Acing business payments with virtual cards

In the realm of commercial payments, the need for speed, security, and seamless integration into enterprise workflows is not just a luxury but a critical necessity. This is especially true as businesses strive to match the consumer payment experience that has been set by the digital age. This shift is pushing the boundaries of traditional commercial payment systems, necessitating advancements in speed, security, and overall transaction efficiency. This is also a crucial factor as businesses work toward remaining competitive and meet the evolving demands of their customers and partners.

The advent of new and emerging technologies that enable real-time processing and embedded financial services is transforming how we interact with commercial payments. Whether it's using blockchain to improve transparency or AI to predict cash flow needs, the possibilities are endless. This is especially true in a region as vast, diverse and vibrant as Asia Pacific (AP). The region has seen a significant increase in fintech investments, paving the way for innovative payment solutions. These new players are offering creative solutions that address the specific needs of businesses, such as embedded finance and alternative lending. A groundbreaking innovation is virtual cards for commercial payments, and the benefits are unquestionable.

Firstly, the adoption of virtual cards can drive growth by providing businesses with the tools they need to operate more efficiently and securely, ultimately leading to increased profitability and market competitiveness. This is particularly important in AP that is experiencing rapid economic development. Secondly, different sectors can leverage virtual cards to address their unique challenges. For instance, the healthcare sector can use virtual cards to match claims and treatments seamlessly, liberating working capital and minimizing manual reconciliations in hospitals that are dealing with multiple insurance providers and limited data and process standardization. Mastercard’s global partnership with Medical Tourism Association leverages virtual cards to streamline billing processes, reduce administrative costs, and improve patient experiences. Thirdly, virtual cards help businesses comply with local and international regulations by providing detailed transaction data and ensuring secure payment processes. Fourthly, with the increasing threat of cyber-attacks, virtual cards offer a robust solution to enhance cybersecurity. A significant percentage of bank executives in the Asia Pacific region believe that virtual cards improve organizational processes and enhance cybersecurity.

However, challenges remain – especially as certain markets are more mature than others, resulting in fragmented payment systems and a lack of interoperability across borders. Other factors hindering widespread adoption also include policy landscape, transaction limits, chargeback concerns, and fears of administrative burdens. Addressing these disparities is essential for unlocking the full potential of commercial payments for the growth and success of every business, no matter their scale or size. This is why collaboration among ecosystem stakeholders is crucial. Mastercard works closely with acquirers, issuers, fintechs, and other stakeholders across the payments ecosystem to deliver a seamless, digital-first experience for enterprises worldwide. By working together, stakeholders can collectively educate businesses on the benefits of virtual cards and develop processes that meet business needs, thereby encouraging adoption.

Regardless of the industry sector, Mastercard's solutions are designed to address the diverse needs of organizations. In the telecom sector, Mastercard’s Virtual Card Network (VCN) is paving the way for better cash flow management. Telcos may make bulk purchases for IT and digital services, but mobile phone sales vary by seasonality. If a supplier does not accept a card, telcos can use a payment aggregator to bridge the gap and realize working capital benefits during peak months. Telcos can easily integrate virtual cards to the aggregator’s system and enjoy greater control over the payment process. Looking to the logistics sector, freight forwarders often work with various third-party logistics providers to secure last mile delivery. Virtual cards allow for easy reconciliation of different payments across partners, further extending credit terms to free up working capital.

It’s evident that virtual cards have proven to be a gamechanger in extending the seamless, frictionless and secure experiences of consumer payments into commercial payments and with widespread adoption and integration, virtual cards hold the promise of making payments as intuitive to business as they are to individuals. By simplifying commercial payments through technology-driven payment innovations, tailored solutions, and a strong partner network, Mastercard continues to create an ecosystem in Asia Pacific and world over to support the entire transaction lifecycle, from order placement to final reconciliation, while ensuring that every step is secure, efficient, and adds value to the business.