Corporate credit cards provided to employees for expenses are a different animal from B2B spending. Employees that use corporate cards look mostly like regular consumers to merchants. They spend on hotels, airplanes, food, and gas, just like any consumer. That's quite different from what a B2B transaction looks like.
Since corporate card-holding employees spend like consumers, why not go all the way and leverage that behavior within the corporate accounts payable (AP) model? Some companies are doing just that by issuing their employees virtual credit cards. Instead of a physical card, employees receive a virtual card that can go into their (personal) digital wallet on their mobile phone. Virtual cards put a focus on sustainability and reduce the production of plastic. Additionally, the entire procurement process is digital.
For many companies, their accounts payable department issues a physical credit card to employees who will incur business expenses. Spending limits are set on the card and transactions can be tracked in real-time by logging into the credit card website. Some less sophisticated companies require employees to spend on business expenses using their personal credit cards. They then reimburse the employees, which is a more labor and error-prone process.
With the new model, the AP department is able to completely integrate with the virtual cards. This is because many virtual card systems are compatible with much of the AP and ERP (enterprise resource planning) software on the market. While this all sounds great from the buyer's side of things, the hurdle comes from the seller's side.
Virtual card acceptance by suppliers has slowed down adoption. That isn't really anything new since modernization efforts generally take a while in the B2B space. The B2B ecosystem is promoting straight-through processing to get suppliers on board. Straight-through processing allows virtual cards to integrate better with suppliers, allowing virtual card payments to scale. As more suppliers accept virtual card payments, corporations will experience higher automation, reduced paper trails, and higher overall levels of efficiency
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