Corporate credit cards hold only a fraction of the B2B payments market, and adoption barriers are holding strong. Still, demand for the payment tool is on the rise, by all accounts. Mercator Advisory Group estimated the U.S. commercial card market alone to be worth $428 billion in 2015, an 8.6 percent year-over-year growth rate that has held strong for two years in a row.
But compared to the estimated $23 trillion of B2B payments — including ACH, wire, check and cards — commercial cards continue to capture just a small fraction of the industry. P-cards made up just 1 percent of total B2B payments volume in 2015, Mercator said.
Industry players see this as an opportunity, and the latest research from Capital One's Commercial Card Group will likely fuel that vision.
Its survey, conducted at the 2017 NAPCP Commercial Card & Payment Conference earlier this year, found 91 percent of corporate finance professionals are planning to adopt commercial cards this year. That's 36 percent higher than a 2016 survey, Capital One said.
"We are seeing a big jump in demand for commercial cards among corporate finance professionals in just one year, which demonstrates the demand for more customized and specialized offerings that support our clients' varied business needs," reflected Rick Elliott, Capital One Bank's Head of Commercial Card Group. "We are working in close partnership with our clients to better understand the daily challenges they face and provide creative solutions for these problems."
Corporate spenders aren't only interested in using a commercial card, either. According to the data, they want those cards to come as part of a broader package of value-add solutions.
Most respondents (82 percent) said they already have access to a commercial card mobile app that supports remote capture of expenses while on a business trip — a whopping 54 percent increase from 2016 levels. For those businesses that still aren't using commercial cards and a mobile app, about half said their companies' "bring your own device" policy is a major barrier to integrating such a tool, while the other half said their businesses simply don't want to transition to a new, mobile solution from their existing one.
About half added that they have adopted a procurement card and a T&E card, up from 39 percent the year before.
The increases between 2016 and 2017 are significant, but it should be taken into account that Capital One's survey pool was relatively small, at just 104 respondents this year.
Still, the trend is clear: Businesses not only want to use commercial cards, they want the latest technologies that make spend analysis and management on those cards more efficient. For commercial card issuers to grab a greater share of the B2B payments market, they need to be strategic about how they interact with corporate clients, Capital One's data suggests.
Most survey respondents said their top priority when picking a commercial card solution is to choose on that is agile and meets all of their unique needs within a single offering — meaning they can manage all of the payments made on a card on a single interface. The second top priority, though with just 15 percent citing this need, is to find a commercial card program that facilitates vendor enrollment and card acceptance.
The latter has proven to be a difficult challenge to overcome. While p-cards and commercial cards for corporate travel use have gained traction, supplier acceptance of commercial cards for higher-value transactions continues to lag, in part due to the cost associated with accepting cards, as well as the friction linked to suppliers having to be on-boarded to a card program.
Card issuers appear to be starting first, though, with the card users, not the card acceptors. The vast majority (82 percent) of survey respondents told Capital One their card providers are engaging in conversations with them, asking questions about their pain points to better understand their needs.
According to Capital One's Elliott, issuers should also be paying attention to a heightened demand for new technologies linked to commercial cards.
"With increased ease of use and implementation, these digital tools are attractive and user-friendly options for our ever-increasingly sophisticated client base," he said.