A recent survey by Mastercard, a leading technology company in the global payments industry, revealed that organizations that switch from Per Diems to corporate card programs benefit from more efficient operational procedures, increased savings and reduced T&E expenses. Per Diems refer to the daily allowance paid by an organization to its employees to cover approved expenses when traveling for work.
The study, conducted in partnership with Kaiser Associates, surveyed 26 large and medium-sized firms across key markets in the Middle East and Africa, including the UAE, Saudi Arabia, South Africa, Jordan, and Kenya, to gain an insight into the procedures and costs of Per Diem usage, and how they compare with corporate cards.
Offering premium value
Data from the research shows that organizations incur substantial operational costs each time a Per Diem trip is taken. Several factors like fraud and error correction, approval processes, dispute resolution, and the tasks associated with payment processing and reimbursement costs, represent 8.2 percent of the average Per Diem spend.
On the other hand, corporate card programs offer more efficient, operational procedures and additional benefits such as travel insurance and rewards on spend. As a result, the net benefit of switching from Per Diems to corporate cards represents 7.8 percent of the average overall T&E spend, indicating a significant advantage for regions like the Middle East and Africa where the total T&E spend amounted to $160 billion in 2016, according to Kaiser Associates.
“The value of commercial cards to deliver automation, transparency and governance to a CFO has never been in question,” said Adam Jones, Head of Commercial Products, Middle East and Africa, Mastercard. “What we have also seen quantified from this research is that T&E budgetary savings can be added when these business tools are used.”
No barriers to corporate card adoption
Many of the interviewees revealed that there are no barriers to corporate card adoption while also noting a willingness to hear the benefits from their issuers, signaling an untapped market and receptive audience for corporate cards.
In conclusion, the survey revealed that corporate card providers could make considerable strides in accelerating the adoption of corporate cards in the MEA region by helping their clients understand the cost savings and efficiency gains associated with corporate cards, including the benefit of controls, the ever-growing global acceptance of cards, and the flexibility to customize card program policies.
Interviews for the survey were conducted with individuals typically hailing from the finance and human resources departments of the selected companies, who provided accurate and detailed insights into their organization’s business travel administration. The organizations studied belonged to various industries such as manufacturing, energy, finance, construction and professional services with company sizes ranging between 250 to 30,000 employees.