Commercial Cards Still Face Adoption Barriers

Commercial cards have struggled to gain widespread adoption in B2B payments, and new research from Mercator Advisory Group aims to explain why — and how to overcome those adoption barriers.

The research group announced last week the release of its newest report, “Supplier Enablement of Cards in B2B E-Payments Requires Persistence, Data and Technology.” The report explores how card issuers and corporate buyers are approaching this challenge to convince suppliers to accept cards in B2B payments.

“While the commercial card industry continues to benefit from the ongoing shift away from cash and checks and the increase in purchase volume, vast opportunities still exist for growth in cards as payables tools,” said Steve Murphy, director of Mercator’s Commercial and Enterprise Payments Advisory Service. Murphy, who also authored the report, noted that commercial cards’ potential is a bright spot for issuers and corporate buyers looking to use these payment tools. “There is substantial untapped potential, given the size of the market,” he said. “The effort to drive further adoption of virtual cards among suppliers is one of the key activities of commercial card issuers and their corporate clients.”

Historically, commercial cards have struggled to gain mass adoption in the B2B payments space because of the high interchange fees charged to suppliers and vendors. But corporate buyers often prefer cards to obtain rewards points.

As virtual card technology develops, however, there is an argument for both sides of a transaction that a card payment is beneficial. For corporate buyers, they can obtain rewards, as well as clearer visibility into transactions and their data for cash management purposes. Virtual cards also safeguard payments without the need for commercial card information to be exchanged manually between parties. For suppliers, cards can support faster payments and similarly offer transaction data for accounting and cash management purposes.

According to Mercator, B2B payments were valued at nearly $24 trillion in 2015, a figure that includes commercial cards, checks, ACH and wire payments.