Traditionally, P-cards are associated with low-value B2B payments. Astute corporate treasurers and card issuers then realized that the same approach could be used for high-value low-volume B2B purchases to cover “accounts payable” and “accounts receivable.” Invoice-based payments could then enjoy all the card-based benefits, which include:

• Deferred payments so buyers can keep money in their accounts for longer and also benefit from card-issuer rebates associated with spending volume.
• Detailed transaction data with one-to-one matches for efficient payment reconciliation.
• Cross-border payments on trusted international networks
• Payment guarantees without the need for buyers to validate and update supplier bank account information.
• Fraud protection and security via a payment network adhering to the payment card industry data security standard.

Card issuers and their corporate customers increasingly appreciate the benefits of card payments to commercial payments. Domestic B2B card spending more than doubled on average across Australia, China, India, Indonesia, the Philippines and Singapore between 2017 and 2023.

Nestled within that growth is a near tripling of virtual card spending over the same period.

A virtual card offers several additional benefits beyond a P-card's benefits:

• Inherent security in single-use virtual card numbers that relieve the burden of having to handle or store sensitive payment credentials.
• Custom spending controls on single versus multi use, frequency of use, transaction amounts, types of purchase, locations and times of day.
• Fraud protection through automatic opening and closing of accounts based on valid start and end dates tied to custom controls.
• Instant and more environmentally friendly worldwide card issuance that eliminates the need for physical card distribution.
• Push provisioning of cards to digital wallets on mobile devices for instant use anywhere.
• Transparency of usage with enhanced transaction data, which includes non-financial information such as invoice numbers and billing codes, to support real-time tracking and reporting for automatic reconciliation across departments and spending categories.

The growth of virtual cards reflects market perceptions: 85% of bank executives believe virtual cards improve organizational processes, and 84% believe they enhance cybersecurity, according to RPMG’s 2022 virtual card benchmark survey results.

Virtual cards can also dovetail into straight-through processing, where available, for additional benefits.

A standard B2B card payment requires the supplier to input the received credit card information provided by the card issuer into the accounts receivable module of its enterprise resource planning (ERP) system. Straight-through processing (STP) for virtual cards is an emerging solution, already available in some markets, that bypasses this requirement by allowing the card network used by the issuer to provide a virtual card number directly to the supplier’s payment acquirer for processing.

The added benefits include:

• No need to manually input payment information.
• No need for manual exception handling when a payment fails.
• Reduced compliance challenges since the payment network rather than the supplier handles the virtual card number.

Domestic spending totals in the wholesale & retail trade category, which includes automotive repair, rank second in the Philippines and Singapore, third in China, and fourth in Australia, India and Indonesia across the eleven B2B sectors in the McKinsey Global Payments Map.

The B2B sales associated with wholesale & retail spending span the length of a supply chain and extend naturally into B2B2C sales. These relatively high volume and low value B2B sales tend to be similar to their B2C counterparts with similarly tight profit margins for businesses. On top of any payment agreements struck between buyers and suppliers, cards can help manage these margins by deferring payments of accounts payable while supporting the rapid reconciliation of accounts receivable.

Consistent handling of flows across B2B and C2B payments particularly makes sense for online marketplaces that straddle B2B and B2C sales. Pre-existing e-commerce support for C2B card payments can then make B2B integration comparatively easy.

Australia’s, China’s, India’s, Indonesia’s, the Philippines’ and Singapore’s domestic spending levels in the transportation & storage category in 2023 are below the levels seen domestically in the wholesale & retail category.

But the relationship between the two categories inverts if the focus is international rather than domestic. The long-distance spending covers chains of suppliers and buyers, local transporters, freight forwarders, terminal operators, customs brokers, port authorities and international carriers when exiting and entering jurisdictions.

The commercial payments, which may include B2G payments as well as B2B payments, that occur en route need to be guaranteed, error free, multi-currency, and able to handle last-minute payments of duties and fees at checkpoints without formal approvals or purchase orders. Virtual cards help through their instant provisioning on mobile devices regardless of location, spending controls to keep last-minute payments in check, and tying of payments to specific shipments that can then sync with ERP systems.

Singapore saw an almost six-fold increase in inbound cross-border cardable spending between 2017 and 2023 in the human health & social work activities category. The increase accords with Singapore’s second place ranking in the latest medical tourism index, which is based on American perceptions of healthcare destinations worldwide — America’s northern neighbor Canada ranked first.

Cross-border spending underlies pockets of intense growth, such as in Singapore. But healthcare spending at home and abroad is growing more generally too: 59% of health insurers in Asia Pacific believe healthcare costs will increase over the long term, according to WTW’s 2024 global medical trends survey.

Complexities include multiple public and private sector stakeholders, fragmented supplier bases including technology companies, minimal price transparency between providers and insurers, lots of highly variable data not always in standardized digital formats, and lengthy debt collection and claims cycles.

Unconsolidated overdue invoices are common. In this singularly complex sector, it is particularly important to be able to connect virtual card numbers from one account to disparate invoices for streamlined reconciliation and early delinquency warnings.

Everything from purchasing online advertising to renting cloud storage, is considered longtail spending, alternatively known as “non-strategic” spending. It consists of the bulk of a company’s B2B purchases across the largest number suppliers while accounting for only a fraction of the value of total spending.

Much of the cost to a business of handling these payments comes from the inefficiency of juggling multiple suppliers. The nature of digital and “as a service” payments make them more likely to be made to global suppliers operating in different currencies. They are also often subscription based with different payment terms and due dates that can be hard to manage.

A unique virtual card number for each subscription from a single funding account regardless of geography or currency can allow for consolidated views of spending. At the same time, the consolidation can open up volume-based spending rebates for buyers from card issuers.