LONDONFew businesses accept cards for B2B transactions, dreading an interchange charge of 2% to 5% on sales that total thousands of dollars. But there are instances where the benefits of using cards outweigh the cost.
There is so much focus on pricing and acquirers have not articulated clearly the benefits card payments provide to specific industries, said Alejandro Stein, managing director of global commercial payments at Barclaycard.
We need to define the win-win for both corporate and supplier," Stein said during the Global Acquirers Conference in London on May 6.
The use case varies by vertical, but typically addresses the company's ability to address slow or missed payments. For instance, it might not make sense to push card payments to utility billers since those companies can just cut off service to a client that doesnt pay its bill. But in the construction industry, where Barclaycard recently struck a deal, workers with a load of gravel in dump trucks must wait for a supervisor to confirm a payment has cleared before they can deliver their cargo. Card payments could provide quicker payment than the traditionally used ACH transfer.
The credit card is a product thats been in the market for over 20 years and still only has 3% of the [B2B] market Id say its still fragmented, said Kurt Adams, president of corporate payment systems at U.S. Bank.
Acquirers can also promote card payments by making them virtual, Adams said. Virtual card services can associate a one-time card number with a particular transaction, reducing the risk of an employee making unapproved purchases with a company card.
This has become an especially important service for the fleet industry. WEX, a corporate payment provider for several industries, has been bolstering its virtual card programs for more than a year. The company also built a virtual card product for the health care industry and partnered with Alegeus to deliver it. It inked a deal with Vibrant, a U.K.-based events management company to offer its virtual card. Plus WEXs travel company clients use its virtual card products as well.
For its fleet cards, data not payment is the biggest driver for switching to digital and mobile payments, said Myles Stephenson, managing director of WEX Europe. WEX allows the data gleaned from card products to guide its client's business.
The bigger priority for fleet businesses is mapping routes and being able to detect and manage fuel efficiency and vehicle performance, Stephenson said. WEX also uses this data in its WEX Connect mobile app, which recommends the most cost-effective gas station based on the driver's location (i.e., the cheapest place to get gas may not necessarily be the one with the lowest price if it's too far away).
Any adoption of mobile payments in the B2B market would have to come with the assurance that tokenization or some other security feature would drive down fraud, said Barclaycards Stein. In the European market where EMV security is more widespread than in the U.S., mobile payment initiatives like Apple Pay are less attractive, he said, especially since Apple is rumored to charge 15 bps per transaction. In most of Europe, interchange has been capped so theres less for issuers to give.