Mastering B2B Payments with UX: Accelerating Virtual Card Adoption
Virtual cards are one of the most innovative and promising solutions in the B2B payments space. They offer several benefits for both buyers and suppliers, such as increased security, reduced fraud, improved cash flow, and enhanced data analytics. However, despite their potential, virtual cards are still not widely adopted by businesses, especially in the SME segment.
Recent research indicates that in the United States and Canada, 38% of firms have not adopted virtual cards due to a lack of expertise. Furthermore, 48% of U.S. and Canadian firms that do not use virtual cards say that their current systems cannot accommodate the technology, for example, and 36% say it is difficult to integrate virtual cards into their systems.
This friction in adoption rate is essentially a user experience issue that must be carefully considered for future design in virtual card solutions.
Reminder: UX is the process of creating products and services that are easy to use, enjoyable, and valuable for the end users.
UX is not just about aesthetics, but also about functionality, usability, accessibility, and emotional appeal. UX is vital for any product or service, but especially for B2B payments, where the stakes are high and there are increasing expectations for the same seamless experiences as consumer payments.
In this article, we will explore how UX can increase the adoption of virtual cards for B2B buyers and suppliers, and how payment leaders can leverage UX to boost their growth and competitiveness in the B2B payments ecosystem.
What are virtual cards and why are they important for B2B payments?
Virtual cards are digital versions of physical cards that are generated for a specific transaction or a set of transactions. They have a unique card number, expiration date, and security code, but they are not linked to a physical card or a bank account. Virtual cards can be used for online or offline purchases, as well as for recurring payments, subscriptions, or invoices.
Virtual cards have several advantages over traditional payment methods, such as:
Security: Virtual cards reduce the risk of fraud and data breaches, as they are not tied to a physical card or a bank account, and they can be customized with spending limits, expiration dates, and merchant categories. If a virtual card is compromised, it can be easily canceled or replaced, without affecting the underlying funding source.
Efficiency: Virtual cards streamline the payment process, as they eliminate the need for paper checks, invoices, and manual reconciliation. Virtual cards also enable faster payments, as they are processed in real-time, and provide richer data, such as transaction details, payment status, and remittance information.
Flexibility: Virtual cards offer more control and visibility over the payment cycle, as they allow buyers and suppliers to adjust the payment terms, frequency, and amount according to their cash flow needs and preferences. Virtual cards also enable more choice and convenience, as they can be integrated with various platforms, such as accounting software, ERP systems, and mobile wallets.
What are the different types of virtual cards and how do they work?
There are two main types of virtual cards: single-use and multi-use. Single-use virtual cards are generated for a one-time payment, and they expire after the transaction is completed. Multi-use virtual cards are generated for a recurring payment, and they can be used for multiple transactions within a predefined period, amount, or merchant category.
There are also different ways to issue and use virtual cards, depending on the use case and the user's preference. Some of the common methods are:
Push-based: The buyer initiates the payment by sending a virtual card to the supplier via email, SMS, or a secure portal. The supplier then uses the virtual card to process the payment, either online or offline. This method is also known as supplier-initiated payment (SIP).
Pull-based: The supplier initiates the payment by requesting a virtual card from the buyer via email, SMS, or a secure portal. The buyer then approves the payment and sends a virtual card to the supplier, who uses it to process the payment, either online or offline. This method is also known as buyer-initiated payment (BIP).
Embedded: The virtual card is embedded in the invoice or the payment request, and the payment is processed automatically when the buyer approves the invoice or the payment request, either online or offline. This method is also known as straight-through processing (STP).
Why is UX crucial for the adoption of virtual cards in B2B payments?
Despite the benefits of virtual cards, many businesses are still reluctant to adopt them, due to various barriers and challenges, such as:
Lack of awareness: Many businesses are not aware of the existence, features, and benefits of virtual cards, or they have misconceptions or doubts about them. For example, some businesses may think that virtual cards are not secure, or that they are not compatible with their existing systems or processes.
Lack of trust: Many businesses are not comfortable with using virtual cards, as they are unfamiliar with them, or they have concerns about their reliability, validity, or acceptance. Some businesses may worry that virtual cards will not work, or that they will not be accepted by their suppliers or customers.
Lack of incentive: Many businesses are not motivated to use virtual cards, as they do not see the value or the need for them, or they have other preferences or habits.
For example, some businesses may prefer to use checks or ACH, as they are used to them, or they may not want to change their existing payment methods or relationships.
These barriers and challenges can be overcome by applying UX design principles and practices to virtual card solutions. UX can help to:
Educate: UX can help to inform and persuade businesses about the benefits and advantages of virtual cards, and to dispel any myths or doubts about them. UX can also help to demonstrate and illustrate how virtual cards work, and how they can be integrated with existing systems and processes.
