Accounts Payable News^®

Executive Summary by Tom Wilson

What are procurement cards?

Procurement cards are charge cards which work in a similar way to credit cards and can be used to purchase goods or services. They can be treated like traditional charge cards and can be open to use with any suppliers or they can have controls placed upon them by the employer, limiting them, to use with only certain commodities or suppliers.

Procurement cards are established across the UK Public Sector and if deployed effectively can deliver significant administrative cost reductions and benefits.

Economic Reasoning v Tradition

For thousands of years human society has revolved around the concept of giving hard currency in return for goods.  In this transaction is the innate human recognition that this is both fair and up-front ie you pay the seller an agreed price and you shake hands on the deal. Both parties walk away satisfied.   Since the widespread introduction of payment cards in the 1970s, many people have predicted the death of cash as the payment method of choice.  Yet forty years on and this is yet to be the case.  In fact as recently as 2004 Seven out of ten transactions were still cash deals*.

Although the use of payment cards (p-cards) has increased exponentially over the last few years, there are key reasons which hold its total domination back – namely anonymity, availability and security.

Benefits and Drawbacks of Payment Cards

Payment cards are the fastest growing sector of the payment systems market.  The coverage of the payment card schemes continues to grow - MasterCard and Visa now have over 25 million merchants around the world accepting their cards.