Virtual cards have been around for over a decade, but they are nevertheless seen as one of the current hot trends in the retail and commercial banking sectors right now. So, what’s the reason for the surge in interest and take-up we’re now seeing?
Partly, it’s dependent on the sophistication of the bank itself. There are persistent barriers to entry, including reluctance among decision makers, legacy approaches to doing business and a lack of IT support. There does therefore remain a need for a mindset shift, and education among wider decision-makers within the business community to better understand the advantages of using virtual cards.
Yet, within the more forward-thinking institutions, we’re seeing growing understanding of these benefits. Many are initially attracted by the enhanced security controls that are wrapped around the cards. More and more people also see them as an innovative payment vehicle that lets businesses easily and safely pay suppliers in seconds, with no paperwork, manual reconciliation or cumbersome processes, but with all the checks and controls they need.
As banks become more mature in terms of the commercial payment services they offer, demand is likely to rise as their business customers adopt the approach and become more dependent on it.
Ultimately, the growth in adoption is primarily about advancements in technology. I see three key factors in play:
- The speed at which consumers and corporates can access information in the cloud.
- The sheer processing power of the smart computing devices that are now in our back pockets.
- The growing availability of information through application programming interfaces (APIs).
Together, all three factors are driving take-up.
The future trend is likely to be that virtual cards will gain more market share and momentum. However, the level of adoption is markedly different in different geographical markets depending on a range of factors, including the dominant business culture and credit policy in the countries concerned. It’s therefore key that banks are aware of the maturity of the local market they’re dealing with, and that they adapt their approach to customers accordingly.
Equally, providers will need to have a good understanding of the banks working in these territories and the market conditions they face. They will need to support each bank on the specific, and often individual, journey they make to virtual cards, whether they’re just trying to get rid of paper, or whether they want to deliver a very sophisticated, integrated virtual card B2B payment solution into end corporates. In this way, providers can play their own part in supporting the escalating growth of this increasingly important corporate payments market.
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