B2B Payments

Embracing The Long Road Ahead For Commercial Card Innovation


The commercial card industry is progressing, and corporate treasurers say they want in on the innovative action. A survey just released by Capital One found that the majority of corporate treasurers plan to upgrade their commercial card programs within the year.

Of course, the findings aren't necessarily predictive — the survey pool consisted of just 116 treasury professionals at a recent conference — but they do indicate some level of interest among executives for progress in corporate card payments.

There is a lot that the sector has achieved in terms of providing more sophisticated, digital payment solutions for businesses, said Rick Elliott, Capital One SVP.

For instance, he pointed to the rise of mobile apps connected to commercial card solutions that have gained traction in the corporate travel space.

"We changed the way we expect the world to work," Elliott explained of the rise of smartphones and enterprise mobility.

Mobile tools not only enable professionals to work beyond the nine-to-five world, but these capabilities provide real-time insight into corporate spend. Managers can identify and assess suspicious transactions almost immediately.

Plus, a commercial card linked to a mobile app supports corporates' need to become more flexible, whether it be to generate an expense report while in a taxi or for accounts payable professionals to review and approve transactions while away from their desks.

In accounts payable, commercial card transactions may not account for much — yet.

According to Elliott, the market is witnessing massive year-over-year growth, "and we expect that to continue years from now," he added.

But the solutions currently on the market for business processes like T&E and accounts payable are far from the best they can be, the executive argued.

"The industry is behind the expectations I think our customers have," Elliott said of commercial cards in the mobile travel and expense management realm. "It's gotten traction, but in a market where there have been low expectations — and they're increasing. You'll continue to see a lot of innovation and a lot of focus on user design."

Commercial cards within accounts payable, too, have a way to go to meet the expectations of both the end user and the suppliers accepting these cards.

The use of commercial cards for corporate buyers isn't entirely frictionless. Elliott pointed to the challenge corporations have when choosing a business card program. Capital One's research found that the top priority for treasury and money managers is to pick a product that meets their firm's unique needs.

Often, that means one that fits to the size of a company and its spend volume. But there are other ways commercial card adoption can be tricky.

"It'd be great if there was an industry standard for how companies control spend," he said, highlighting the various spend categories and control methods for giving an employee a card.

Still, that exponential growth of commercial card spend in electronic accounts payable is impossible to ignore.

One of the reasons commercial card use in AP is rising so quickly, suggested Elliott, is because it's always made sense for corporate buyers to use them — they can obtain card rewards and rebates, and they can better manage working capital.

And for years, corporate buyers had larger buying power to entice suppliers to accept these products. That, however, is changing, Elliott said.

"Us, as an industry, we have to have a value proposition that isn't just a slam dunk for buyers," he said.

So far, interchange fees associated with commercial card acceptance have largely deterred suppliers from widespread acceptance. Sure, suppliers have a lot to gain from accepting these cards, Elliott explained.

Faster payment cycles can mean the difference between getting paid in 60 days and getting paid in just three, for instance. "It frees up a tremendous amount of capital for suppliers," said Elliott. "It's not important to all suppliers, but the vast majority of AR departments focus on working capital management. The card gives the option of paying early. It becomes a really powerful offset to the interchange and cost of receiving the transaction."

Plus, cards provide a sort of AR insurance for suppliers in the case of nonpayment. "You're effectively offsetting the risk of that buyer not paying to the bank," Elliott said. Plus, commercial card acceptance can often be cheaper than taking a check.

Finally, suppliers can gain what Elliott called "business development opportunities."

"By taking cards, a supplier can make themselves more attractive to other buyers," he said.

So, why haven't suppliers universally begun accepting cards from corporate buyers? The industry has a lot to work on when it comes to making commercial cards a "slam dunk" for suppliers, too, Elliott stated.

"There are a few things I think we initially need to solve as an industry," he said. "Oftentimes, the terms that are offered are pretty inflexible; it's a take-it-or-leave-it structure and a nuisance."

Interchange fees aren't the only repellant for suppliers. Often, a corporate buyer may want to pay with a card, but doing so requires a supplier to first get onboarded to the card network then take the payment — a cumbersome task that might only be for one transaction, Elliott said.

"We, as an industry, need to get better at listening to suppliers and what their needs are," he continued, adding that, like the rest of the FinTech world, commercial payment service providers shouldn't settle. "If there's any advice I would give for others in the payment space in general, it's to set a higher bar for the kind of experiences that we, as an industry, are creating for our customers."

"There are a thousand excuses why you have to make something complicated," he continued. "But you need to push through that."



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