Commercial card has been a fixture of business payments for three decades, yet as Capital One’s 2019 survey at the annual NAPCP Commercial Card & Payment Conference revealed, its relevance only continues to grow. Businesses are finding more ways to use commercial card, prompted by their growing comfort with corporate virtual cards and changes in card platforms that make commercial card easier and more convenient to use. As more and more organizations embark on their digital transformation, organizations are finding that commercial card is a good fit for their electronic payments strategy.
In our survey, industry leaders revealed the four big things that corporations should be keeping their eye on for commercial card:
- Virtual Commercial Card Trends
- Customizing the Use of Your Corporate Card Program
- Mobile Apps for Corporate Card
- An Era of Commercial Card Innovations
Virtual Commercial Card Use Continues to Grow
A corporate virtual card is a one-time, 16-digit credit card number that a buyer can issue to a vendor to pay for a specific purchase. This year, virtual card use reported in Capital One’s annual survey approached 50 percent.
One of the primary reasons for commercial card’s continued viability is the continuous innovations that cause it to evolve. Procurement card (p-card) and travel and expense card (T&E card) have achieved a well-established place among payment alternatives. Eighty-seven percent of the respondents to Capital One’s survey said their organizations used p-cards while 68 percent said they used T&E cards. The survey revealed the commercial virtual credit card is now coming into its own.
This growing enthusiasm for virtual commercial cards among survey participants was reinforced by a recent Accenture report, which estimates that virtual card spend will increase at an annual rate of 21 percent between 2017 and 2022, rising from $136 billion to $355 billion. Driving this increase is virtual card’s ability to streamline accounts payable processes, improve cash management, and mitigate exposure to payment fraud.
Customizing Corporate Card Programs
Now that virtual card has now taken its place among the commercial card options, payment managers are discovering the possibilities of using each card type selectively. This more comprehensive use of a commercial card program is another factor in its ongoing popularity.
As the Capital One survey demonstrates, more and more organizations are deploying the full range of card uses, matching each to a specific purpose. Over one-third (35 percent) of the survey respondents reported their organization utilizes all three types of cards, compared to less than 20 percent last year. When combined with spending limits and merchant category code (MCC) templates, strategic use of these different card types provides a host of benefits, including:
- Greater control over expenses
- Simplified accounts payable processes
- Greater compliance with corporate card policies
The experience of an NAPCP conference presenter from a major U.S. airline highlighted the advantages of this commercial card trend. Among other strategies, the airline distributes declining balance cards to employees to cover per diem meal expenses at training events, replacing checks. The cards have single transaction limits and accept only hotel and restaurant codes. Switching to card from check has made it much easier for the corporate tax team to calculate the company’s per diem meal deduction, and, because of the MCC restrictions, the tax team was willing to forego expense reporting, which employees appreciated.
The airline took a different approach for hotel stays by its flight crews, issuing virtual credit cards for employees with hotel MCC’s that allow only for room and tax charges. It engaged a third-party vendor, who built an API into its bank’s site, to conduct these transactions. When the vendor receives invoices, it makes payment via virtual card.
Mobile Apps Boost Compliance and Control
Another trend in corporate cards is the increasing use of mobile apps that make it easier for employees to document their spend and for card administrators to manage it.
This commercial credit card trend has significant benefits for employee cardholders. Cardholders can enjoy multiple advantages from mobile applications:
- Applications that can deliver real-time balances and credit availability can help keep spending within bounds
- T&E apps can include receipt scanning and location services that automatically calculate mileage
- Not surprisingly, 56 percent of the respondents whose organizations issued T&E cards reported making a mobile app available to their employees.
Mobile apps also have a number of compelling advantages from an administrative perspective.
- It frees payments administrators from sitting at their desks, providing a 24/7 window on important commercial card activity throughout the organization.
- Mobile access also enables administrators to dispute debits immediately, adjust cardholder access, and revise permissions in real time.
Taken together, these advantages are likely the reason that two-thirds of respondents to the Capital One survey noted that when both choices were available, there was an even split in the use of mobile apps and web apps among their employees. The survey results also suggested that the use of mobile apps will continue to rise. Slightly more than a quarter of respondents (27 percent) from organizations not currently using mobile apps said that they were still in the process of developing their “bring your own device” policies.
Commercial Card in an Era of Innovation
After 30 years, commercial card is a technology whose relevance is only increasing, driven by digital transformation and a number of B2B payment trends like:
- Accounts payable/accounts receivable automation
- Real-time spend visibility
- Increasing focus on working capital.
Not surprisingly, organizations are carefully tracking the evolution of this product. Our survey showed that while the vast majority of respondents are satisfied with their organization’s commercial card program, they are nonetheless interested in new features, technology and trends impacting the industry. Our survey found:
- 69 percent of respondents stated that their organization was not planning to implement a new commercial card program or tool in 2019. Of that, 82 percent said their reason was that they were happy with their current program.
- 31 percent were planning to upgrade in 2019, 62 percent of those planning to upgrade said they were doing so because they wanted to implement new tools and services from their current provider.
Innovation in commercial card is going strong and more is yet to come. For instance, in coming years organizations should expect the introduction of mobile apps that have all the functionality and ease of use of consumer products, push purchase-specific information about compliant use of their cards to employees, and allow one-click approval of expenses. Given the pace of change, it only makes sense for commercial card users to work with providers who understand their needs and who have the ability to use customer-informed design and such technology as APIs to deliver the best-in-class user experience and enhanced value.