Viewpost Banks On V-Cards With Comdata

Commercial cards can be a point of disagreement between buyer and supplier. For a vendor, the cost of the interchange associated with accepting a card payment may outweigh its client’s desire to pay with a card, often preferred by payers to gain rewards points.

Adoption of cards for supplier payments has been limited, but analysts predict a bright outlook for the tool. B2B payments company Viewpost is putting its own confidence in commercial cards through a new partnership with Comdata, a top issuer of virtual cards.

The collaboration, announced Tuesday (Dec. 13), aims to support buyers’ demand for card payments. According to a Viewpost survey, 16 percent of companies said credit cards are their preferred payment method. But the benefits of using commercial cards — and virtual cards — are vast and go beyond an ability for buyers to rack up rewards and points.

“From a consumer perspective, they’re maybe focused on rewards or points coming back through card programs,” said Pat McMonagle, EVP and director of payment operations at Viewpost. “Larger organizations may not be focused on that. A virtual card program allows them to have an opportunity to turn a cost center into an opportunity to generate rebates that they can bring into their organization.”

Proponents of commercial card use have pointed out that cards allow suppliers to get paid quickly but support payers’ cash management needs by still providing a float. Viewpost’s own survey found that 65 percent of companies agree that using a card is a cash management tool “critical to running their business.”

Indeed, cards can support buyers’ cash flow management needs. A recent report published by American Express highlighted commercial cards’ ability to make payments, while enabling them to keep cash-on-hand for more strategic investments.

All of this, however, doesn’t address the hesitancy suppliers face when deciding whether to accept cards. Viewpost’s McMonagle said that there is a tradeoff to be made.

“It’s a question we’ve discussed many times: Why would a vendor opt into this program?” he said. “It’s about simplification of their processing on their sides and the costs that they have for the interchange rates in comparison to the cost of processing the paper check.”

Cards can allow vendors to access a dependable cash management structure, too, with the acquiring bank landing money in a vendor’s account at predictable times. Further, McMonagle said, cards don’t have the same types of exceptions paper checks face, like stop payment.

For Viewpost and Comdata, a key differentiator in their offering, McMonagle added, is that their partnership targets another key source of friction for B2B payments made via card. The task to ensure that a buyer that wants to pay with a card can actually do so and validating that a supplier will accept that payment rail can be a challenge. Viewpost and Comdata are automating that for their clients.

“Viewpost will take care of that burden of mapping which one of their partners is eligible and have agreed to accept virtual cards,” McMonagle said. “That removal of that friction associated with management of vendor relationships is a tremendous simplification.”

For both sides, commercial cards — especially virtual card solutions — can heighten companies’ grasp of payments data. It can be key for the reconciliation process, McMonagle pointed out, but proponents of the technology have also highlighted virtual cards’ ability to provide data and insight into cash flow management, forecasting and other key metrics of business performance.

According to the Viewpost executive, supporting an array of B2B payment rails for both buyers and suppliers is part of strengthening their strategic relationships.

And while interchange fees and other points of friction associated with accepting cards may deter suppliers from getting on board, research shows that vendors are demanding to be paid electronically. Research from Receivable Savvy earlier this year found that 63 percent of suppliers prefer to be paid electronically. However, the same report found that only 9 percent said they’d like to be paid via commercial card, instead preferring ACH payments.

That’s the hurdle that Viewpost and Comdata — and the entire commercial and virtual card space — will need to overcome. McMonagle told PYMNTS, though, that there is space for the payment tool in B2B payments, and it’s a technology that can support both sides of the transaction.

“Virtual cards benefit the trading partner relationship,” he said. “Buyers can deliver payments in the preferred mechanism of their vendor, which helps strengthen those bonds between the customer and the vendor.”

“They want to be a good payer and a good customer and to deliver electronic payments as opposed to check payments,” he continued, “which is the desire of many of their vendors.”