It was a cold dark winter’s night when I met a couple of executives at the Trump here in Toronto. They were showing me an innovative payment solution using virtual credit cards; a service I had little experience with at the time. I grew up on the other side of the tracks – on the Acquiring side, where card transactions go to get settled. Never having issued a ‘v-card’ before, I was curious. Five minutes in, I was hooked.
V-Cards: Shooting Fish in a Barrel
I got onboard and like an ignorant rookie, expected folks to be clamoring for my attention. The offering was that good. What we presented helped businesses do better, be more progressive and secure. It wouldn’t cost them a thing except time. All they had to do was provide us with a vendor list and we would do the rest. But as it turned out, the flood anticipated was more of a trickle.
Sure, in other parts of the world, v-cards are used extensively. But in Canada, it’s still relatively new. Sometimes after presenting, looks of “…this is too good to be true!” would appear on faces around the table. We assured them we were on the up and up, but cautious skepticism prevailed.
What was needed was time and education, but that wasn’t the business model.
Looking at the facts, manual cheque processing is being phased out everywhere. And as far as a commercial alternative goes, virtual credit cards pack a wallop. A simple business case could be made for single-use v-cards in accounts payable. They work like cheques but unlike cheques, they are more secure. They also offer rebate revenue on spend, making the value proposition even more compelling.
Considering Supplier Challenges
In the B2B payments landscape, issuing has a stronger pedigree than acquiring. They are two peas in a pod – a yin yang. Yet like Popeye’s muscular arms; issuers are the huge powerful biceps surrounded by the skinny forearms of acquiring. The implications are such that most acquiring reps don’t know how to assess the needs of businesses needing a commercial acceptance solution. It is a very different proposition from retail.
MasterCard Canada was the first to address this gap a few years ago. They held a brilliant event called The Cost of Acceptance to get acquirers across the country aware and inspired about commercial payments. Since then, Moneris and some of the other acquirers have quietly beefed up competencies.
Still, getting suppliers to accept is tough work. They bear the brunt of the costs and perceive very little value out of the transaction. On the other hand, for accepting suppliers, they face a different challenge all together – reconciling disparate remittance data. I never considered this until sitting down with Dean Leavitt of Boost Payments who was in town for the NAPCP conference last month. The variety of virtual card platforms in the marketplace makes reconciling a difficult task. Boost Intercept is a product developed specifically to mitigate these challenges.
Virtual credit cards will grow to play a significant role in time – just like all the other technologies we’ve wondered how we got along without before. Cheques have been around since the World War II but that run is ending. So investigate how issuing v-cards could enhance your business but also, review what’s needed to accept commercial transactions. Because if you don’t, your customer will find someone else who will.