Commercial card payments have failed to take off, despite significant potential benefits for suppliers, buyers, and card providers. Today, only some 2% of global business spend is captured on card.

Next generation virtual payments platforms will transform commercial card payments if they enable three winning strategies to counter today’s barriers to growth. In this second of a series of three blogs, I look at how our innovative single platform will break the requirement for suppliers to be card accepting – stemming cost and process burdens, and helping card payment benefits to flow.

Underwhelmed by overheads

There’s no doubt about it. Many suppliers feel that commercial cards are an expensive burden. All kinds of overheads have to be met – from integration of card acceptance hardware, regulatory overheads such as PCI-DSS, to high cost and inflexible transaction rates.

New models haven’t so far proved any more successful in creating the right conditions for supplier acceptance.

Master merchant models have tried to relieve suppliers from card acceptance, offering a service that accepts card payments on their behalf. However, the master merchant provider charges a fee for this service on top of the card acceptance cost, so the solution still means expense for the supplier.

Straight Through Processing (STP) is another approach, used by providers to relieve supplier cost and process burdens. With STP, a supplier can register a card acceptance terminal and the provider will process the payment on its behalf, with payments sent direct to its bank account. The trouble is that the supplier still has to become card accepting, and pay a merchant service fee.

Breaking free

What's needed is a friction free way for  suppliers to receive payments, regardless of their acceptance status, and the next generation Ixaris Payments Server is designed to do just that. It provides payment flexibility through an innovative single platform, increasing the volume and value of addressable payables spend, relieving suppliers from the need to be card accepting by enabling them to receive payments via multiple electronic payment networks through a single platform.

Once the supplier has completed a simple, one-time enrolment process to the Ixaris portal, payments can be routed directly to their bank accounts. Think of it like a virtual cheque that allows the buyer to electronically send a supplier a payment instruction – with rich remittance data that the supplier can review and accept to trigger a low cost electronic transfer using the most appropriate payment network.

As well as providing a payments audit trail, the remittance data also helps suppliers to streamline accounts receivable processes and make further cost savings. There is no need for the supplier to receive and re-key card details for each transaction, no need to worry about PCI-DSS compliance, or to spend valuable time trying to reconcile payments.

A next generation Payments Server can provide the flexibility for payments to be executed outside traditional card rails, where the supplier is not card accepting, prompting a shift away from costly card payments to a new world of transaction fees ‘right-sized’ to the supplier’s transaction dynamics and business needs.

Benefits for all

Adopting a next generation payments server will deliver the proven benefits of virtual cards to all partners in commercial payments.

The ability to support non-acquired suppliers means buyers can address long-tail spend suppliers, for example, who are traditionally hard to serve. These are suppliers used on an infrequent basis who often represent a major process and cost overhead for accounts payable departments. With our next generation payments platform, these suppliers can be paid off card rails through the same front end platform as existing card accepting suppliers, without becoming card accepting.

It also allows the third important partner group in commercial payments – banks and other commercial payment providers – to offer a single solution to their buyers that drives greater transactional revenues, increased efficiency, and an improved client experience.

Aternate option below:

• Buyers can utilise a single solution to initiate payments, but have the flexibility to select the payment method that works for the transaction. Card based where the buyer accepts card, but off card rails via alternative networks where they do not.
• Suppliers get access to a solution that supports their clients preferred payment processes, without the need to become card accepting and receive electronic payment with rich remittance data.
• Banks and other commercial payment providers can offer a single solution to their buyers that drives greater transactional revenues, increased efficiency, and an improved client experience.