Understanding Commercial
Card and the use of Controls
Louisiana GFOA Fall Conference
October 9, 2014
Rhonda C. Engel, SVP
Commercial Card Sales Manager
Regions Bank
Agenda
Introduction
Commercial Card Usage
Basics and Benefits of a Commercial Card Program
Establishing Controls
Best Practices
Questions and Discussion
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Commercial Card Usage
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Cities and Counties Usage
Source: RPMG Research Corporation, 2014 Purchasing Card Benchmark Survey Results
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School Districts Usage
Source: RPMG Research Corporation, 2014 Purchasing Card Benchmark Survey Results
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Basics and Benefits of a Commercial Card
Program
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Commercial Card Basics
Improving Cash Flow and Reducing Costs Through Payment Methods
Wire
Fastest Method
Most Expensive
Check
Most Common
Labor Intensive
ACH
Inexpensive
Reduced Float
Commercial Card
Increase Float, Pay Faster
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Earn a Rebate
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Commercial Card Basics
Traditional Plastic Card - Replace the Purchase Order
 Given to employees to buy goods and services
 Typically card-present purchase
 Logged into A/P after posting date (i.e. expense reports)
Accounts Payable – Replace the Check
 Payments made via the Card Program on approved invoices or Purchase Orders
 Typically card-not-present purchases or Ghost Cards
 Logged into A/P at the time of invoice or PO approval
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Savings and Simplification of
Commercial Card Usage
Source: RPMG Research Corporation, 2014 Purchasing Card Benchmark Survey Results
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Commercial Card Basics
Differences between a
Commercial Card and a Traditional Credit Card
 Controls
 Dollar Limits
 Merchant Category Blocks
 Velocity Limits
 Ghost Card Capability
 No plastic card issued
 Enhanced Reporting
 Online real time information
 Due in Full Each Month
 Typically due the 15th of each month
 Rebate
 Paid annually
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Commercial Card Uses
Accounts Payable
Replace the check
Construction Projects
Increase your float
Small Dollar / Emergency
Purchases
Replace purchase orders
Capital Expenditures
Increase your rebate
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Commercial Card Value Proposition
Due to the economics of growing costs and reduced revenue, companies have
continued to focus on improving cash flow and reducing costs.
Authorization Controls
Benefit from custom spending controls at the point of sale that
are both automated and standardized
Float Benefit
Increase the potential float on payables
Revenue Share
Convert your Accounts Payable area into a source of revenue
Cost Reduction
End-to-end purchasing solution that significantly lowers
purchasing transaction costs
Data Reporting
Automation of data capture, reporting and integration of
expenses into existing accounting systems
Strategic Sourcing
Readily accessible spending data for strategic sourcing and
vendor negotiation
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Improve Vendor Relations and Cash
Flow
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Establishing Controls
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Program Risks – Fraud, Misuse and Abuse
Fraud is the leading concern for Commercial Card
issuers and Program Administrators.
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Account takeover
Mail theft
Counterfeit Cards
Lost / Stolen Cards
Mail Order / Telephone
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Database Hacking
Franchise Software Hacking
Skimming
Sniffing
Phishing
Other program risks involve Abuse and Misuse:
 Abuse: Intentionally or unintentionally violating organizational
policies and / or procedures for personal gain
 Misuse: Intentionally or unintentionally violating organizational
policies and / or procedures for work related gain
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Increased Controls
Commercial Card Programs have increased controls that help reduce the
potential for fraud.

Dollar Limits
Monthly, Daily, Weekly and Transaction

Velocity Limits
Daily and Monthly

Supplier Limits
Block by Supplier Type (MCC)

Reporting
Real Time Monitoring of Transactions
Additional:
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
Employee Card Agreement

Employee Misuse Coverage
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Chip Card Technology
Emerging EMV
Technologies
• EMV-enabled cards -- named for
developers Europay, MasterCard and Visa -have an embedded microprocessor chip that
encrypts transaction data differently for each
purchase.
• Some chip cards require a personal
identification number (PIN) to complete a transaction, while others only
require a signature.
• Over 130 countries world-wide use chip technology and it is being
adopted as the standard in the U.S. by the end of 2015.
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Best Practices
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Best Practices
Commercial Card Best Practices
› A Program Administrator should hold an
appropriate position within the organization,
have good motivation and people skills and
should have access to applicable training to
enable them to fulfill the associated
responsibilities of managing an efficient
program.
› Benefit: Minimizes the potential for problems
and abuse.
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Best Practices
› Receive a Commercial Card Program review at
least semi-annually from your card provider.
The review should focus on previous card use /
spend and should identify areas to optimize the
program.
› Benefit: Validates program integrity and
supports the Program Administrator’s oversight
of the program.
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Best Practices
Card Best Practices
•Commercial
Program Administrators
should meet regularly
with Management to provide quality updates on
program performance and issues.
– Benefit: Management is engaged and provides
organizational leadership for program direction.
› Establish and publish Card program policies and
enforce disciplinary actions for card misuse /
abuse.
› Benefit: Encourages proper stewardship of the
card program.
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Best Practices
Card Best
Practices
›Commercial
Leverage appropriate
controls
to effectively manage
when, how and where the cards are used (i.e. credit
limits, daily limits, merchant controls).
› Benefit: Reduces risk of fraud and misuse. Ensures
organizational dollars are being used for intended
purpose.
• Stay up-to-date on industry trends in the
commercial payment space.
– Benefit: Understanding industry trends will help to
optimize your program and identify ‘best
practices’.
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Revenue Sharing
A Commercial Card Program is currently the only payment
strategy that offers a Revenue Sharing Opportunity.
 Earn a percentage on every dollar spent
 Paid in cash directly to your organization
 Unencumbered funds
 Turn Accounts Payable Department into a revenue generator
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Stop by and see us at our Booth!
Open Discussion / Q&A
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