Virtual Card Mobile Payments Struggling to Take Off

Credit cards are a big part of everyday life for a lot of users out there. Whether in physical stores or as the foundation of online shopping, credit cards are the go-to platform for many users. Yet the virtual credit card isn’t having near so much success, reports note, and it largely stems from one problem: a lack of accepting merchants.

There’s been a lot of discussion that, eventually, business-to-business (B2B) operations will start to look like the business-to-consumer (B2C) market. Word from the Credit Research Foundation (CRF), however, says that cards are used in just 11 percent of B2B transactions. Within the next three years, that’s poised to only grow 1.5 percent, according to some projections.

For B2B transactions, the problem is, essentially, that most won’t take cards for such purchases because the purchases in question are just too large. There’s a certain amount of fee—known as an interchange fee—that goes into accepting credit cards.

While for B2C customers, the costs per transaction are much smaller (that and the costs of refusing credit cards in lost business are much higher), for B2B customers, the smaller order count and hefty purchase price of most transactions often mean fees much too high to bother with.

Worse, security is often just as much of a problem; in 2017, the Association for Financial Professionals released a study that found that one in four businesses that offered some kind of credit card—fleet card, commercial card or otherwise—were attacked by some kind of fraud. Though that’s down somewhat from 2016’s figures in which almost a third found their cards targeted, the numbers are still painfully high.

Perhaps the easiest way to remedy this situation would be to get rid of, or sharply curtail, interchange fees. This is probably likely never going to happen since it would mean an immediately shot to the bottom line for those charging the interchange fees, but since right now they’re not making much as no one will use cards for these purposes, the end result is the same. Better 30 percent of something than 100 percent of nothing, after all.

With the best solution likely unavailable, cards will likely continue to soldier on, and falter, for some time to come in the B2B market.