Regulatory change • By Amon Cohen
Steve Robson, EMEA head of commercial cards for Citi. “There’s a little ‘wait and see’,” he adds. Some issues involve changes by the
airline association IATA to the rules governing travel agency payments to airlines. However, most of the developments relate to the EU. Brexit is one headache, but even more directly
THE REGULATIONS ARE WELL-MEANING BUT DON’T ALWAYS TAKE THE CORPORATE USE CASE INTO ACCOUNT
pertinent are the IFR and the Payment Services Directive 2 (PSD2). Although both sets of rules are largely aimed at reforming consumer payments, some unintended consequences are causing collateral damage to corporate payments. “The EU is trying to limit unfair practices and reduce fraud,” explains
In association with
Clive Cornelius, senior director, global card products, at Carlson Wagonlit Travel. “The regulations are well-meaning but don’t always take the corporate use case into account, including the cost of a commercial card to issuers. “There are more services involved in commercial cards, such as reporting and controls. I don’t see regulations prevent- ing the use of them, but there may be some modifications in how they are used and the processes behind them.” What follows is a summary of the chief issues which could affect your corporate card programme. Pouring a stiff glass of something fortifying before reading is highly recommended.
INTERCHANGE FEE REGULATION Introduced in December 2015, the IFR capped the interchange fee for Visa and Mastercard credit cards (American Express and Diners Club products were overwhelmingly exempt) at 0.3 per cent. An interchange fee is the fee that the acquiring bank used by a merchant for accepting card payments pays the issuing
bank of the cardholder. Commercial cards were exempted from the cap but there was one major complication. Individual pay corporate cards – used by cardholders to settle directly with their issuer and then reimbursed by their employer – were categorised as consumer cards and, therefore, not covered by the exemption. A severely reduced interchange fee
threatened to make individual pay cards unprofitable overnight for Visa and Mastercard issuers. Changes were therefore inevitable. “Clients may have to pay a fee for that individual pay card now and they certainly won’t get a rebate for it,” says Cornelius. “And some issuers have withdrawn individual pay in some markets.” Companies that like individual pay
are disappointed because they believe it encourages employees to submit expense claims punctually. Even so, the typical response has been to switch to corporate pay to avoid fees and preserve rebates. But this may not prove a solution for much longer. The European Commission will
BBT CORPORATE CARDS SUPPLEMENT 2018 21
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