Digitalisation and the Pandemic have Caused Large Companies to Use Commercial Payment Cards, New Report Finds

  • Covid-19 , Payments
  • 09.12.2021 02:00 pm
  • Around 10% of global card payments are commercial or corporate in nature
  • With a projected market size of $90.4 billion in 2020, the global corporate cards market is set to experience a compound annual growth rate of 18.9% between 2020 and 2025
  • Virtual cards will continue on their strong growth vector and, with increasing recognition of the working capital benefits that the payment vehicle provides, should continue to grow long term at a 30% rate

The Payments Association (formerly The Emerging Payments Association (EPA)), today announces the release of its report Navigating the New Opportunities for Corporate Cards. The report looks at how 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. Created by a consortium of The Payments Association’s members that included senior figures from FIS, Cardlay, Schiltz & Schiltz, NatWest, FLEETCOR and Accenture, this expertise mix drawn from established banks, fintechs and regulatory experts gives a broad view of the corporate cards landscape and its future.

The consortium has found 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. Europe had an estimated corporate card market size of $7.8 billion in 2020, and this is predicted to grow by 7.4%, largely fuelled by demand for corporate and procurement and purchasing cards from governments, public sector entities and large corporations.

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.

Tony Craddock, Director General at The Payments Association, comments: “We are very encouraged by what we have seen both from within the fintech industry, from established players in the payments space and from companies across Europe when it comes to the evolution of payments. Two difficult years have meant that the necessity of having access to working capital today rather after the sixty days terms in an invoice has been driven home, and we are seeing the payments industry create new products to meet that need.”

Silvia Mensdorff-Pouilly, SVP and Head of Sales Europe at FIS, adds: “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. We can predict that there will be a much greater uptake in modern commercial card solutions among large companies over the coming years.”

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