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Credit-Card Firms Find Eager Customers Behind Office Desks

Businesses cut costs by charging small transactions

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CREDIT-card companies have found a big market in small business-to-business transactions.

United States firms spend up to $300 billion a year on small purchases - things like paper, ink cartridges, and so on.

In the process, they spend a lot of money processing purchase orders and invoices. Small items often amount to only 10 percent of a company's purchases by cost, but these items can eat up as much as 90 percent of the money a company spends to track purchases.

Visa U.S.A. has so far led the effort to market credit cards designed to help streamline the paper-based purchasing process into an electronic system.

Visa launched its corporate purchase card in the fall of 1993 after several pilot programs. American Express started a similar program early in 1994, and MasterCard International followed later that year.

Agencies of the federal government that opted for the program started using the Visa purchase card to buy supplies five years ago, before the card was offered commercially.

''We have nearly 400,000 of these business-to-business cards in use,'' says Robert Levaro, Visa's senior vice president for commercial card products, and they are used to buy about $3 billion in products and services a year.

Some companies have saved close to 90 percent of their administrative costs on small transactions, Mr. Levaro says, while managers ''can focus more on other ways to save money, and suppliers get paid [by the banks] right away.''

The billing statements, meanwhile, provide useful records by which companies can track their purchasing patterns.

In addition to cutting red tape by offloading paperwork, the cards offer security features that make them different from consumer credit cards: Companies decide who to ''empower'' to use the cards and, as part of this decision, dollar limits are set, based on previous purchasing patterns. Also, ''smart'' software at banks can detect changes in the purchasing patterns of users. And suppliers also know the purchase patterns of customers.

The product is stealthy, Levaro says, because a lot of people haven't heard of it yet. Yet the dollar volume of purchases from such Visa cards ''is doubling each six months.''

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