Treasury and Trade Solutions

Commercial Cards Lead the Way

in the World of B2B Payments
Commercial cards offer buyers and suppliers numerous benefits.
But to realize their full potential and extend their reach, card
providers must work with payment facilitators, platforms and other
fintechs to offer integrated solutions that deliver incremental value
to all parties, writes Sébastien Delasnerie, Head of Commercial
Sébastien Delasnerie Cards, North America at Citi Treasury and Trade Solutions.
North America Head of
Citi Commercial Cards
You have read it many times before; we live in an online world, much of our interaction with banks,
retailers and service providers is via our smartphones or desktops. The tremendous impact of
this change is all around us, best exemplified by well-known bricks-and-mortar retailers folding
under the pressure of online consumption. This trend towards dematerialization and digitization
resonates powerfully in the world of B2B payments as businesses increasingly expect immediacy,
process efficiencies, security, and data enrichment, all through easily accessible channels.

Firstly it is worth noting that commercial cards already addresses the aforementioned objectives;
it is readily available to virtually all buyers and their suppliers, it offers buyers the ability to digitize
and streamline their P2P processes (particularly the resource intensive PO-to-invoice
reconciliation), it avails vendors critical speed of payment and constitutes a highly secure payment
channel with customizable spend controls, and it offers the highest level of data enrichment
through extra line-items, such as product or commodity code, item description and quantity, and
even duty amount.
2 Treasury and Trade Solutions

The growing adoption of virtual card accounts (card capitalize on the trends of our digital economy. Below are
numbers delivered via digital channels as opposed to three examples of how the commercials cards product leads
their physical plastic form) is indeed largely driven by the evolution of B2B payments:
increased transaction-level controls, with limits on the
number of transactions (single- or multi- use), transaction 1. Adapting to the platform economy model, where an
amount limits (exact, maximum, or range) and validity online network facilitates digital interactions between
periods (suppliers and merchant category codes). They a variety of participants. Platform businesses are best
also facilitate client-specified data elements for each known in the B2C world, through companies such as
transaction, providing enriched analysis, reconciliation and Uber or Amazon. But they are also rapidly gaining
allocation. Virtual card spend for purchasing activities is ground in the B2B sector. It is expected that more and
projected to grow at 19% annually through 2022.i more business will leverage procurement platforms and/
or e-catalogues to reduce COGS and streamline their
Commercial cards have a crucial role to play in the procurement processes. One such provider is Coupa,
digitization of the B2B payment experience and thus are with whom Citi Commercial Cards recently partnered in
being embraced by a growing number of companies; while order to give its clients access to a more efficient way to
commercial card spend by corporations still accounts for manage business payments as part of a comprehensive
less than 1% of total B2B payments in the US, according spend management strategy. Corporates can leverage
to recent research from Accenture, it is growing by 10% a their existing banking relationship with Citi and their
year: spend is expected to rise to $763 billion by 2022 from integration with the Coupa platform to set up, in a
$523 billion in 2018.ii single instance, a best-in-class and fully integrated
procure-to-pay tool. Citi’s ‘pre-integration’ of its virtual
Commercial cards continue to evolve card capability into Coupa’s platform enables clients to
eliminate the need for potentially complex and costly
One of the key strengths of the commercial card product
integration or process changes. Citi customers gain
suite as a means of payment is its inherent flexibility,
greater operational efficiency and transparency, richer
particularly in its virtual form. While some may see
data, enhanced flexibility to manage their cash flows and
the Cards’ extensive infrastructure as a hindrance to
increased economic benefit from their commercial cards
its evolution, it is actually its extremely robust and far
program. Suppliers gain access to new sales opportunities
reaching eco-system that enables it to capture and

