Mastercard Says Virtual Cards Bring Speed and Security to B2B Healthcare Transactions

Healthcare is a complex field, but that doesn’t mean healthcare payments can’t be simple.

Of course, due to intricate billing processes with various codes, regulations, compliance requirements and more, healthcare payments — particularly B2B ones — remain a sea of inefficiency and complications.

Addressing these challenges requires a concerted effort from stakeholders in the healthcare industry, including healthcare providers, payers, insurers and technology providers, to streamline processes, enhance transparency and embrace innovative solutions.

One of the more promising solutions is the use of virtual cards within B2B healthcare — and it is already showing promise in at least one market, the Indian healthcare sector.

“By using virtual cards, we’ve been able to speed up the payment process overall between insurance companies and medical providers,” Chad Wallace, EVP and global head of Commercial Solutions at Mastercard, tells PYMNTS CEO Karen Webster.

The healthcare payment cycle can be slow, with extended approval and reimbursement times. This can lead to cash flow issues for healthcare providers and businesses, affecting their financial stability.

Wallace notes that Indian healthcare providers traditionally had to endure long wait times when receiving payments from insurance companies, and he explains that virtual cards provide a way for insurance companies as well as the medical providers “to be able to collaborate in a more real-time environment.”

Collaboration between healthcare providers and payers is crucial for efficient payment processes. However, achieving effective collaboration can be challenging due to differing priorities and interests.

But by using virtual cards, providers can receive their payment faster, eliminating the delays they previously experienced and resulting in a more efficient claims process — and a better running healthcare system for patients in need.

Capturing Efficiencies

Focusing on improving accounts reconciliation is critical to addressing the inefficiencies in healthcare payments in India.

“We focus on the reconciliation piece and generate a virtual card for every single claim that goes across the system, and that creates efficiency. So, that way, when the receiver of the payment has the data as well as the payment paired together using our virtual card technology, they’re able to streamline the overall accounts receivable process,” Wallace says.

Still, it is not as though the Indian market has a monopoly on the healthcare sector’s inefficiencies and payments bottlenecks. Limited transparency in the payment process can — and frequently does — lead to disputes, delays and misunderstandings between healthcare providers and businesses around the globe.

“We’re constantly working with various different FinTech companies, banks, ecosystem providers, and B2B marketplaces in order to look for those types of efficiencies,” Wallace says.

Virtual Cards as Preferred Vehicle

Clear communication and transparency are vital for building trust in B2B healthcare transactions, and virtual cards have been gaining popularity because they provide both of those benefits.

With virtual cards, providers receive payment more quickly, improving their cash flow. Additionally, as Wallace notes, virtual card solutions provide better data for reconciling claims and payments, enabling providers to streamline their accounts receivable process.

“By pairing the virtual card issuance on the buyer side, and then the automation that we can on the supplier side, we’re just seeing a phenomenal growth pattern,” he adds.

Traditional B2B payments often involve manual processes such as cutting paper checks, leading to delays and increased administrative overhead. Virtual cards automate the payment process, reducing the need for manual intervention while at the same time allowing transactions to be easily tracked and reconciled.

“We see from both buyers and suppliers across many different industries that the need to focus on working capital has been apparent. … [By using virtual cards] buyers are able to pay suppliers in a real-time fashion, so suppliers aren’t receiving late payments. And the buyers are also taking advantage of the credit line to manage their own working capital better. So we see the benefits on both sides of the house,” Wallace says.

Looking ahead, Wallace explains that the hope is for virtual cards to have a ripple effect across both the entire healthcare ecosystem and the financial supply chain supporting it.

And while virtual cards offer many advantages, challenges such as the need for widespread industry adoption, addressing resistance to change, and ensuring interoperability with existing systems must be considered.