MasterCard’s new inControl platform allows
corporate programme managers to set spending parameters for greater
management and flexibility. Truong Mellor investigates the
various benefits that the application offers, as well as the
potential for the consumer market.
As the current global economic woes continue to
reverberate across many industries, businesses are looking to adopt
a more frugal approach to their finances and trim undue expenditure
wherever possible. Corporate travel and expense budgets, long
considered a necessary but oft-abused evil by companies, have
unsurprisingly been the first targets in an attempt to rein in
excessive and superfluous spending.
To help businesses better manage their
expenditure and retain greater accountability of where that money
is going, MasterCard has recently launched a new credit card
platform – inControl – that not only provides real-time information
regarding card spending, but also allows for companies to set
exacting parameters on exactly where or even when the credit cards
can be used.
The inControl system was developed in
conjunction with Dublin-based payments technology specialist
Orbiscom. Programme supervisors can set an overall spending limit
for an individual employee or an entire staff category, as well as
compile a list of approved hotels and restaurants. They could also
elect to have charges declined after a certain hour or at dubious
establishments. The platform will allow issuers to leverage both
preset solutions as well as create entirely bespoke offerings
depending on the needs of their clients. An alert functionality
also provides programme supervisors with real-time information on
card transactions via email or SMS texting.

Approval To Buy

Royal Bank of Scotland (RBS) is currently offering the inControl
application in the guise of “Approval To Buy”, a corporate-aimed
programme that has recently been launched for its UK customers.
Additionally, the application will allow for unique purchasing card
numbers for individual purchases within a certain timeframe, either
for employees who need to make sundry purchases or who are not at a
level of authority to own a corporate credit card. RBS will be the
first bank in the world to leverage the new payment platform’s
purchase control module.

According to Raghav Prasad, head of commercial
cards at RBS, the bank is in talks with several of its cornerstone
clients regarding the new system, and is hoping to have the first
roll-out by the end of the year or early 2009.
“Products like this, because they need to be
embedded into the company’s purchasing systems and programmes, tend
to take a little while to be fully implemented,” he said. “We hope
that we should have at least one application out in the market in
the next nine to 12 months, if not sooner.”
There are also plans in the pipeline for a US
roll-out, according to Steve Abrams, global group executive for
commercial products at MasterCard Worldwide.
“There is opportunity in both the public and
private sector,” he confirms. “We are getting a tremendous amount
of interest. There is opportunity across different product types,
and it is really a global platform.”
MasterCard has been aggressively looking to
expand in the corporate payments space, and Abrams believes that
the inControl platform could be a significant factor in the
company’s plans.
“This is really going to give us a tremendous
and unique advantage,” Abrams says.

Benefits

One of the key selling points of the inControl scheme is the
flexibility it provides businesses when they set up their
purchasing system. “It allows you some amazing levels of control,
and ensures that the money is spent exactly the way the
organisation wants it spent,” says Prasad. “It also allows for
control to put in advance of the spending, rather than having to
chase the controls after the spending has been done.”

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By GlobalData
Prasad is also quick to point out that spending
parameters can be set for a group of employees as opposed to
individually. “All junior procurement managers could have one
pre-approved monetary limit per month, while senior managers have
another one.”
“This flexibility is where the application
provides the most convenience for the employees spending the
money,” adds Prasad. “It’s where the rubber hits the road, and
ensures that the programme’s benefits are real as far as the
employees of the organisation are concerned. The ease with which
you can manage your procurement spend also becomes a huge
upside.”
Another benefit of the inControl scheme is that
the adjustable parameters can help recognise and combat fraud. “If
you had controls relative to geography, time of day when used and
things of that nature, you can really help identify fraud,” says
Abrams.
“You can get truly bespoke, highly flexible
solutions for your customers to use,” concludes Prasad. “You can
also ensure that they not only get the flexibility and control, but
they also get a lot of process efficiencies built out of
that.”
It is perhaps this streamlining of
administrative costs and functions that will see companies
beginning to curb costs within their corporate spending programmes.
While employees will still need to travel and stay in hotels, many
businesses are seeing a disproportionate amount of their corporate
spending budget being frittered away on costly administrative
processes.
A recent survey of European corporate spending
undertaken by American Express and payment consultancy firm AT
Kearney, the ‘European Expense Management Study 2008’, highlighted
the point that expense claim processing alone accounted for 52
percent of all indirect corporate spending amongst the businesses
that were examined. In relative terms, this has risen from its 2003
level of 46 percent.
By employing a set of best practices, the study
argues that the average cost per expense claim could be reduced by
around 47 percent. These best practices include several steps –
such as a streamlining of activities, the defining of a
company-wide policy, and an optimisation of administrative approval
processes – that the inControl platform specifically
addresses.
One other best practice that the study touched
upon was the potential collaboration between companies and retail
or service suppliers such as stationary companies, hotel chains and
restaurants in order to procure the best possible rates. According
to Prasad, this is an area where RBS can add a lot of value for
their customers.
“By adding our Approval To Buy solution’s
ability to control spend in advance, and taking the management
information that we provide for our customers, you can build some
very powerful relationships with suppliers,” explains Prasad. “You
can drive more spend through these suppliers, and that can be
linked back to supplier discounts that the organisation’s
purchasing department can negotiate.”
RBS can work with companies prior to the
roll-out of the application and analyse their current spend across
a supplier base.
“Since compliance to the system is automatic,
the process for ensuring these benefits are then realised becomes
much easier,” Prasad says. “What we then add to the mix is to
actually assist with supplier analysis and help companies tie up
with specific suppliers.”
“You now also have the opportunity to gain
better controls by the use of the one-time or limited-time use
account number, and reduce the amount of cash and cheques that are
used for purchasing transactions,” adds Abrams. “You can set the
parameters for each employee. There is a lot of opportunity to
reduce expenses as well as enhance control.”
According to Abrams, these parameters can also
be extended to separate business and personal expenditure on the
one card.
“You can set these parameters perhaps by type
of merchant or by size of transaction, and it would divert
particular types of transactions to a personal account and the
other transactions – office supplies, travel and things of that
nature – to a business account.”

