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In a vast and rapidly growing commercial card market, virtual cards are grabbing dollar-volume share and are poised to dominate business-to-business card payments, according to research from Accenture Payments.
Corporate cards, purchasing cards, and virtual cards will account for $523 billion in U.S. commercial card volume, up 10% from 2017, according to the research. Of the 2018 total, virtual cards, which are non-plastic accounts typically tied to accounts-receivable systems and represented by a digital token, will total $169 billion in spend, up fully 24% from last year.
Indeed, virtual cards are by far the fastest-growing of the three commercial card categories studied by Accenture, with a compound annual growth rate of 21% over the five years from 2017 to 2022. Purchasing cards will grow 6% and corporate cards, after some slight growth, will wind up with pretty much the same volume as they commanded in 2017. Accenture’s numbers do not include small-business and fleet card activity.
Buoyed by virtual cards, the total commercial card market will expand at a 10% annual rate through 2022. Looked at in isolation, virtual card spend just on mobile devices will grow at a 43% clip, Accenture forecasts, totaling $42 billion in 2022. Mobile usage will bloom as “issuers continue to enhance solutions to issue/approve virtual cards from mobile form factors, and corporate travelers become more comfortable with mobile wallet capabilities from the ‘Pays’ (e.g., Apple, Google, Samsung), banks, and merchants,” says Frank Martien, managing director for payments research in North America, in a blog post.
By 2021, virtual cards will take over as the biggest segment of the commercial card market, registering $300 billion in volume and taking over the lead from purchasing cards ($275 billion), Accenture projects.
Technology companies and payments providers have recently responded to the rapidly growing opportunity in virtual cards. For example, Noventis Inc. and HighRadius Corp., both based in Houston, this spring collaborated to offer software that automates for suppliers the chore of processing and reconciling virtual card transactions while helping them meet PCI-compliance requirements.
Even with a 10% annual growth rate in purchasing volume, commercial cards are barely scratching the surface of an enormous market. All told, they account for less than 1% of a business-to-business payment market estimated at $150 trillion. But while virtual cards may be the strongest engine driving the growth of digital B2B payments, they aren’t the only one. Others, Martien says in his post, include “continuing accounts payable (AP)/accounts receivable (AR) automation and integration, increasing focus on working capital, [and] improving real-time spend visibility and expense management.”
