Buyers Value Various Features of Virtual Cards for AP Payments
June 24, 2013
Comdata, along with MasterCard and Kaiser Associates, launched a survey in January 2013 to both buyers and suppliers within the Accounts Payable and Accounts Receivable ecosystem. Our respondents included 54 Comdata customer buyers and 222 suppliers across our customer base, meaning that these suppliers currently accept card as payment for invoices.
Surveys of buyers in this market are commonplace, and our results certainly confirmed what we all believe about the use of virtual cards for AP payments. Buyers value the following features associated with a virtual card program:
• Increased control
• Reduced costs
• Greater efficiency in processing.
No surprises on that front, and we have collectively been successful in highlighting those benefits in the value proposition posed to company CFOs and Controllers.
Even though the valued features were no surprise, there were two data points from suppliers that did intrigue us. In the first point, we learned that many suppliers reported an increase in sales due to credit card acceptance as well as an increase in revenue.
While we were surprised by this finding, it made sense when viewed through the nascent lens of B2B card payments. Before consumer card acceptance became ubiquitous, merchants incorporated the fact that they accepted credit cards into their value pitch to consumers and used card acceptance as a point of differentiation. Therefore, we contend that the same differentiation could exist for AP suppliers if they chose to market this acceptance.
The second noteworthy point in the survey came from a mirrored question posed both to buyers and suppliers. We asked buyers how much control they felt they had in dictating method of payment in AP invoices, and less than 40% felt they had a high degree of negotiating power with suppliers in choosing method of payment.
Similarly, we asked suppliers how likely they would be to accept a card from a buyer who mandated it as the method of payment, and the majority of respondents said they were likely to accept the mandate.
To all of those AP managers who worry about damaging the relationships with suppliers, this is indeed food for thought in your AP payments strategy.
Meitra has more than 16 years of experience working both domestically and internationally in the financial services industry. She currently serves as Vice President of product management for Comdata’s corporate payment solutions. Prior to Comdata, Meitra held a number of senior roles at Total Systems Services (TSYS), including positions in product strategy and relationship management.