This is another example of Visa increasing distribution for the brand and use of purchasing cards for B2B transactions, only this time through an interesting partnership involving several major issuers as well as the leading global e-commerce market. By bringing together commercial card issuers (Bank of America, Citi and PNC)and registered corporate users of Amazon Business, buyers can use their card-based payment vehicle and gain line-item detail for the transactions. Provision of Level 3 data has long been considered one of the holy grails of commercial cards since it helps buyers reconcile employee spending on card accounts and more quickly manage the payables function. This also provides more flexibility in pricing for suppliers who gain lower percentage assessed costs by providing greater transaction detail.
“Tracking and reconciling online purchases made with commercial cards can be a time-consuming task, and at Visa, we are continuously looking for innovative ways to simplify the process,” said Vicky Bindra, global head of products & solutions at Visa Inc. “Visa’s collaboration with Amazon Business and our bank partners will ultimately help our commercial accountholders in the U.S. spend less time on reconciliation of their purchases and allow more card management options – all with the existing value and cost-savings that come with an Amazon Business account.”
In this case Amazon acts as the merchant of record (master merchant) and can settle downstream with the partner supplier. In effect this partnership helps to increase the capture of what is commonly referred to as ‘long-tailed spend’, which is the non-strategic last 20% of corporate procurement that is distributed amongst the largest number of suppliers. This has long been a difficult supplier segment to gain card acceptance due to the time and expense needed to enable card usage on a one-on-one basis. So it provides buyers (and bank issuers) with increased access to a greater number of suppliers, without bearing the inefficiencies of managing them directly. Mercator has written about this trend in several published pieces, including most recently in Digitizing the Business Cash Cycle: Advancement and Partnerships.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
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