Virtual Cards and Credentials Form Cornerstones of Commerce Ecosystems

The surge in virtual card issuance — and the linking of banks, FinTechs, enterprises and brands to get those cards out into the market for daily use  — speaks volumes to how those cards are helping to form new commerce ecosystems for consumers and businesses.

The purely digital flow, from card design to issuance to use, underpins new payment experiences. For the banks and the brands launching card products, the platform approach shortens the time to market to introduce, say, a BNPL card or a B2B-focused instrument that tailors spend management across a supply chain.

The continued embrace of credentials and program management through which platforms manage compliance and risk remains a growth engine for the enablers, as cards and credentials are delivered in real time.

The benefits are gaining wider recognition. In just one example, PYMNTS Intelligence found in December that, among middle-market companies — defined as firms with annual sales of between $50 million to $1 billion — 56% of executives using virtual cards have cited the improvements in working capital management as among the key advantages of using those cards. Yet the market is virtually untapped, as the data shows that just 3.3% of North American Growth Corporates use virtual cards.

The Read-Across From Earnings Announcements

During Marqeta’s earnings call this week, the company said that it had struck a deal to acquire TransactPay, a BIN Sponsorship provider licensed as an E-Money Institution (EMI) in the U.K. and European Economic Area.

The deal, Marqeta said in the announcement, will strengthen its card program management capabilities in the U.K. and Europe. As PYMNTS reported in tandem with earnings, EMIs are required in order to, among other things, issue prepaid and virtual cards in those regions.

Concurrently, Marqeta announced that the American Express network, per Interim CEO Mike Milotich’s observations on the call, would be “a new option for credit and debit card programs” in joint efforts that would begin later this year.

With a nod to how the ecosystems are taking shape, Milotich said that his company had early on “eased the burden of merchant adoption with instant issuance virtual cards. Then we were the first to help providers deliver the BNPL value proposition via card that they issue, making BNPL available anywhere a card is accepted,” and now has been working with Visa and Mastercard to deliver their recently announced flexible card credentials, which lets users switch across spending sources with that credential.

“We are also making progress on Marqeta Flex with the goal of enhancing how BNPL payment options can be delivered inside payment apps and wallets, servicing them when needed within the existing payment flow,” he added.

The shift toward the ecosystems can be seen in the firm’s mix shift, where the CEO said that consumer use cases are growing “much faster than single-use commercial virtual card.”

Milotich also noted that in the embedded finance space, “we are trying to offer the brand more control over the value proposition, the marketing, the onboarding and have it be delivered as a truly embedded experience.”

BILL.com noted in its own earnings report and conference call commentary — and with a focus on B2B — that its virtual card solution has added a straight-through processing provider. John Rettig, president and CFO, told analysts that within the spend and expense category, the company saw 23% card payment volume growth year over year.