead to card charge rethink

19 April 2000
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20 April 2000 | Elizabeth Bellamy

Banks are having to rethink their purchasing card charges because of one-off purchases that were larger than expected, writes Elizabeth Bellamy.

Purchasing cards had usually been used for low-value, high-volume transactions, said Patrick New, head of commercial cards at NatWest. But some large firms, including British Airways (BA), had started to use the cards in conjunction with e-commerce systems to buy high-value items.

New, who was speaking at the v.comm 2000 conference in London this month, said this meant the old fee system was no longer appropriate.

"At the moment there is a standard fee charged on all transactions of up to 2.5 per cent. This is fine for a £10 purchase, but when you start spending £1 million on the card, this is not a tenable situation," he said.

BA launched its purchasing card with NatWest in 1998. Pat Rice, BA's e-commerce manager, said that only 1,400 of the 2,000 cards in circulation at the company are actively used, although this figure is growing since the cards became mandatory for purchasing last November. The value of goods purchased using the BA card ranged from 17p to £145,000, she said.

Howard Price, director of enterprise-to-enterprise purchasing at consultancy KPMG, said that purchasing card suppliers, such as Visa and American Express, were reviewing their services. "They are looking at the cards less as charge cards and more as an outsourced e-commerce service," he said.

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