Cards could become the electronic payments method of choice for the world's corporations, according to a report by Visa (Foster City, Calif.). But there's no reason to discount other forms of e-payments either, Visa says.
The 2007 Visa Global Cash Management Survey polled 800 executives from around the world responsible for the financial, treasury and cash management decisions of their organizations (companies with annual sales of more than $50 million) to get their views on current cash management processes. The goal was to provide banks with a clearer picture regarding the issues that concern their corporate customers.
"Our main customers are the financial institutions," explains Aliza Knox, SVP of Visa Commercial at Visa International. "We don't often touch the end users [corporates] directly, so we conducted this study to help our FI clients understand their end users' needs. What we found is that cards are much more than plastic for corporates -- they're cash management tools. They want to minimize the amount of cash they have lying around so that they can invest it."
According to Knox, respondents agree that checks are the least-efficient form of payment and that e-payments in some form would work to their benefit. This could be due to companies seeking solutions that optimize payment and expense management information to help them make better business decisions overall, she says.
"The holy grail is achieving straight-through processing (STP)," explains Knox. "They want to be able to automate everything." Electronic payments, such as corporate payment cards, she says, can help them meet this goal. "The single biggest value proposition is that you get more data with e-payments. Also, those companies that desire STP want to be able to incorporate as much of this payments data into their ERP [enterprise resource planning] systems as possible to get back-end integration and reporting capabilities." (See related sidebar below.)
There's More Than One Way to Pay
As a report from Visa, one would expect cards to take center stage. However, Knox does acknowledge that other forms of e-payments, such as ACH and wire transfer, have their place as well. "These are certainly viable forms of payments," she says. "But cards are easier to deal with in some ways because we already have the infrastructure. Other forms of e-payments don't work as well on a cross-border basis. They're viable for different situations with different requirements around price and urgency."
However, Knox contends that corporates can receive richer data with card payments versus other forms of e-payments, an important consideration from a regulatory standpoint around issues of transparency of the information companies store, she says. "Eighty percent of respondents said back-end integration and reporting is important to them. Cards can deliver this," Knox states. "ACH doesn't give you such rich information. And cash and checks certainly don't."
"I think this information is useful for FIs to understand how their clients are hurting and how they can help," says Knox. "Banks have a good sales opportunity here because there are companies that want to do more [in reaching cash management efficiency]."
Achieving Efficiency Through E-Procurement Integration
According to the 2007 Visa Global Cash Management Survey, the top three reasons for integrating corporate payment cards with e-procurement and enterprise resource planning processes are:
- Process streamlining leading to cost reduction.
- Automating expense reconciliation processes
- Availability of transaction data for spend analysis