When the B2B payments industry began considering what to expect for 2018, commercial cards weren't often on the radar. Cards are still expected to account for only a minor fraction of B2B payments volume in accounts payable by the end of the year, after all, with ACH gaining traction as the go-to ePayments rail for corporate payers.
Yet, 2018 was certainly a big year for commercial cards, and for credit card giants' B2B payments aspirations overall.
In our look back at the biggest B2B payments stories of the year, PYMNTS found that card conglomerates — including Visa, Mastercard and American Express — grabbed the headlines, not only as they took new steps toward commercial card adoption, but as they invested in FinTech innovations to digitize B2B payments and attack a multitude of its pain points.
Visa Acquires Fraedom
Visa ended 2017 with a B2B payments focus that it kept rolling early in 2018 as it began testing and expanding B2B Connect, its cross-border corporate payments solution that integrates distributed ledger technology (DLT).
However, what really grabbed headlines was Visa's February announcement that it acquired longtime partner Fraedom. The expense management company already powered Visa's IntelliLink Spend Management platform, but the takeover signaled Visa's investment in not just promoting commercial card adoption, but integrating new functionality to streamline payments and add new features for its corporate customers.
In an interview with PYMNTS' Karen Webster, Visa Head of Global Business Solutions Kevin Phalen said the acquisition of Fraedom addresses one piece of the complex puzzle of B2B payments friction.
“I think there is a perception of simplicity, but the reality in commercial payments is that there are many parties, there is a lot of friction,” the executive explained. “And once you go global, it creates more problems. Ultimately, what you have to do is attack each component of that complexity, rather than assume there is one answer to everything. You have to do so in a thoughtful way, one bit at a time, versus either assuming the answer is simple, or assuming the market is complex and there is an easy answer.”
Mastercard Tackles The Buyer-Supplier Connection
Toward the end of the year, Mastercard revealed B2B payments as a key component of its growth for 2018. CEO Ajay Banga told analysts during Mastercard's Q3 earnings call that the launch of Mastercard Track is one of the bright spots in the firm's operations.
"Track basically solves key challenges in the procure-to-pay process," Banga said in October, "including managing supply chain risk and creating more transparency in the B2B payments process."
Mastercard Track will see a phased rollout, but in the meantime, Mastercard's B2B payments volume continues to surpass 11 percent of the company's total transaction volume.
It was only a few weeks after Mastercard first announced Mastercard Track, a collaboration with Microsoft, that the firm, again, demonstrated its focus on not only commercial card adoption, but on tackling key B2B payments pain points. Track centralizes data to streamline supplier onboarding to the platform, not only to make it easier for buyers and suppliers to get connected and move money, but to enhance transparency and boost trust between business partners.
“What we hear from our customers is, ‘I need to better manage my full supply chain,’” Mastercard's President of Enterprise Partnerships Carlos Menendez told Karen Webster at the time.
American Express Bets On Blockchain In B2B
Visa eyed cross-border corporate payments and value-added financial services for corporates, and Mastercard tackled friction in buyer-supplier connectivity within the supply chain. American Express, meanwhile, staked its bets on blockchain with its B2B payments initiatives this year.
In addition to filing some blockchain-related patents that hint at a B2B payments use case, American Express continued to invest in the technology via its partnership with Ripple, announced late last year.
Earlier this month, American Express General Manager of Corporate Payments Carlos Carriedo touted the success of its pilots with RippleNet, Ripple's global payments network.
“We did a test, partnering with Santander locally, and with Ripple to just do cross-border transactions,” he said during the Wings of Change Europe conference, according to reports. “And in a matter of seconds, through this test, our clients were able to transfer funds in a very transparent and seamless way, from one part of the world to the other one.”
What's more, he noted that American Express is likely going to continue investing in blockchain exploration in 2019.
“Blockchain is absolutely an option we’re looking at,” said Carriedo. “Just to give you a sense, we have invested in a FinTech lab based on blockchain technology, just to understand how to leverage this better.”
With commercial card industry leaders paving the way, 2019 could be the year that cards become the dark horse in B2B payments, finding new ways to gain traction by addressing pain points beyond accounts payable.