Historical difficulties in gaining mass-scale adoption of commercial cards for use in corporate payables have been rooted in friction around pricing and technical requirements for acceptance. Issuers, buyers, and financial technology firms (fintechs) are now approaching this challenge from several angles, using the rising popularity of virtual card accounts as the catalyst for achieving the long-sought broad acceptance of card-based payments among suppliers.
The commercial card industry is an integral and growing portion of the broader business-to-business (B2B) payments landscape. The author estimates that the overall noncash value transfer between U.S. businesses within the B2B payments ecosystem was close to $24 trillion during 2015. This includes payments by check, ACH, cards, and wires.
In a new research report, Supplier Enablement of Cards in B2B E-Payments Requires Persistence, Data and Technology, the author discusses supplier enablement, recommending fundamental approaches for success, suggesting tools to enhance suppliers’ recognition of the value proposition of B2B e-payments, and reviewing innovative business/technology trends that will have an impact on the industry.
"While the commercial card industry continues to benefit from the ongoing shift away from cash and checks and the increase in purchase volume, vast opportunities still exist for growth in cards as payables tools," commented Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service and author of the report. "There is substantial untapped potential, given the size of the market. The effort to drive further adoption of virtual cards among suppliers is one of the key activities of commercial card issuers and their corporate clients."
Highlights of the report include:
- A step-by-step approach for fundamental success
- A discussion of the opportunities around driving revenue through scale versus interchange and rebates
- Methods to overcome the continuing greatest single hurdle, suppliers’ resistance to pricing
- A detailed review of the value proposition for suppliers
- A review of next-generation technology driving new business approaches that allow for flexible pricing and ease of card payments
1. Executive Summary
3. The Acceptance Challenge
A Glass Ceiling?
Industry and Issuer Choices
4. Paths to Supplier Enablement
5. Value Proposition for Suppliers
Overcoming Initial Objections
6. Additional Value Drivers
Working Capital Management
Explaining the Product
Reduced Processing Cost
Fewer Disputes and Chargebacks
7. New Models and Technology
The B2B Directory
List of Figures
Figure 1: P-Card Enabled Volume Remains a Small Part of B2B E-Payments
Figure 2: Effect of Volume Scale on Rebates and Supplier Acceptance Costs (Illustrative)
Figure 3: The Fundamental Steps of the Supplier Enablement Process
Figure 4: Virtual Card High-Level Process Flow
Figure 5: Optimization Requires Ongoing Collaboration
List of Tables
Table 1: Generic Tracking Sheet for a Supplier Enablement Campaign
Table 2: Commercial Card Interchange Variations, United States (Illustrative Example)
Table 3: Accepting Virtual Cards Can Improve Cash Flow
Table 4: Potential Charge Problems Related to Commercial Card Products
Table 5: Benefits of the B2B Directory