For example, an excellent UX means using clear and simple language, visuals, and animations to explain the concept and the process of virtual cards, and to highlight their security and efficiency features.
Engage: UX can help to create and deliver a positive and memorable user experience for businesses, that is easy, enjoyable, and valuable. UX can also help to build and maintain trust and loyalty with businesses, by providing consistent, reliable, and secure virtual card solutions.
Excellent UX can use feedback, notifications, and rewards to acknowledge and appreciate the user's actions and to reinforce the user's confidence and satisfaction.
Empower: UX can help to empower and enable businesses to use virtual cards, by providing them with more control, visibility, and flexibility over their payments. UX can also help to incentivize and reward businesses for using virtual cards, by offering them discounts, rebates, rewards, or other benefits.
Excellent UX uses clear dashboards, reports, and analytics to show the user the status and the impact of their payments and to suggest the best payment options and terms for their needs and preferences.
How can payment leaders leverage UX to drive the adoption of virtual cards in B2B payments?
Payment leaders, such as banks, fintechs, card networks, or payment service providers, can leverage UX experts in B2B payments like WDIR, to drive the adoption of virtual cards in B2B payments, by following these steps:
Understand: Understand the needs, pain points, goals, and behaviors of their target users, both buyers and suppliers, in the B2B payments context.
Design: Design virtual card solutions that are user-centric, that is, that address the user needs, solve the user pain points and achieve the user goals.
Test: Test and validate virtual card solutions with real users, to ensure that they are intuitive, desirable, and valuable.
Iterate: Iterate and improve their virtual card solutions based on the user feedback and data, to ensure that they are relevant, competitive, and innovative.
How can UX reduce the friction in virtual card solutions?
One of the main sources of friction in virtual card solutions is the complexity and inconsistency of the payment process. Depending on the type and method of the virtual card, the user may have to go through different steps and interfaces to complete the payment. For example, the user may have to switch between different apps or platforms, enter or scan multiple codes or numbers, or wait for confirmation or approval messages.
These steps can be confusing, time-consuming, and error-prone, and can deter the user from using virtual cards.
Excellent UX can reduce the friction in virtual card solutions by simplifying and standardizing the payment process, and by providing clear and consistent guidance and feedback to the user. Here's the UX advantage:
Simplify: Excellent UX can simplify the payment process by reducing the number of steps and inputs required, and by automating or pre-filling the information whenever possible.
Standardize: Excellent UX can standardize the payment process by using common and familiar elements and patterns across different types of and methods of virtual cards.
Guide: Excellent UX guides the user through the payment process by providing clear and consistent instructions, labels, and icons, and by highlighting the important and relevant information. This guidance can also be done with cues, hints, and suggestions, and by validating the user inputs and choices.
Feedback: Excellent UX provides feedback to the user during and after the payment process, by showing the progress, status, and outcome of the payment, and by acknowledging and appreciating the user's actions.
How can UX showcase the use cases and benefits of virtual cards in different industries?
Another source of friction in virtual card solutions is the lack of relevance and value for the user. Depending on the industry and the business model, the user may have different needs, challenges, and opportunities in their B2B payments. For example, the user may have different payment frequency, volume, amount, or complexity, or they may have different compliance, regulatory, or contractual requirements. Therefore, the user may not see how virtual cards can help them improve their payment performance and experience.
To increase virtual card adoption, you can showcase the use cases and benefits of virtual cards in different industries, by providing specific and relevant examples and scenarios, and by highlighting the impact and the outcomes of using virtual cards.
Compelling stories are key here. Use the framework of Problem, Solution, and Impact in Numbers demonstrated below.
For example:
Healthcare: You can show how virtual cards can help healthcare providers and payers simplify and secure their complex and sensitive payment processes, such as claims, reimbursements, or refunds.
You can also show how virtual cards can help healthcare providers and payers to improve their cash flow and liquidity and to reduce their administrative and operational costs.
HealthCare Case Study:
Take healthcare company MediX, a healthcare provider that used virtual cards to pay its suppliers and vendors, and how it saved time, money, and resources, and how it improved its data quality and accuracy. You can use the following details to illustrate the story:
MediX is a healthcare provider that offers various services, such as diagnostics, surgery, pharmacy, and rehabilitation, to its patients.
MediX has to deal with a large number of suppliers and vendors, such as medical equipment manufacturers, pharmaceutical companies, laboratories, and insurance companies, to run its operations and deliver its services.
Problem
MediX used to pay its suppliers and vendors using checks, which was a slow, costly, and risky process. MediX had to issue, mail, and track hundreds of checks every month, which took a lot of time and resources.
MediX also had to deal with the risk of fraud, theft, or loss of checks, which could compromise its financial security and reputation. MediX also had to reconcile the payments manually, which was prone to errors and discrepancies and affected its data quality and accuracy.
