“We are seeing more and more issuing banks championing virtual cards that feed directly into mobile wallets, doing away with plastic once and for all.”
Some changes wrought by recent events are not unwelcome. For example, do we really need plastic cards anymore? “Our issuing partners are asking this question more and more often, and in the B2B world, commercial cards and purchasing cards (p-cards) are rapidly being replaced by virtual cards,” said Simon Barker, CEO at Conferma Pay. “The additional controls and authentication measures that mobile wallets can deliver are crucial for businesses that administer funds to thousands of employees.”
The following is an excerpt from How 35 Execs Are Powering The Great Digital Shift Of 2020 (And Beyond), contributed by Simon Barker, CEO at Conferma Pay.
The pandemic triggered seismic shifts in the way people behave and interact with traditional forms of payment. As businesses around the world start to reopen, we have seen guidance recommending contactless payments to avoid unnecessary touchpoints between customers and retailers.
Jumping Straight from Cash to Digital
There has been a great deal of speculation concerning the end of cash, a topic that has often dominated conversations about the future of payments. The coronavirus health crisis has accelerated the need to switch to digital payments, making cash and plastic redundant in the corporate world.
At the height of lockdown, cash volumes in Spain dropped by 90 percent. In the U.K., the number of ATM transactions was down 62 percent – and Austria, among the first countries to reopen bars and restaurants, has not seen a bounceback to pre-COVID levels of cash volume.
The popularity of alternative and digital payments has been growing rapidly around the world, particularly in regions such as China, where at the start of 2020, nearly half of in-store purchases were made digitally. Just as people in emerging markets leapfrogged a generation of fixed telephony and jumped directly to mobile, the same behavior trend is likely to manifest in payments around the world.
We are about to witness the world skipping the physical wallet of plastic cards and jumping directly from cash to truly digital and mobile payment methods.
An End to Plastic
The majority of digital wallets are still enabled by traditional plastic cards behind the scenes, and that’s the elephant in the room for many banks.
Issuing plastic cards relies on a real-world supply chain, with a factory and distribution setup that’s as vulnerable as any other physical process during a crisis. In fact, some issuers really did find it hard to maintain these operations at the height of the COVID-19 pandemic. Really, when a mobile wallet acts as the proxy for a card, and all a card really represents is a string of 16 digits that link to a specific account, why is a plastic card needed at all?
Our issuing partners are asking this question more and more often, and in the B2B world, commercial cards and purchasing cards (p-cards) are rapidly being replaced by virtual cards. They are typically provided on a one-off basis to cover each purchase, and can include spend controls such as amounts, merchant codes and validity. The additional controls and authentication measures that mobile wallets can deliver are crucial for businesses that administer funds to thousands of employees.
We are seeing more and more issuing banks championing virtual cards that feed directly into mobile wallets, doing away with plastic once and for all.
Accelerating the Speed of Innovation
Once a sleepy backwater of the payments world, the speed of corporate payment innovation is quickly reaching parity with the consumer world.
Thanks to our own work with Visa, their issuing partners can place virtual commercial cards on mobile for the first time. This is significant because it means a traveler can now use contactless payment methods for all on-trip expenses s such as restaurant bills, taxis and upfront air and hotel cost – with an Apple Pay or Google Pay wallet.
Business travelers once made those payments using cash or plastic, but as travel begins again, we expect travel managers to empower their people with the safest, most touchless payment experience possible.
As we continue to re-evaluate our behavior in light of the pandemic, it has become clear that payments will move to mobile at an ever faster rate.