MasterCard increases its primary use by small business market while Visa gains ground with middle market customers
CALABASAS, CALIFORNIA (March 31, 2004) – Informa Research Services, Inc., today released results from a new study of 2,800 micro, small and mid-sized companies indicating that fewer small and middle market companies rely on American Express cards as their primary corporate expense card, while significantly more micro market companies use the American Express card as their primary card. In this study, micro market companies are defined as those with between $50 and $999.9 thousand in annual revenue, small businesses are defined as companies with annual revenue between $1 and $19.9 million, and middle market companies are defined as those with annual revenue between $20 million and $249.9 million. This study tracks all card brands used by micro, small, and middle market companies, and also asks businesses to indicate which brand is the primary card used for expenses. Based on this study, it is in this measure where American Express experienced a significant loss of primary use in the small and middle markets and a significant gain in primary use by the micro markets.
“Based on our study, 2003 was a year during which American Express experienced considerable erosion of their share of small and middle market customers that rely primarily on their American Express cards,” said Mike Marselli, Market Strategist and manager of Informa’s study. “At the same time our results show that American Express witnessed a sharp increase in primary use among micro market companies.”
“It is important to note that this does not mean that there has been a similarly significant drop in the number of small and mid-sized enterprises that have American Express cards,” stated Marselli. “It simply means that far fewer small and middle market companies cite American Express as their primary card used for business expenses. This is because many companies carry more than one type of business expense card. In 2002, American Express was the leading card in the lucrative middle market, cited as the primary expense card by one-half (50%) of all middle market companies that use expense cards. By 2003, the diversified financial services firm’s share of primary middle market relationships had eroded to 35%; that’s an annualized rate of decline of 30%.“
“American Express’s growth in the micro market may be indicative of a strategy of targeting the micro business,” surmised Marselli. “The base of micro market companies that uses expense cards has grown mightily, from 21% in 2002 to 31% in 2003, and American Express has nearly doubled their share of that expanding pie, from 14% in 2002 to 27% in 2003. MasterCard took the biggest hit in the micro market, declining from 31% in 2002 to 18% in 2003, while Visa gained some ground, from 51% in 2002 to 54% in 2003. Visa is still the number one brand in the micro market, with more than one-half of all micro market companies indicating that Visa is their primary expense card, but now American Express is in a strong second position.”
Based on Informa’s study, Visa’s use as the primary card in the middle market increased from 35% to 45%, and now the Visa brand is the dominant one in this segment, with a 10% lead beyond its nearest competitor. MasterCard also increased their share of middle market primary relationships, from 15% in 2002 to 20% in 2003. Visa is now the number one brand in the middle market, followed by American Express, which is the number two brand, and MasterCard, the number three brand.”
In the small business market, American Express did not fare much better. Based on Informa’s study, American Express again lost a considerable number of small business primary relationships, and their share of small business primary expense cards dropped from 36% in 2002 to 23% in 2003, or an annualized rate of decline of 36%. Informa’s study indicates that Visa maintained its strong leadership position in the small business market, with 44% of all small business relationships in 2003, up from 40% in 2002. MasterCard increased its share of small business relationships at an even faster clip, from 24% in 2002 to 32% by 2003.
“Even though the economy has been in growth-mode for the past few years, businesses in all of these markets have kept a cautious eye on expenses, and reliance on expense cards give businesses a convenient way to pay for products and services directly tied to expanding their revenue base,” stated Marselli.
“With their lower fee structure and aggressive marketing campaigns, Visa and MasterCard have clearly found success in recent years, albeit at the expense of their direct market competitor,” concluded Marselli.
Mike Marselli, a certified treasury professional and market analyst, has over 15 years experience in the financial services industry, serving with Dun & Bradstreet Information Services and PSI Global prior to joining Informa Research Services in 2000. His background includes experience in business-to-business market strategies, industry trend forecasting, e-commerce trend analysis, and primary market research.
The business market research study, performed by Informa Research Services, includes approximately 1,000 interviews with micro market companies, 1,000 interviews with small businesses, and about 800 interviews with middle market companies. The study is conducted annually during the months of March through July, and consists of telephone-based interviews with small and middle market companies throughout the
Brand of Primary Expense Card Used by Micro, Small, and Middle Market Companies, 2002-2003
Source: Informa Research Services 2002-2003 Business Market Research Program
Note: Percentages above Refer Only to Businesses That Use Expense Cards
Note: Totals May Not Equal 100% Due to Rounding
About Informa Research Services, Inc.
Founded in 1983 and headquartered in Calabasas, CA, Informa Research Services, Inc., provides the financial industry's most extensive array of market research and decision-support information.
Conducting daily surveys of the retail and business products offered by more than 10,000 financial organizations nationwide, Informa Research Services, Inc., currently supports the product pricing decisions of more than 2,500 clients, representing all 50 states and including the top 25 financial institutions. This electronically transmitted competitive pricing intelligence effectively generates profitable responses to continual market changes, enables clients to effectively position deposit and loan products within local markets, maximizes interest income, and manages interest expense. Informa is the premier provider of fee and feature studies used to determine the competitiveness of fee-based services. In-depth studies are also available on cash management services, trust products, mystery shops, and other specialized services.
Informa Research Services, Inc., is a division of London-based Informa Group plc (LONDON:INF). Collectively, the business units of Informa Group plc sell to more than 121,000 delegates and 80,000 subscribers, generating annual revenues of over $283 million.