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Data for today’s episode is provided by Mercator Advisory Group’s Report: Commercial Credit Cards: International Markets Review and Forecast, 2020-2025; COVID Bounce Back Not Expected Until 2023
Predictions for the International Commercial Credit Card Market:
- The pandemic wreaked havoc on corporate card spend across the globe during 2020, as business travel was minimal after the first quarter.
- This trend continues into 2021, as international travel restrictions remain in place, although certain corridors are expected to be opening up during the second half of the year.
- The economic recovery will have some variances across regions, with Western Europe and Latin America Caribbean lagging in growth.
- However, the utility and usefulness of commercial credit cards, particularly virtual cards, will continue to help grow spend for B2B scenarios as business travel picks up.
- We see a return to generally healthy growth during 2022 and a continued emphasis on non-travel use cases.
- This is not dissimilar to expectations in North America, particularly in the United States, where economic growth of roughly 6% and 3%, respectively, will cause commercial card spend to be weighted toward B2B uses.
About Report
In global markets outside of North America, spending growth remains underpinned by corporate cards, used mostly for travel and entertainment (T&E), as well as virtual cards used to settle with travel management companies. The consequent spending volume in corporate cards is closely tied to travel budgets and general corporate adoption. The pandemic had a deleterious effect on global business travel spend. A new research report from Mercator Advisory Group, Commercial Credit Cards: International Markets Review and Forecast, 2020-2025; COVID Bounce Back Not Expected Until 2023, reviews the current situation and outlook as the industry recovers from the effects of COVID-19 and business lockdowns.
Given the remedies selected by most government entities to combat viral spread, varying levels of GDP declines were felt across regions in 2020, with economic recovery expected to have a similar level of variability during 2021-22. As such there was an expected massive drop off in spending on corporate cards. Commercial credit card spend for mid-large market companies outside of North America was 42% lower than in 2019. Going forward, recovery levels and expected behavioral changes in business travel are the most pressing issue. A continued shift to digital payments and virtual cards will help improve spending levels through 2022 and partially offset the travel slowdowns. In this report we will discuss the overall pandemic impact on economic growth, then address how that plays out both short and longer term on spending in each indicated region.
“The pandemic underscored the relative dependency of the commercial card industry in most regions on business travel versus the broader B2B use cases that have been pursued in North America, and to some extent, Western Europe,” commented Steve Murphy, Director of the Commercial and Enterprise Advisory Service at Mercator Advisory Group, the author of this report. “Once economies emerge again, which is already underway, travel will return at some level, but most issuers will be redoubling efforts to expand commercial card spend into B2B uses.”
