Toronto-based BMO Financial Group expects its planned acquisition of the Diners Club North American franchise from Citigroup, which gives it exclusive rights to issue the travel and entertainment expense cards to U.S. and Canadian corporate customers, will add about $7.8 billion in transactions to its T&E and purchasing card business.
While BMO already had a T&E card program, Diners Club's worldwide franchise system will make it easy for BMO to set up accounts for global corporations and service customers in countries around the world, says Terry Wellesley, managing director for BMO Spend & Payment Solutions in North America.
Wellesley cites the Diners Club rewards program as another attraction, as well as the data Diners Club can provide to customers about their transactions. "In the Diners system, they can consolidate information about transactions anywhere in the world and get it broken down any way, shape or form," he says.
BMO, currently the seventh biggest corporate card provider in North America, expects the Diners Club acquisition to boost it to fifth place, and Wellesley sees opportunity in the middle market. While T&E expense cards are common at bigger companies, "there are a lot of midsized companies that don't have a mandated corporate card program," he says, adding that the economic downturn is increasing companies' interest in controlling T&E spending. "There's a belt tightening across the board on any spend, but probably more on the T&E side," Wellesley says. "It is probably the second or third biggest controllable expense at most companies."
Terms of the transaction were not disclosed. The acquisition, which is subject to regulatory approval, is expected to close by the end of the first quarter.