B2B Payments

Virtual Prepaid Tackles Biz Payments Friction Beyond AP

Corporate payments innovation has cast a wide net to tackle the many pain points businesses experience today, with accounts payable (AP) one of the most popular targets for disruptors.

But supplier payments are far from the only scenario in which businesses face friction when initiating a transaction.

The rise of the gig economy, heightened customer demands, and business globalization have all introduced new ways that businesses can use outgoing payments as a strategy for growth, profit and customer loyalty. Unfortunately, these trends have also broadened the opportunity for businesses to experience payments friction, too.

Rodney Mason, chief revenue officer at daVinci Payments, recently spoke with PYMNTS to dive into the vast number of scenarios beyond the AP department in which a business must make a payment while mitigating more complexity than ever before. But while there are a nearly endless number of cases presenting corporate payments challenges, increasingly, businesses of all kinds are seeking a similar experience — and prepaid card technology can be a valuable tool in meeting those requirements.

From Gig Workers to Rebates

Many of the emerging payment scenarios are business-to-consumer (B2C), Mason explained, and stretch into many verticals.

Property management, for instance, must manage transactions like rental deposit returns and referral payments, while in the automotive industry, collaboration between dealerships and lenders makes for some complex payments scenarios. Insurance disbursements can also be complicated as providers must ensure their adjusters in the field can facilitate the payouts customers demand on the spot.

Many of these B2C payments are key to driving customer loyalty, he explained, with sectors like the utility space offering rebates for energy efficient purchases, while in the travel sector, bundling services from various suppliers also adds friction when ensuring everyone is paid when a booking is made. Rebate programs are becoming increasingly popular, too, he said, with loyalty programs a major driver of repeat business.

Beyond B2C, organizations’ employee and gig worker payments are growing in complexity as well, particularly as these professionals get hired from across borders.

The gig economy includes scenarios in which a food delivery driver will need money immediately to fund a customer’s purchase, as well as those in which a company must pay gig workers they rely on to meet rising customer demand for faster and same-day delivery. Even the research and development arena, which relies upon focus groups and clinical trial participants, faces gig economy-like challenges when compensating those individuals.

Also, the arena of businesses making payments to their staff includes the expense management space, with markets like the construction sector requiring solutions that arm professionals in remote locations with company funds necessary to complete a project. It also includes the growing market for employee rewards, incentives and wellness programs.

Finally, there are also scenarios that can have either a consumer or a business on the receiving end of a payment, including the massive volume of refunds sellers must facilitate, as well as the growing point-of-sale financing and lending market in which borrowers, both consumer and small business, want access to funds immediately.

Different Scenarios, Same Demands

The list of scenarios that Mason provided is by no means exhaustive, but the vastness of corporate payment and disbursement opportunity is clear. Even so, he said, many corporates want the same things from service providers that facilitate these transactions.

“Speed really is an important factor now,” he said. “There are a lot of scenarios in which transferring to a bank account isn’t fast enough anymore, and most legacy accounting systems are really slow.”

Think of a gig worker of a food delivery service. That professional needs funds to purchase a customer’s food on the spot and cannot wait even a few hours to receive money in order to provide the best customer experience. Even in the insurance and lending space, small businesses and consumers want to see the money they’ve borrowed as close to the time of application acceptance as possible.

Beyond speed, businesses and the recipients of their transactions want a branded experience with less friction associated with manually providing sensitive personal information, like bank account details. Corporates need to be able to provide a positive end-user experience — even across borders — and do so cost efficiently.

At the same time, they need greater control over a transaction. For instance, disbursing funds to a contractor means ensuring that professional spends the right amount of money on the right product. Paying out a small business equipment financing loan means ensuring those funds are used to purchase equipment, nothing else.

“There’s just a multitude of logistics you have to deal with,” said Mason.

The Prepaid Virtual Card Opportunity

For payment solution providers, offering businesses choice in how they make their payments is important. However, Mason noted that prepaid card technology is often the tool that can most effectively meet the demands for speed and control on a global scale.

The mobile device, and the ability to send virtual prepaid cards, is key to the payment tool’s effectiveness, he said.

“When you add mobile to it, the prepaid card becomes so much more nimble and agile than anything else on the market,” noted Mason. “It’s on your phone, it’s virtual, and in seconds it’s pushing a payment to a person’s phone.”

Even with the emergence of real-time payment rails that can enable faster bank transfers, he said that he’s confident innovation in prepaid virtual cards will continue to be a dominant force in addressing the multitude of friction points across corporate payment scenarios beyond AP.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.