In a world of digital-first experience, businesses are transforming to become data-driven enterprises. But how are payments for B2B transactions transforming?

With COVID-19 accelerating digital forms of interaction, businesses are looking towards digital technologies to stay ahead and remain profitable. Yet despite these trends of going digital, most businesses are still using archaic payment methods that lead to tedious administrative processes, eating away at productivity.

To overcome these challenges, OCBC recently announced the launch of its Virtual Purchasing Card that leverages Visa’s Commercial Pay mobile solution to help businesses digitalise and streamline all their payment requirements.

The Visa Commercial Pay mobile solution provides businesses with real-time visibility of their employees’ spending on OCBC Virtual Purchasing Card while capturing enhanced data for automated expense reconciliation.

DigiconAsia discussed the future of B2B payments with Kunal Chatterjee, Country Manager, Singapore & Brunei, Visa and Melvyn Low, Head, Global Transaction Banking, OCBC.

Melvyn Low, Head, Global Transaction Banking, OCBC

What are the benefits of data-powered payments in empowering businesses to manage their expenses better?

Low: Digital payments can be a powerful tool for businesses because of the resulting wealth of data. It goes beyond letting you know each customer’s ticket size – there are solutions out there that enable you to learn more about customer demographics and even how you stack up against your peers. Data is similarly important on the cost side of things.

For instance, using the OCBC Virtual Purchasing Card can show how much has been spent per category, at the cost-center level or based on company requirement, so companies know where costs need to be controlled. The data might also show which supplier is most often engaged by the company and can then be used to negotiate for better bulk prices.

Kunal: As businesses and commerce move towards digital-first experiences, data-driven decisions ensure transparency and greater accountability. Through data-powered payments, companies can now have better visibility over their spending, allowing them to easily manage their working capital through more accurate budgeting.

With businesses changing the way they operate, the migration towards digital payments allows them to eliminate manual and often tedious account processing and reconciliation processes. Data-powered payments empower companies to have more flexibility and control over their spending by using employee cards to make payments for certain purchases without the need for prior approvals or paying out of their own pockets.

An easy way for businesses to adopt data-powered digital payments is virtual cards, which have low barriers to adoption and can be easily implemented within an organisation’s existing processes. Such solutions allow us to expand B2B digital payments to more small businesses, enabling them to benefit from greater inclusion in the digital economy. By transitioning to commercial cards and virtual cards for B2B payments, businesses can also leverage Visa’s Business Payment Solution Provider (BPSP) model to control supplier payment processes with minimal effort.

The BPSP model allows businesses to easily pay suppliers by card, even enabling B2B payments with non-card accepting suppliers across various activities. The data-driven solution also makes it easy for businesses to track and reconcile payments, and even digitise processes to schedule recurring payments, set payment reminders, and monitor payment status — all from one integrated dashboard. With BPSP, businesses can also optimise their cash flow with benefits such interest-free credit and early settlement discounts.

Please share what you see as the latest trends in the B2B payments space in Asia, and the opportunities that are opening up for organizations operating in the region.

Kunal Chatterjee, Country Manager, Singapore & Brunei, Visa

Kunal: With COVID-19 accelerating digital adoption, many businesses were making huge changes to how they operated to keep pace with changing consumer demands and employee habits. On top of providing consumers with eCommerce and contactless options, businesses had to rapidly adapt to changes in paying suppliers and managing supply chains. As such, they have since recognised the immediate need for digital solutions in driving efficiency. According to Visa’s Back to Business Study, more than nine in 10 Singapore small-and-medium businesses embraced new forms of digital technology by the end of 2020.

The pandemic has also been a catalyst for digital payments adoption among businesses. It exposed many fragilities associated with B2B payments — from movement restriction orders preventing businesses from depositing cheques at bank branches to suppliers being unable to meet face-to-face for payments or having concerns handling cash. With the purchases of goods and services in the B2B space in Asia pacific amounting to USD50 trillion, there is a massive opportunity to empower businesses with more intuitive and seamless digital ways to pay and be paid.  

As speed and convenience look to be the key differentiators in the B2B payments experience, we see a greater interest from businesses in card products to overcome some of the friction within the B2B payments space.  We have witnessed high contactless penetration rates across numerous Asia Pacific markets including Singapore, which is over 90 per cent. The region’s rising interest in mobile contactless payments has also extended to B2B payments, signalling opportunities for contactless-enabled virtual cards. According to Mercator Advisory Group, the adoption of virtual card solutions by companies in Asia Pacific is poised to grow at 40 per cent over the next four years.

Low: Mobile payments will remain a key theme going forward. This was once more of a consumer play but it has now been introduced to businesses and the take-up has been encouraging. In fact, there is a ‘mobile everything’ mentality. Even beyond payments, entrepreneurs expect to be able to run and manage their business through their mobile devices. As a result, we will see a healthy flow of apps being pushed out for this segment, and though not all of them might be developed by the banks, they will have our fingerprints through the use of our APIs.

Cross-border payments that do not require the knowledge of the recipient’s bank account number is another area where we are seeing rapid development. The importance of this has grown in tandem with the rise of ecommerce as suppliers look to extend their reach, and buyers look for regional and even global diversification. Credit cards and other forms of instant mobile cross border payment methods will become more prevalent as a result.

The third trend that we see is platform connectivity. There are many platforms out there with new ones sprouting every day, but getting them to interact – while necessary – is not easy. Banking platforms like ours are large, regional platforms and are therefore key to this ecosystem.

Integrating our platform with other platforms, like blockchain trade platforms or eCommerce platforms, for instance, can facilitate invoicing and payments between buyers and sellers. Finding opportunities for integration is therefore a big part of our transaction banking strategy in order to deliver value to our customers.

How are OCBC and Visa strategically addressing these opportunities together?

Kunal: As a global network business, Visa works closely with strategic partners such as OCBC to innovate new payment methods and solutions that help organisations transform the way they conduct business. We aim to provide businesses with B2B payment solutions that are faster, more efficient, and above all safe — whether through virtual cards, business credit cards, or Visa B2B connect.  

By providing seamless payment methods through the issuance of virtual commercial cards, we create new payment flows to simplify the payment process and address the inefficiencies within the B2B transaction experience. 

Our partnership with OCBC is a testament to our commitment to enabling new payment experiences that leverage the best parts of Visa to benefit both financial institutions and their corporate clients.   

Low: Visa’s forte with mobile payments was something that we wanted to tap on to deliver the best virtual purchasing card solution to our customers. We are fortunate to be the first in the world to leverage the Visa Commercial Pay mobile solution for the OCBC Virtual Purchasing Card.

In fact, OCBC and Visa have a broad partnership that extends beyond the B2B space and into the consumer landscape as well, and there will be many opportunities to work together going forward as digital payments become more common in different markets across the region.