Fuelled by dynamic integrated technology innovation, seamless regulatory compliance and enhanced value added services, businesses can generate operational advantages, achieve process improvements, and lower costs through the new generation of intelligent corporate and commercial card programmes.
Commercial card payments reach 10% of global card payments
Commercial cards and corporate payments programmes account for less than 10% of total payment card volume in Europe, yet there is tremendous potential for developing this sector into other areas undergoing automation, such as travel and expense programs and supply chain payments.
In Europe, the increasing demand for corporate and procurement/purchasing cards from governments, public sector entities and large corporates could see the estimated corporate cards’ market size of $7.8 billion in 2020 grow by as much as 7.4%.
In fact, to meet this growing demand, many companies increased their investments in technology by an estimated $25 billion between Q1 2020 and Q1 2021.
And nearly 40% of firms expect to increase their use of virtual card technology over the next 12 months as they seek new ways to streamline supply chain management and reduce reliance on manual payment methods.
These are some of the findings from Navigating the New Opportunities for Corporate Cards, which looks at the way that larger companies pay has changed in the two years following the pandemic, when digitalisation of payments was a major trend in banking for individuals and small companies.
The insight shows that although innovation in this area is slightly lagging behind the choices available to individuals through ‘challenger banks’, the FinTech industry is increasingly offering larger companies increased flexibility and choice through digital technology.
The report finds that commercial cards, whether they are issued to individuals to pay for expenses or used to pay for larger business expenses by the company itself, are a critical component of commercial client relationships, and the use of these cards is growing.
Rising Demand
The rising demand for better payment solutions at enterprise level is driven by the difficult economic environment in the early part of 2020, in which commercial credit card spend outside of North America dropped by 42%.
Although data shows that commercial card spending has almost returned to pre-pandemic levels, this experience showed large organisations the need for agile, modern payments technology to protect their cashflow.
FinTech companies have entered the $7.8 billion European commercial card market with innovative solutions that expand upon what a commercial card can do with new digital functionality.
Virtual cards that can be configured for each user with custom rules can significantly drive cost savings and reduce administration while also reducing fraud and misuse.
Open Banking protocols are allowing companies to use Request-to-Pay (RTP) services to send and request money instantly.
API integration means that companies can keep track of transactions from a single integrated platform, giving them an overview of spending in real time.
These examples barely scratch the surface of what will be possible in corporate card payments in the coming years.
“The regulatory and accounting requirements of large organisations often mean that change is slow, but there is a golden opportunity here for companies to become more efficient and increase their own working capital by embracing new digital payment solutions,” comments Silvia Mensdorff-Pouilly, SVP and Head of Sales Europe at FIS.
“We can predict that there will be a much greater uptake in modern commercial card solutions among large companies over the coming years.”
For more info on commercial cards in Europe CLICK HERE
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