Solution
MediX decided to switch to virtual cards, which was a simple, fast, and secure process. MediX used a virtual card solution that integrated with its accounting software, and that allowed it to generate and send virtual cards to its suppliers and vendors via email or SMS.
MediX could also customize the virtual cards with spending limits, expiration dates, and merchant categories, to ensure that the payments were made according to the agreed terms and conditions.
MediX also received real-time notifications and confirmation of the payments, and it could access the transaction details, payment status, and remittance information from its dashboard.
Impact in Numbers
MediX experienced several benefits from using virtual cards, such as:
1) Reduced its payment processing time from weeks to minutes, which improved its cash flow and liquidity, and enabled it to negotiate better discounts and terms with its suppliers and vendors.
2) Lowered payment processing costs by 80%, as it eliminated the need for paper, postage, and manual labor, and as it received rebates and rewards from the virtual card solution provider.
3) Decreased payment fraud and data breaches by 90%, as it used virtual cards that were not linked to its bank account, and that could be easily cancelled or replaced if compromised, and as it used a virtual card solution that complied with the highest security standards and regulations.
4) Improved its data quality and accuracy by 100%, as it automated and streamlined the payment reconciliation process, and as it received rich and reliable data from the virtual card solution, such as transaction details, payment status, and remittance information.
Travel: You can show how virtual cards can help travel agencies and suppliers streamline and optimize their fragmented and dynamic payment processes, such as bookings, reservations, or cancellations.
Compelling storytelling can describe how virtual cards can help travel agencies and suppliers increase their security and flexibility, and enhance their customer service and loyalty.
Travel Case Study:
For example, UX can tell the story of TravelX, a travel agency that used virtual cards to book hotels and flights for its customers, how it reduced the risk of fraud and chargebacks, and how it increased its customer satisfaction and retention. UX can use the following details to illustrate the story:
TravelX is a travel agency that offers various travel services, such as flights, hotels, car rentals, and tours, to its customers.
TravelX has to deal with a large number of suppliers and partners, such as airlines, hotel chains, car rental companies, and tour operators, to provide its services and deliver its packages.
Problem
TravelX used to book hotels and flights for its customers using its corporate card, which was a complex and risky process. TravelX had to share its card details with multiple suppliers and partners, which exposed it to the risk of fraud and data breaches.
TravelX also had to deal with the risk of chargebacks and disputes, which could occur due to cancellations, changes, or errors in the bookings. TravelX also had to reconcile the payments manually, which was time-consuming and error-prone, and which affected its cash flow and profitability.
Solution
TravelX decided to switch to virtual cards, which was a simple and secure process. TravelX used a virtual card solution that integrated with its booking platform, and that allowed it to generate and send virtual cards to its suppliers and partners via email or SMS.
TravelX could also customize the virtual cards with spending limits, expiration dates, and merchant categories, to ensure that the payments were made according to the booking details and conditions. TravelX also received real-time notifications and confirmation of the payments, and it could access the transaction details, payment status, and remittance information from its dashboard.
Impact in Numbers
TravelX experienced several benefits from using virtual cards, such as:
1) TravelX reduced its payment fraud and data breaches by 95%, as it used virtual cards that were not linked to its corporate card, and that could be easily cancelled or replaced if compromised, and as it used a virtual card solution that complied with the highest security standards and regulations.
2) TravelX reduced its chargebacks and disputes by 85%, as it used virtual cards that matched the booking details and conditions, and that could be easily modified or canceled if needed, and as it used a virtual card solution that provided clear and consistent evidence and documentation of the payments.
3) TravelX improved its cash flow and profitability by 75%, as it automated and optimized the payment reconciliation process, and as it received discounts, rebates, and rewards from the virtual card solution provider.
4) TravelX improved its customer service and loyalty by 65%, as it provided its customers with faster and smoother booking and payment processes, and it offered them more security and flexibility in their travel plans.
Conclusion
Virtual cards are a powerful and promising solution for B2B payments, as they offer several benefits for both buyers and suppliers, such as security, efficiency, and flexibility. However, virtual cards are still not widely adopted by businesses, due to various barriers and challenges, such as lack of awareness, trust, and incentive.
UX can help to overcome these barriers and challenges, by educating, engaging, and empowering businesses to use virtual cards, and by creating and delivering a positive and memorable user experience for them. UX can also help to boost the growth and competitiveness of payment leaders, by enabling them to offer user-centric, user-friendly, and user-focused virtual card solutions.
To create user-centric virtual card solutions, work with WDIR, the leading UX agency in B2B payments! We're trusted by leading financial institutions like American Express and innovative fintechs to make business payments frictionless. Get in touch today!