In B2B, it’s approaching “ditch the plastic” time.
In an interview with PYMNTS, Stuart Davenport, chief innovations officer at Conferma Pay, said that innovation in consumer payments has given some tailwind to the digitization of commercial payments – and the adoption of virtual cards.
At a high level, he told PYMNTS, “certainly for consumers at the moment, there’s a rapid recognition of how payments can be made easier and a lot more efficient than they have been in the past.”
He pointed to the rise of challenger banks like Monzo, which allow users to create accounts and get cards within minutes. Digital wallets and P2P services make money transfer instant, using mobile devices as points of contact.
Such ease of use and speed are not (yet) part of the commercial payments landscape, where paper-based and inefficient processes mean that approvals and reimbursements can be laborious.
Those inefficiencies have been spotlighted by recent national lockdowns that are now returning to various countries (and here in the U.S., depending on where you look, dot the landscape and may be on the rise). Remote working and contactless are the new normal.
In a significant enhancement for incidentals spend management, mobile tech can now be leveraged by businesses to enable employees to request cards from their managers when required, and the managers, in turn, will be alerted directly on their phones to approve or decline those requests. This is not just a simple rendition of a 16-digit PAN for online spend, but also for in-store, in-app and in-transit usage.
These enhanced virtual cards, said Davenport, “avoid plastic and reduce fraud. It’s often also incremental spend because virtual cards can be used in different ways.” Such cards, he added, allow for rich data to be transmitted with payments and for tokens to be integrated into the process as well.
The movement toward work-from-home across all manner of verticals also means that having procurement cards available in a central office or locations is ineffective at best – and inaccessible at worst. Employees working from home, noted Davenport, may not have access to cards or to the physical checks that are typically printed and mailed out to suppliers.
Conferma, he said, has been working with commercial card issuers (more than 50 of which are currently connected to Conferma’s platform) to enable additional products and features that can be offered to the issuers’ corporate customers with virtual cards.
Through application programming interfaces (APIs) and a single point of integration, the platform helps to ensure smooth issuance for those partners, who have back-end systems in place that stretch back over decades, where making changes to drive scale as they bring virtual cards to market would incur significant costs.
Employers benefit by being able to issue cards on request (through instant issuance) to employees, extending credit lines and gaining a real-time view of payment activity. In the end, corporates are able to decentralize, but maintain control over, payment activity. Companies can specify who can access cards, determine which projects receive funds, restrict the merchants that can be paid and, as Davenport said, “configure activity right down to ‘only this particular merchant, this terminal will actually be able to bill that card, and only once.’”
With the emergence of digital-first mindsets, noted Davenport, B2B firms are seeking more straight-through processing.
“Historically, a lot of virtual cards might be sent to suppliers, who would manually process those transactions,” he told PYMNTS. “Now, we’re seeing the requirement that these payments go straight through to the supplier’s acquirer and get processed automatically.”
When that happens, Davenport said, remittance and reconciliation can be automated and streamlined. Credit terms embedded within virtual cards can benefit suppliers’ cash flows. In such cases, suppliers may be willing to take a discount in order to be paid more quickly (and the discount, of course, helps buyers’ own bottom lines while still maintaining the credit line they have with the commercial card issuer).
Virtual cards “are on a fast track to replace the issuance of physical plastic,” Davenport told PYMNTS, as issuers that have never issued virtual commercial cards are adopting digital-first mindsets.