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The Real-Time Differentiator For Virtual Cards

Within the B2B card payments space mid- to large-market entities are hitting a wall – one that traditional commercial card payment solutions just can’t seem to fix. Todd King, Chief Product Officer at AOC Solutions, joined PYMNTS to discuss why it takes an entirely new approach to ensure virtual payments are being done right.

Banks are feeling a lot of pain points and facing a lot of challenges, but one of the most significant might just be the cost of card processing.

Todd King, Chief Product Officer at AOC Solutions, said that financial institutions and their buying organizations have some major problems that need solving when it comes to payment processing.

A NEW LOOK AT AN OLD PROBLEM

Banks and their clients are tired of receiving a multitude of lengthy invoices and not understanding their costs, according to King, and they’re ready for a payment processing platform that is purpose-built for virtual cards to make things easier rather than harder.

AOC Solutions recently launched Transact GlobalSM, a cloud-based processing platform for virtual payments that takes a unique approach to solving some age-old challenges.

“A lot of the large processing players have really conditioned the market to believe that commercial cards are incredibly complex, when in reality they’re not,” King explained.

With commercial card payments running on older legacy systems, there’s been a justification of this complexity that has also driven up costs over time, he added.

That was then, and now AOC Solutions believes Transact Global will bust the “just too complex” perception of virtual card payment processing.

But what makes Transact Global different from every other platform out there?

King let us in on what he believes is the platform’s “secret sauce”: simplicity.

Transact Global is not only looking to enhance the way data moves on the processing side and the fraud tools associated with virtual payments, but also to cut the offerings that just don’t work for virtual cards.

“We’re looking at reducing and eliminating features that just don’t apply to virtual cards, like hierarchy, card production and paper statement production – all those don’t have any use in the virtual card environment,” King said.

DELIVERING ON REAL-TIME

With an entirely automated AP process, there’s a true need for real-time data.

AOC Solutions’ B2B card and payables platform, EnCompass®, and its supplier portal on the receivables side, AR-Exchange®, enable the company to offer an end-to-end digitally connected environment, King explained.

“Then when you add Transact Global into the mix, you’ve got a way for data to be provided in real-time to both the buyer and the supplier,” he added.

Through Transact Global, AOC Solutions will post data as soon as transactions are cleared by the card scheme – which is currently six times a day, six days a week – eliminating the need to wait for batch processing or until the next day to see the data.

“It’s flowing freely through our entire ecosystem,” King noted.

But even with quickly accessible data, many payment processing platforms still struggle to get off the ground due to customer implementations.

King explained that the real question is this: Why do banks have to deal in days for customer implementations, rather than in minutes?

The longer implementations run, the costlier they become to financial institutions and the more frustrating they become to customers.

According to King, customer implementation shouldn’t take more than a few minutes, which is why he believes the technology behind Transact Global is that differentiator, “because it’s built for real-time.”

He said that in a real-time environment, the goal is to remove the unnecessary bureaucracy and the redundant controls, to just get back to simplicity.

Another aspect that Transact Global addresses is that existing fraud tools may no longer be equipped to handle the virtual card environment.

King described the legacy fraud tools as “problematic,” especially since virtual cards, by design, have relatively low fraud risk.

“A lot of the rules engines are somewhat clumsy when it comes to virtual cards. If you have those [rules engines] in place, you sometimes have a ton of false positives, so in our opinion none of these traditional fraud tools would work,” King explained.

FINDING VALUE IN VIRTUAL

Though innovation may be just beginning to touch the eCommerce payments space, there’s no doubt that there are things leaving a lasting impact as the industry continues to evolve.

Virtual cards have been around for quite some time (since around the year 2000 in some verticals), but King noted that in the last five years there’s been a surge in the mass adoption of virtual card technology. This leads him to believe that the industry is on the cusp of seeing virtual card use become ubiquitous.

Cloud-based technology and the unlimited virtual computing that comes with it has also enabled AOC Solutions to quickly scale up and down as needed.

“We also know that cost matters. It’s all about flexibility and speed, and if we’re able to do that and drive down operational costs, then everybody is happy,” King said.

With the opportunity to work with both buying organizations and suppliers, AOC Solutions may be in a unique position that allows them to have a broad view of the very different problems impacting very different players.

“When you bring them all together, that’s when we can jointly solve problems, and we’re extending value to all the players in the payments ecosystem,” King explained. “If we’re providing solutions where everybody is benefiting then we’ve got a powerful story to tell.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the December 2019 Mobile Card App Adoption Study, PYMNTS surveyed 2,000 U.S. consumers for a reveal of the four most compelling features apps must have to engage users and drive greater adoption.

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