Commercial cards have

a crucial role to play in
the digitization of the
B2B payment experience
and thus are being
embraced by a growing
number of companies.
Commercial Cards Lead the Way in the World of B2B Payments 3

while enjoying quicker, upfront payments for goods and Citi recently worked with a fintech that provides highly
services and the elimination of the often cumbersome customized invoice and payment data reconciliation to
reconciliation of purchase orders and invoices. one of the bank’s large global client. Upon the satisfactory
outcome of its due diligence, Citi connected its virtual
2. Working with payment facilitators that are helping card product to the fintech platform via API and within
to solve the challenge of vendors that do not want to 60 days the customer was able to enjoy the benefits of
accept cards. A wide range of companies in all regions a fully integrated procure-to-pay tool that has helped
offer services described as credit card enablement or them realize critical efficiencies in a highly competitive
acceptance (allowing payments or collections using industry.
a credit or debit card, where cards are not accepted).
Payment facilitators take a payment instruction from a Banks’ core role in the payments space is to facilitate
buyer, process card payments and send the proceeds to transactions; it is not to dictate to clients how they interact
the beneficiaries in a form that they will accept such as with third parties that provide other solutions relating to
electronic bank transfer or check. The cost is typically the purchase-to-pay process. Platform economy firms,
borne by the buyer. However, this may not be the full payment facilitators and other fintechs are well placed to
cost of a traditional card payment as the payment develop payments solutions that are customized to users’
facilitator can leverage alternative models offered by the needs – often on an industry-by-industry basis – thanks to
card schemes and specifically targeting B2B flows. For their intense focus on solving for a specific ‘pain points’.
buyers, payment facilitators deliver the same operational
efficiency benefits as regular commercial card payments. However, while such companies can offer valuable
In addition, by using a card they can more efficiently innovations, they often do not have the track record
manage cash flows related to certain large recurring and proven expertise that most companies demand
payments (e.g. office rental or equipment leasing). Finally, when it comes to operations-critical processes such as
by growing card throughput buyers have the potential to B2B payments. For that, certain clients may feel more
lift their spend volume into a higher tier. comfortable with the pedigree, worldwide reach and
established capabilities of a global leading bank. Open-
3. Taking a ‘fintech flex’ approach by collaborating minded financial institutions – such as Citi – are therefore
with new entrants to develop solutions that benefit increasingly choosing to work with select platforms,
clients. When fintechs first emerged a decade ago, the payment facilitators and other intermediaries to provide
assumption – both among many fintechs and banks – was enhanced, flexible and frictionless services that adapt to
that they were essentially rivals, competing for the same the changing world of B2B commerce.
customer base. In recent years, this has been shown to be
unfounded. The relationship between fintechs and banks Expanding the breadth of the B2B
is now collaborative rather than adversarial. As a result,
banks and fintechs are working together to add value
solution set
right across the payments chain, including in relation to The digitization of B2B transactions is accelerating and
cards. The number of these collaborations is only going commercial cards constitute a readily available solution
to increase. A total of 75% of fintech executives recently that meets many of the critical requirements of settlement
said their goal was to partner with established players between buyers and sellers, including transparency,
rather than challenge them.iii security and process efficiencies. But in order to realize the
full potential of commercial cards as a payment tool, issuers
Citi has developed an extensive strategy to identify and must build new partnerships, focused on the development
collaborate with fintechs who bring meaningful value-add of integrated solutions that deliver value beyond the sum
to the bank’s customers and demonstrate a commitment of their parts. As the needs of the broader B2B eco-system
to service aligned with Citi’s own. The approach is born continue to evolve, commercial cards, and virtual cards in
out of a recognition that banks and fintechs have very particular, are bound to lead the way for a new generation
different strengths and that cooperation can benefit of B2B payment offering, whose success will be determined
both parties and the clients. It is along these lines that by its founding synergistic collaboration.

i
https://bankingblog.accenture.com/slice-700b-us-commercial-card-spend-up-for-grabs?lang=en_US
ii
https://bankingblog.accenture.com/slice-700b-us-commercial-card-spend-up-for-grabs?lang=en_US
iii
https://www.billtrust.com/resources/blog/on-the-lookout-b2b-payments-trends-in-2019-part-4/
Treasury and Trade Solutions
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