The commercial payment card industry is at a tipping point, reveals market research firm Packaged Facts in the recent report Commercial Cards and B2B Payment Services: US and Global Markets and Trends, 11th Edition. While cards continue to provide the backbone, technology is reshaping and broadening their ability to meet customer pain points. Wrapped around them are increasingly sophisticated array of software solutions and technology platforms that help bridge a gamut of challenges and providing increasingly seamless payment processes that involve not just cards.
It’s a multi-rail world, even for Visa and Mastercard, as industry participants rush to partner, acquire, and strategize to tap the broader global B2B payments opportunity.
- Mastercard has pushed aggressively into payment methods and related services that diversify it away from its traditional card network roots. While card-based payments remain the foundation of its business, Mastercard has executed a multi-layered approach across infrastructure, services, and applications that targets P2P, B2B, and B2C payment flows via a “multi-rail” strategy that leverages not only its traditional card rails but also incorporates non-card payment methods. These more recent solutions include Mastercard Send, Mastercard B2B Hub, and Mastercard Track. Along with a growing assortment of related data analytics solutions, these new offerings help position Mastercard for long-term global B2B payments growth.
- Visa has also aggressively directed more resources in the B2B payments direction. Visa Direct, Visa’s real-time “push debit” money transfer and payments platform, uses the Visa network to process transactions. So, while it is used for push payments like ACH, it also protects Visa’s four-party network model and interchange and can leverage Visa’s international scale and existing infrastructure. Product usage has grown at a rapid pace: Packaged Facts estimates that 2018 volume topped $100 billion. While most Visa Direct volume is currently P2P, Visa positions the product as meeting the needs of multiple users and user relationships, including B2B.
These services not only help drive payment value but also gives the companies competitive advantages on the global stage. China UnionPay has eclipsed western payment networks by total payment value, and its commercial card payment value is rising quickly. However, it lags its western counterparts significantly when it comes to added-value technology services.