With the nation's personal credit-card market becoming saturated, MasterCard International sees commercial payments by small- and medium-sized enterprises (SMEs) as a market segment with great potential.
Citing statistics for the Asia-Pacific region, including Taiwan, China, Japan and South Korea, MasterCard said 59.8 percent of the US$700 billion exchanged in business-to-business transactions consists of cash and checks.
This proportion is believed to be bigger in Taiwan, a massive but underdeveloped market which the company is eager to tap, Peter Gordon, MasterCard's vice president for commercial payment solutions, told reporters yesterday.
Operating in a similar fashion to personal credit cards, commercial cards allow cardholders -- who are owners or employees of businesses -- to make payments when purchasing office supplies and stationery or purchasing business trips and meals.
This saves businesses the trouble of making advances and applying for reimbursement, and can help corporations and the public sector lower costs, streamline procurement processes, reduce paperwork and increase operational efficiency, according to MasterCard.
Moreover, it is a lucrative business for card issuers, Gordon said, citing MasterCard's global figures showing that an average of US$6,664 per year is spent on commercial cards, four times that spent on personal cards.
Banks can design loyalty programs to build better ties with their corporate customers, he added.
Visa International is also upbeat about the under-penetrated market.
"The transaction volume made through commercial cards shows strong growth. The opportunity is huge," said Christopher Clark, Visa's country manager in Taiwan.
By cooperating with 16 banks to target large-sized enterprises and SMEs, Visa had issued 17,000 commercial cards in Taiwan by the end of last month, generating over NT$5.3 billion in transactions in the year ending March, or 150 percent growth year-on-year, Clark said.
While the idea might be new to some business operators, American Express Bank Ltd took the lead by issuing the nation's first "corporate card" in 1989, targeting big corporations and foreign companies, followed by the issuing of a "business card" in 2000 to serve SMEs, said Kelly Yang (
Although the market development sounds enticing, an academic pointed out that the lack of a rating reference system on SMEs would make banking institutions bear higher risks.
"Card issuers have less access to understanding the nature of a company, whose success or failure is closely related to the economy," said Thomas Lee (李桐豪), professor of money and banking at National Chengchi University.
But if a scoring system is established, banks instead would garner better information about how their corporate customers spend money with the help of commercial cards, he said.
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Six years ago, LVMH’s billionaire CEO Bernard Arnault and US President Donald Trump cut the blue ribbon on a factory in rural Texas that would make designer handbags for Louis Vuitton, one of the world’s best-known luxury brands. However, since the high-profile opening, the factory has faced a host of problems limiting production, 11 former Louis Vuitton employees said. The site has consistently ranked among the worst-performing for Louis Vuitton globally, “significantly” underperforming other facilities, said three former Louis Vuitton workers and a senior industry source, who cited internal rankings shared with staff. The plant’s problems — which have not
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
RSS