Challenges

It is worth noting that the core strength of the application could
potentially be a hindrance to its overall adoption and operation.
The sheer complexity that the flexible nature of the inControl
platform potentially creates and the level of reporting and
accountability that programme managers would be burdened with could
make the scheme unworkable if used incorrectly.

However, this is something that Prasad sees in
inverse terms. “This application provides benefits for both the
approving managers as well as the employees that use the product.
Because you can determine how exactly funds get spent, it ensures
that the amount of monitoring you have to do is restricted to any
transactions that breach that limit. You are actually monitoring by
exception rather than having to monitor the whole thing, which
would make it a lot easier for companies to manage their expenses,
but make sure that it could monitor them tighter.”
The management information reporting systems
provided by RBS allow for reporting that is determined by the
specified criteria.
“Combining our management information
capabilities with the flexibility and the control that this
platform provides, we can bring to the market what I believe to be
a truly radical solution that will fundamentally alter the way that
businesses manage their expenses,” adds Prasad.
Similarly, Abrams argues that the application
lends itself to far greater transparency, making life easier for
programme managers.
“There will be a lot more information available
through the appropriate reporting, and it will help you better
manage your business,” he says .
“There will be better control, you will have
the ability to have audit reports, which will just make it a lot
easier for managers, regardless of whether it is large corporate, a
travel manager or a small business owner or even an issuer trying
to control the spending of their consumer database.”

Consumer applications

The potential for the inControl application within the consumer
space is also ripe. However, where the business case for the
platform is primarily focused around the element of tightly
structured approval for expenditure, within the consumer market the
focus would undoubtedly be realigned around customer control. The
scheme would put the cardholder in charge of their own spending
parameters – they would be able to obstruct specific retailers that
were a costly temptation, and cards enabled with the inControl
technology could be used by parents looking to curb and monitor the
spending of their children.

The other matter, according to Abrams, is that
of instant issuance over the internet.
“As financial institutions start to use the
internet more for the acquisition of accounts, one concern has
always been that although they can get an approval, by the time the
card gets into the wallet, that consumer might be using other
cards. Now you have the ability to say ‘yes’ over the internet
through the credit evaluation, and then you can provide a unique
account number to use either for a particular transaction or a
dollar amount.”
As far as consumer applications for the
inControl platform, Abrams believes that the platform has a myriad
of potential uses. He also notes that there has been interest in
the platform from the debit side of the business, which can see the
benefits of the scheme for fraud protection purposes.
“You have the parental situation, you have the
individual who would like to set their own controls so they don’t
overspend,” he explains. “I see students that could really take
advantage of setting their own parameters so they don’t get into
any financial trouble. Instead of the bank telling them they have
been spending too much, perhaps they would like some sort of
self-regulation. There are a lot of opportunities on the consumer
side for people to better utilise their accounts. ”
Although RBS is concentrating on bringing the
programme to the business world at the moment, Prasad sees the
potential for the flexibility, control and process efficiencies in
any buying process.
“It will also reduce the disputes that happen
in the spending world,” he adds. “If you get a hotel bill with
additional expenses added onto it, but if the card that is set up
to pay for that is restricted to room expenses of a certain amount,
it ensures that there is no scope for this to happen. You could
take that logic and bring it to the personal spending world as
well.”

CORPORATE AND COMMERCIAL CARDS

MasterCard inControl – key features

Enhanced authorisation controls that direct how, when and where
cards may be used to a greater level of specificity than previously
supported.

Intelligent routing capability that enables a
transaction to be routed through to the appropriate funding source
at authorisation time, depending on the transaction
characteristics.
Robust alert functionality that provides
personalised real-time communication on transaction
activities.
A one-time use number feature that allows
authorisation, spending limits and usability controls to be set on
a transaction-by-transaction basis, providing enhanced levels of
security, control, data capture and traceability on every
purchase.