Powerful plastic Featured

8:00pm EDT March 26, 2007
We may have started out paying for needs with rocks or pebbles, but plastic has become the method of choice for most Americans. It has been reported that 75 percent of us now use credit or debit cards to pay for purchases. The most dramatic shift has been from checks and cash to plastic. Now, especially with those under 34 and earning more than $30,000 per year, the shift is moving to debit cards. Debit purchases have grown from $421 billion in 2001 to $1 trillion in 2006.

“Plastic can be a terrific tool for companies and consumers when used properly and to their full advantage,” says Roy Binger, executive vice president and retail LOB manager at SunTrust Banks, Inc. in Tampa. “There is a wide variety of choices that include consumer credit or debit cards, business cards, purchasing or procurement cards, fleet cards, and payroll debit cards.”

Smart Business talked with Binger for more insight on using plastic for more efficiency.

Why are we seeing such an increase in plastic for purchases?

For consumers and companies alike, plastic is easier to use. Carrying large amounts of cash is cumbersome and can be dangerous.

For companies, purchasing with plastic can provide instant, online information on purchases without the processes of preparing purchase orders, processing a plethora of individual invoices and creating checks for each of the numerous suppliers, and finding the authorized person to sign a check for routine or emergency purchases. Employees are not always in a position to pay for travel or other expenses and wait to be reimbursed by the company. Record-keeping is streamlined with the use of plastic. Reporting methods can be customized by your provider to give you the right combinations of reports to provide the details needed to analyze your spending. Another benefit is the credit and debit card industry is unique in that the card-holders are paid to use them. That payment includes reward points, mileage, rebates and extra services.

What should you consider when choosing cards?

As a consumer, you should do your homework in understanding the features and benefits of your cards. Analyze your lifestyle to determine what card fits best. Which saves you time or money? Would you benefit from travel insurance, concierge service, extended warranties, preferred seating, rebates or any of the other offerings? Read the fine print to ensure you can use what is offered and live with the conditions of the card.

For corporate cards, along with the above, make sure that you can receive the reports that you need to manage your business. Ensure that you and the issuer have agreed upon and set up the controls on how the cards can be used and who can use them. Determine if reward points can be combined for credit and debit cards. Decide who gets the points. Develop a plan to clearly inform each employee on the uses, restrictions and reporting requirements of card use.

Work closely with your business banker to determine what card or cards best suit your purposes and provide the cash management features and benefits to optimize your overall profitability.

What are the advantages of fleet cards?

They are especially useful to corporations with many drivers. Some cards provide discounts when employees use the cards, plus they help the company more easily track spending and employees don’t have to use their own funds when traveling.

What are payroll debit cards?

These are the next evolution beyond direct deposit for payroll. While many companies have streamlined their payroll system to direct deposit, that only works for employees with bank accounts. For a variety of reasons, not all employees have or want a bank account. In those cases, the employer’s workload is increased because it has to determine which employees receive checks and which receive direct deposit. Checks also increase the workload for employees receiving them as they must stand in line to cash them and often will pay a premium cost for that privilege. With payroll debit cards, each employee has his or her own card, can use it like any other debit card and can be rewarded for card use instead of paying to have their check cashed.

What are the caveats on plastic use that the reader should be aware of?

Every card, debit or credit, has disclaimers or footnotes. Make sure that you read all the fine print and follow the rules.

ROY BINGER is executive vice president and retail LOB manager at SunTrust Banks, Inc., Tampa. Reach him at (813) 224-2147 or roy.binger@suntrust.com. SunTrust Bank Member FDIC