Issuers have long struggled to make commercial card payments a bigger part of the cross-border payments landscape. Of the roughly $100 trillion spent on commercial payments flowing outside of North America in 2018, commercial card use totaled only $342 billion, according to a report from Mercator Advisory Group.
That commercial cards make up under 1% of B2B payments reflects the fact that the card process remains costly and cumbersome for many buyers and suppliers around the globe. In many instances, the reporting process is complicated, while navigating currency exchange rates, various fees, and regulation frameworks—which vary by region—only further complicates the process.
Because of all these problems, international payments are typically made by wires, ACH, and even checks, explained Steve Murphy, director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.
However, Boost Payment Solutions (“Boost”) is working to bring innovation to commercial cards, enabling them to be the optimal payment device for international payments. Founded in 2009, Boost now operates in 34 countries around the world and is leading the effort to optimize commercial cards for international B2B transactions.
The company recently released a white paper, “How to Optimize Commercial Cards for Cross-Border Payments,” which is worth exploring. The paper surveys the cross-border landscape and identifies the major pain points affecting commercial card use. Crucially, the paper covers how Boost addresses these pain points through Boost Intercept, its proprietary straight-through processing (STP) commercial card platform.
Current commercial cards aren’t getting the job done
Since commercial transactions are often complex, potentially encompassing hundreds or thousands of individual invoices, automation is important. Despite this, most commercial cards have lacked automation, detailed reporting, and even adequate security.
The lack of these features causes many problems. Boost notes in the white paper that one major issue is that suppliers have to manually match each invoice to the total amount, making the reporting process slow, expensive and fraught with human error.
On the AP side of the equation, buyers must navigate complex laws governing international trade and taxes, resulting in various fees which can prove costly. Buyers must also manage multiple card platforms.
Boost’s STP platform addresses all of these pain points, making international commercial card payments simple, fast, and cost-efficient.
STP makes a big difference
The central innovation of Boost’s platform is its straight-through processing capabilities. STP makes the payment and subsequent data exchange a passive process because the virtual card payment is made and settled without the payee needing to do anything.
Such an approach is unique, said Murphy, noting that straight through processing, even on domestic payments, isn’t common.
Using STP helps issuers, buyers, and suppliers. Buyers get complete control of their billing cycle as they can process payments within seconds of initiation. They also benefit from working capital extension and possible rebates via the increased card acceptance and related increase in card spend.
Boost’s STP platform also makes the transactions more cost-effective for merchants. Trading partners can settle in multiple currencies which often allows the businesses to avoid cross border scheme fees and FX fees. Also, in many cases, buyers are able to make card payments as if they’re paying with a local card, further reducing costs.
For suppliers, automated card payments come with enriched data capabilities. This means they don’t have to process and report transaction manually. Instead, Boost allows suppliers to customize how they receive their reports and remittance information. For example, the supplier can select their preferred file type so the reporting data can instantly flow into their ERP
Finally, issuers benefit because buyers’ card spend will invariably increase when their commercial cards are optimized for international payments.
Boost’s solution was also designed with security in mind. There is no need for either the buyer or the supplier to share bank account information. Instead, all payments are “pushed” by the buyer and are directly funded to the supplier’s depository account.
To learn more about the benefits of STP and Boost’s approach to commercial card payments, you can read the white paper here.