Banking » Remote working sees rise in B2B card transactions

Remote working sees rise in B2B card transactions

Corporates turn to virtual cards as pandemic decentralises the finance function

The payment space has seen a lot of movement over the past year as the pandemic has accelerated both existing tech trends and altered business and consumer habits. With greater convenience for consumers, corporates’ employees are demanding similar levels of accessibility for commercial offerings.

“We see a trend that the employees of the businesses that we work with are looking for, and expecting, the same levels of convenience in their work life that they see in their personal life,” says David Legg, head of corporate products at Lloyds Bank Commercial Cards.”

According to Legg, commercial cards have seen strong growth because of the decentralisation caused by home working during the pandemic and the need to secure supply chains. Though not traditionally a large part of B2B transactions, banks are growing the card share of customer spend as they deliver solutions bringing benefit to both buyers and suppliers.

“Issuing banks have traditionally been focused around the needs of our buyers,” he says. “We are trying to address both ends of the supply chain to incentivise both parties to be able to achieve the benefits of card payments.”

Virtual cards have seen increased use and that trend is expected to continue as many workplaces look to a hybrid form of working.

“What we have seen as an issuing bank, is strong performance of B2B spread on commercial cards”, says Legg. “The area of growth has been particularly around virtual card usage. We expect to see virtual cards continue to grow in prominence.”

One of the reasons B2B card payments have grown, he says, is that they are being used to pay new suppliers who were introduced during the period of remote working, as well as improving the efficiency and working capital with existing supplier relationships

“During the pandemic, it wasn’t easy establishing some of the traditional processes of setting up fully sourced supplier relationships. It’s actually created by a rapid change in the landscape, as with virtual cards, customers can control spend with greater confidence than on a traditional plastic card; virtual cards enable more employees across the business to transact without increasing risk of out of policy spend.”

Compared to a conventional plastic card, virtual cards allow corporates to have a greater degree of control, examples can be seen in the ability to set individual transaction limits, lock the locations the card can be used and the number of times a virtual card can be used.

“Virtual cards gave a very easy route for our customers to enable their employees to request payment instruments. One of the key advantages of a virtual card is that you don’t have to issue an open credit line to an employee for a prolonged period of time, you’re given a fixed credit line for a fixed need.”

“There are really quite granular levels of control that you can introduce to ensure spend into areas that you are not looking for is minimised,” says Legg. “Virtual card solutions, for example, enable requesters to ask for a card number to be issued for a particular transaction and supplier, with pre-approval where required.”

Real-time data

Though the UK economy is on track to reach pre-pandemic levels by the end of this year, uncertainty lingers over how variants will affect its economic recovery. Cash visibility and cash forecasting will therefore remain important. Access to faster, real-time data will also be essential, and with account-to-account (A2A) transactions threatening the dominance of online card transactions, card transactions are similarly moving towards real-time data to remain competitive.

“The card data arrives well in advance of the statement. We will make data available to our customers as soon as it is inside our processing platforms,” Legg says.

“Virtual card systems enable you to collect reference data from your employees at the point of issuing the card, and as soon as that card number has been granted, and that card transaction has been undertaken, then you can start to analyse that in your systems.”

He adds that virtual cards offer additional data compared with A2A transactions at present. ‘For a number of years cards have benefitted from line item detail from some suppliers. With the initiatives being delivered now by issuers, additional data can be gathered and importantly card payments can be used as an alternative to other payment types offering the opportunity for a working capital benefit.

“Once you’ve set and captured the reference data, you’re then able to push that back into bank systems and then load that into your ERP platform.”

“Card payments are an alternative mechanism to meet a range of expenses in our customers businesses, this could be the traditional long tail spend but can also now be leveraged against strategic payments,” says Legg. “I am excited about the innovations currently being deployed in the Commercial Card industry and believe Issuers can now bring a range of added value to our customers.”

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