In 1994, The Wu-Tang Clan had the whole world singing, “cash rules everything around me, CREAM, get that money dolla dolla bills y'all,” but almost 25 years later, cash is borderline irrelevant, and the cashless society of the future is here. What now? Great question.
The short answer is: to embrace and even harness change or get left behind. It’s easy to see that eCommerce and BNPL (Buy Now Pay Later) are exploding, and technologies such as mobile wallets and virtual credit cards are no longer an alternative option. But there is a longer, more nuanced answer that bears exploring.
If every growing company had a “dolla dolla bill” for every time they heard “if you’re not evolving, you’re dying,” they wouldn’t need a credit card. But they don't, so they do. In a world of digital and mobile payments, and with apps replacing dirty old coins and banknotes, the humble credit card remains an incredibly useful tool. It’s not just the age-old concept of buying something now and paying for it later, it’s a potential tool for managing strategic spend.
Credit cards have moved with the times, and over the next few years, we will see this evolution pick up pace - not just in the consumer cards we carry, but in B2B transactions as well. The days of paper processing and physical cards may already be in their twilight, but to understand where the industry is going, it’s important to briefly revisit the past.
In 1958, Bank of America issued the first credit card, and American Express issued a charge card. In 1969, American Airlines became the first private company to utilize the magnetic strip that had been previously invented by the CIA. Until the early 2000s, not a lot had changed in terms of credit card technology, but with smartphones, a pandemic, and the ever-increasing vulnerabilities of a digital world, credit card technology has had to evolve faster than other, less vulnerable industries.
EMV chips, contactless cards, and pins weren’t enough to make consumers feel secure, so entered the likes of Google Pay, Apple Wallet, Android Pay, and a host of other personal finance tech solutions that were aimed at increasing ease and security. But what about B2B payments? There’s an argument to be made that B2B payments arguably needed innovation much more than the personal finance space, but until recently, the industry lagged behind.
It is estimated that in the US alone, there is $25 trillion (no, that’s not a misprint) in annual B2B payments. If this number is correct, the costs associated with processing that many checks and corresponding invoices exceed $100 billion. These estimates are based on payments and what is available today, but at the pace that this industry is evolving, it’s fair to assume there’s even more out there.
There’s also an opportunity cost to consider: embracing and adopting change early will pay dividends to those who start the journey now, while those who wait take on the burden of time-consuming, manual, and unnecessary processing work—not to mention the risks associated with physical cards that can be lost, stolen or cloned.
That’s why the next iteration of B2B credit cards won’t be something you put (or forget to put!) in your wallet; they’ll be virtual.
Virtual cards sound complex, but in reality, they are quite simple, and they come with a whole host of advantages:
As you can see from all these benefits, the real question we should all be asking ourselves about virtual cards isn't “why?” but “when?” Why wouldn’t your organization demand enhanced business continuity, less tedious work, more money on the balance sheet, and a strong hedge against the future?
I’ll close by saying that I have two toddlers (one nearly four years old, the other almost two). They have never seen a check, and maybe once they’ve seen cash (in their birthday card from their elderly grandparents). If I lose a bet on a game or on the golf course, I pay it virtually via an app.
One day soon, we’ll look back and laugh at having ever used plastic cards to pay for stuff. That part is easy to predict; whatever comes next isn’t. But wouldn’t you rather be taking a step towards a solution rather than continuing to use something that is creating problems?
Combining Tradeshift Go with your card program lets you issue pre-approved, encrypted virtual cards through one simple web app. Freedom to buy, free of worry—that’s the power of Go. To learn more about our Tradeshift Go solution or see our software in action, reach out to our team of experts and start your free demo today.