Historical Insight on Commercial Cards
The following content originates from The One Card Solution, a 2004 NAPCP report.
The first Commercial Card payment system was implemented by a group of major airlines in 1937 and was primarily used as a central billing approach for air travel. It was centrally controlled and, from the traveler’s viewpoint, operated in a similar fashion to the ghost cards that would follow years later.
In the 1970s, two large firms launched Corporate Card offerings to address business travel and entertainment (T&E) expenses. Those first Corporate Cards were met with some resistance from end-user organizations as financial executives and others in senior management were leery of putting credit cards in the hands of traveling employees. The first real traction occurred when cardless accounts, known commonly as ghost cards, were introduced as a method of charging airline tickets to a central account without the apparent risk of employees spending freely on a card. This approach was promoted heavily by travel agencies that had been carrying airline receivables on their books. The card issuers began offering liability waivers to their corporate customers (the end-user organizations) to mitigate the concern about inappropriate card usage, resulting in increased distribution of Corporate Cards. The liability waivers, typically joint and several liability, evolved to the individual liability/individual pay option common with Corporate Cards today.
In the late 1980s, following the success of Corporate Cards, the first Purchasing Card (P-Card) was introduced after being developed for the U.S. federal government’s General Services Administration (GSA). The P-Card was directed to the purchase of general, non-T&E items such as maintenance, repair and operating (MRO) goods and business supplies. P-Cards were introduced as, and continue to be, corporate (organization) liability/central pay payment vehicles for which payment in full must be made by the end-user organization to the card issuer at least monthly. This attribute remains the primary distinction from consumer and small business credit cards.
Following the wide market acceptance of P-Cards in the mid-1990s, the concept of combining P-Cards and Corporate Cards into a "One Card" solution emerged. Today, One Cards continue to be a viable Commercial Card option; some organizations embrace this program type, while others are reluctant to combine T&E and the purchase of goods/services on a single card.
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