Virtual Cards and Super Apps’ Big Future in B2B Payments

With an increasing number of businesses going digital, virtual cards are fast becoming the preferred method of payments in various markets across the world, thanks to their ability to help curb overspending and crack down on the mismanagement of funds.

As PYMNTS reported earlier this year, the worldwide value of virtual card transactions is expected to hit $6.8 trillion in 2026, up from $1.9 trillion in 2021, an indication of the method’s growing importance for corporations in the business-to-business (B2B) payment landscape.

Read more: B2B Virtual Card Transactions to Top $6T By 2026

According to Gökhan Nazenin, vice president of sales for banking and payments, Europe, at FIS, the lion’s share of that business will happen in the U.S., as corporates look to digitize workflows and automate the paper-based processes all too common in the corporate world.

Virtual cards are also a secure way for buyers to instantly pay suppliers while buying them time to pay their outstanding credit card balances, Nazenin explained, adding they also offer businesses a means to earn extra income with interchange revenue.

But despite the huge demand from corporates looking to pay with virtual cards, Nazenin said these cards can often create reconciliation issues when multiple numbers are issued for virtual cards.

See also: Virtual Card Use Brings Cash Flow Boost to 4 in 10 Businesses

Basically, suppliers receiving multiple virtual card numbers will have to pick and choose the right numbers from emails, PDFs, and all the other media files, he explained, which they will then bring into their account systems and ERP systems to ensure reconciliation is properly done.

That time-consuming manual process is not only inefficient and prone to error, Nazenin said, it’s the reason why FIS offers corporate clients an automated processing software to instantly access the right virtual card number, bring it into the account system and seamlessly complete the reconciliation process.

Regulating Crypto, BNPL

The unregulated crypto world has been rocked by the collapse of one of the world’s biggest cryptocurrency exchanges, FTX, robbing crypto skeptics of any trust they had left in digital assets.

It’s a problem regulation can help fix, Nazenin said: “Once we have [regulation], even the volatility will be reduced because we will then have some rules in the game, and everyone will know how to play” by those rules.

Related: What Regulators Must Do Now in Light of FTX Scandal

But regardless of when, where or how those rules are implemented, it’s unlikely that crypto adoption will slow down anytime soon, especially in emerging markets, where they solve a major access, cost and speed issue for cross-border payments and remittances.

“If I’m sending $300 to the Philippines or Thailand and have to pay $75 or $50 as a fee, that’s a lot of money for many people out there. [But] with crypto, tokens or even blockchain, you can [eliminate] those transaction fees and [send money in] real  time,” he explained, adding that these benefits give digital assets an edge over traditional non-crypto marketplaces like Western Union or Wise.

That said, Nazenin seemed certain that virtual assets “will never replace cash” and will simply offer another payment option to users on the market.

He also made a case for regulating the buy now, pay later (BNPL) sector to protect consumers from piling on debt and merchants from the risk of having to chase and recover unpaid debts. “It’s a kind of stress no one really needs,” he said.

Millennials Lead the Super App Charge

In this age of convenience, connected devices that enable consumers to consolidate all manner of services into a single app, from buying groceries and booking flight tickets to monitoring bank transactions and trading crypto, have never been more popular among connected consumers.

In fact, research from PYMNTS’ October study “Super Apps for the Super Connected,” published in collaboration with PayPal, shows that 350 million internet users across the U.S., the U.K., Australia and Germany own a median of 6.5 of these devices.

In an interview with PYMNTS, Nazenin said the trend will continue to gather steam globally, pointing to firms like PayPal and U.K. challenger bank Revolut as examples of firms leading the charge to drive mass adoption of super apps.

When it comes to emerging markets, he pointed to M-Pesa, the pioneering mobile payments system launched by Safaricom, as another example of a super app democratizing financial services and bringing unbanked or underbanked individuals into the banking fold.

And as these apps gain traction, Nazenin said they pose a serious threat to traditional banks, especially those still operating legacy business models that lag behind demand for instant and convenient solutions among consumers, especially for younger ones.

“The [younger] generation is all about convenience. [They] have everything on their smartphone and they have the world in their hands. But the problem is that we still have some business models that are not really fit for purpose for this generation,” he noted.

Learn more: Are Millennials and Super Apps a Match Made in Connected Heaven?

Given the importance of millennial consumers in shaping the new economy, those businesses will have to jump on the bandwagon and adapt their solutions to the needs of this high-earning generation that “will decide the markets” in the years to come, Nazenin said.