Commercial cards on the rise: BOAML

There is an overall growth in commercial card payment activities with treasuries seeking greater efficiency and control, David Voss, Bank of America Merrill Lynch, argues in an exclusive interview.

“[Treasurers] are looking more closely at policy compliance and how they can reduce exceptions to limit inefficient payment and reconciliation processes,” says Voss, head of commercial cards for Europe, Middle East and Africa.

“Control and efficiency are big topics for most treasury divisions. Treasurers are increasingly using commercial cards to create a central payments solution,” he adds.

Transformation projects are a hot topic when it comes to improving expense management and payment programs.

“We are seeing more and more interest from companies wanting to consider a central, rather than any individual, payment solution,” Voss tells The Global Treasurer.

“It is fair to say that that is a trend and there is plenty of interest from people who are willing to look fundamentally at their card program and what might change,” he adds.

How has PSD2 impacted commercial cards?

With PSD2 being introduced at the start of 2018, how commercial card payments will work in the future has been called into question.

“Rules and standards are in a state of flux. The industry is grappling with these and there’s much discussion around how the rules and standards will change and what changes that would be for commercial payments in the future,” explains Voss.

As the product head for commercial cards, Voss is challenged with needing a greater understanding of online payment technology and security in much more detail than before.

“My role has become more technical and that is a really interesting shift for the industry as a whole. PSD2, more broadly, is inviting the industry to look at the opportunity that new technical platforms are offering,” he says.

The commercial card product team has been working on an API strategy.

“There’s been quite a lot of noise because people didn’t know what to develop. There is a natural tendency to look for one standardized solution or protocol”

“There’s been quite a lot of noise because people didn’t know what to develop. There is a natural tendency to look for one standardized solution or protocol,” explains Voss.

The UK’s standard as Voss believes it is one example of where the market nationally has collaborated.

“Ultimately, I don’t think anyone is going to invent a single standard. It is going to be down to the individual players to adapt to the solutions that are out there. I do think this will also evolve over time – those standards may well emerge in two to five years’ time,” Voss says.

Fragmentation and dis-harmonization is a risk, particularly if countries look to gold plate regulation. However, PSD2 is generally seen as less fragmented than other pieces of European legislation.

Virtual cards

API technology is having a wide-reaching impact on commercial cards as they allow banks to integrate virtual cards as part of a fully automated corporate card solution.

This is partly responsible for the growing trend for large corporates to opt for virtual card solutions, Voss says. “The technology has come of age. Corporates have developed more sophisticated solutions based on virtual cards, and success is breeding success,” he explains.

“We are seeing corporates making higher value payments than before too due to the additional controls you can get with virtual cards.  API technology is also enabling higher volumes of payments,” Voss tells The Global Treasurer.

“We are seeing corporates making higher value payments than before too due to the additional controls you can get with virtual cards”

Data is a key differentiator as virtual cards offer the ability to provide enhanced data for transactions through the payment chain right through to the back end and automate those payments.

They also provide a good level of control and oversight in terms of fraud prevention or policy compliance.

“Virtual cards are a very versatile solution, and it lends itself well to the large corporate that often has complex buying requirements,” says Voss.

“It is a much more user-friendly generation of card technology compared to the traditional enhanced data of purchasing,” he concludes.