When Jerry Seinfeld, in his recent Netflix special, asked the audience, “where did texting come from?… what, did they just give it to us!?” it was one of the biggest laughs I had during the darkest pandemic months. For weeks it resonated because I had been wrestling with a similar question about virtual credit cards, a technology that should be pervasive in B2B circles but isn’t. While its origins are clear and its promise significant, I was curious as to why growth had been laced with inertia for years. So I looked into it.

Virtual cards fit between early adopters and early majority in the technology adoption framework. Geoffrey Moore termed the gap a chasm in his book Crossing the Chasm, calling it the hardest part of the life cycle to overcome. But this solution is different. If ever there was an intuitive technology that closely resembles an existing manual process like writing cheques, and digitizes it, virtual cards are it. Yet hesitation exists amidst benefits that far out way costs. Why?

Educate to Accelerate Virtual Credit Card Growth

In the yin-yang relationship card schemes oversee, issuers are disproportionally better educated than their acquiring counterparts when it comes to virtual cards. Even then, their educational impact is limited. I once worked with a fintech issuer who did a great job advising prospects, cultivating relationships and onboarding suppliers at a 60:40 acceptance rate. However, the ‘maybe’ and ‘not-right-now’ suppliers that compromise the 40%, didn’t get a follow up call instead, were sent to the waiting for religion pile that was never cultivated – the stack got fat.

As it is, their successful business model didn’t need such a partnership to thrive. Had they partnered with a capable acquirer, that 40% could have been halved or more. But herein lies a concern: most acquiring reps are retail focused and do not understand receivables, working capital or the liquidity KPIs B2B companies manage.

In Canada, there is only one program – bank cash management services aside – actively helping B2B suppliers accept virtual payments. In comparison, on the issuing side, at least 10x or more are dedicated to buyers. And their efforts are paying off as over 80% of buyers in a MasterCard study indicated supplier relationships would improve if they accepted cards.

Still, another challenge is the sales process itself. Going virtual is more than a product purchase for small and mid market businesses; it is a cultural shift. The impact is top down, company wide. If all stakeholder interests are not captured, efforts will be stalled, if they proceed at all.

What You’re Not Aware of Can’t Change

Payments is a simple concept yet can be very complex. It will be interesting to see how, over time, these challenges get resolved. But really, businesses need to take ownership. Solutions like virtual cards are turning cost centres into revenue generators, supporting trade credit–a lubricant of commerce. Progressive organizations who understand this have accounts receivables (and payables) functions contributing to profitability in ways where risk management and good cash flow are icing on the cake.

Covid19 has accelerated the need to digitally transform and virtual cards are a low hanging fruit to replace cheques. On the supplier side, research has shown accepting cards can be cheaper than other payment collections methods. If uncertain about this, examining the cost of acceptance will go a long way to revealing the right mix. Should that uncertainty persist, reach out–we can help.

In the absence of a technology that could disrupt momentum such as digital currencies, virtual card usage will rise in B2B perhaps to the extent text messages do for citizens now. But until that happens, competitive advantages can be realized for the curious and informed.

In 20 years, when this payment method is prevalent and early-adopter advantages are gone, should a comedian or Seinfeld himself lament the state of virtual credit cards, chances are it won’t be about where it came from but what did we do before?