By Jørgen Christian Juul, CEO & Founder at Cardlay and vattax
With a shift away from traditional cash and bank transfers to digital transactions, the corporate payments industry is at something of a crossroads. Generally referring to any kind of business transaction, corporate payments encompass a wide range of different payments, from those for travel costs and office supplies, to supplier and cross border payments.
With a movement towards more convenient, globalised and technologically advanced transaction methods, what exactly does the future look like for corporate payments?
One thing that’s soon expected to become a thing of the past — at least in the realm of corporate payments — is physical bank cards. Not only are they bad for the environment, but are cumbersome to set up and used less and less frequently since employees increasingly rely on digital wallets such as Google Pay and Apple Pay.
In contrast, virtual cards can be instantly issued and distributed, and managed in real time. With Cardlay’s solutions, companies can easily issue virtual cards for all their employees without having to deal with KYC forms like with physical cards, nor do they require credit checks or paperwork from the employees using them either. These virtual cards also come with their own unique card numbers, expiration dates and CVCs.
Real-time cross border payments
Arguably the biggest change in the payments landscape is the rise of cross border transactions. This is inevitable considering today’s growingly globalised world, and the volume of such payments will only grow in the future. According to the Bank of England, the value of cross-border payments is expected to rise from almost $150 trillion in 2017 to over $250 trillion by 2027.
However, these transactions are often still slower than domestic transfers due to the higher number of intermediaries involved, plus a lack of standardisation between different countries. As such, expect real-time cross border payments to take centre stage in the coming years. Relying on a range of technologies, from application programming interfaces (APIs) to distributed ledgers, these are enabling international payments to become much quicker and cheaper.
Super apps are all-in-one marketplaces of services and offerings. Arguably the most famous example is WeChat, which not only encompasses messaging capabilities, but social media, news and payment features too.
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wallets and QR payment capabilities, but the ability to access financial services such as insurance, loans and credit.
Take Cardlay’s white label app suite, for example, which is tailored towards corporate payments specifically. It features card management (like card issuing and card controls), expense management (all company card transactions and employee reimbursements are automatically collected and presented there) and automated VAT reclaim capabilities all within one app.
Cryptocurrencies are almost certain to increasingly influence the corporate payments sphere. As of now, many businesses are using cryptocurrencies to facilitate instantaneous, cheaper and more secure payments, with such transactions having to go through fewer intermediaries and protected by the immutable nature of blockchain technology. One study found that around 15,000 companies worldwide accept Bitcoin alone.
This usage is expected to rise, particularly as more stable coins become available. Pegged to dominant fiat currencies, these provide the advantages of digital currencies without the volatility. With the likes of Facebook moving into the stable coin world, don’t be surprised to see these become mainstream in the near future.
Artificial intelligence (AI) has already impacted various aspects of business, from intelligent chatbots to enhanced data management, and finance is no exception. Research shows that 54% of financial services organisations with over 5,000 employees have adopted AI.
The use of AI for corporate payments can offer many benefits. For example, it can help to prevent and detect fraud by identifying unusual payments, like when the amount involved is particularly large or the transaction was carried out by somebody unexpected. It can also speed up payments by reducing the need for humans to get involved, and help companies more easily meet regulatory requirements by quickly validating transactions against money laundering and sanctions rules. With all these advantages, AI is sure to play an even greater role in corporate payments as time goes on.
Although nobody can ever say with absolute confidence what the future holds, it’s clear that certain trends are highly likely to influence the corporate payment sphere in the coming years and decades. Aimed at making corporate payments quicker, cheaper and more secure, it’s advisable for your own company to start adopting the above solutions as soon as possible if it hasn’t already.
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