One of the fastest-evolving technologies in the business world is financial technology. With the introduction of digital payment channels, the traditional ones are becoming more and more ineffective. Cash and cheques are time-consuming and non-reliable modes of payment in comparison.
Naturally, this technological revolution reached India. The number of digital payments in the country has significantly increased under the government’s initiative to digitize the financial sector and economy. The government of India is in a constant endeavor to provide and promote seamless digital payments in a secure and effective manner. With this support, businesses in the country are flourishing by adopting digital payment methods, especially corporate cards.
Corporate cards are the most efficient and reliable way to make payments because these are specifically designed to cater to business needs. This means from making a large number of transactions to expense tracking and business credit; corporate cards are the key.
What is a corporate card?
A corporate card is just like other debit and credit cards we know; however, the difference arises in purposes and eligibility. Corporate cards are specifically for business use. These are granted to businesses either by banks or other financial service providers. Corporate cards are used to make business spending easier by assigning them to employees. Hence, any expense an employee makes through the corporate card, for example, travel bookings, subscription payments, etc., will be deducted from the company funds. The need to reimburse employees gets eliminated.
How did corporate cards start getting all the attention?
Financial technology trends and legislations are unpredictable. But with the popularizing of fintech, more and more businesses and consumers started adopting dynamic and faster payment solutions. The inclination toward corporate cards increased, especially during and after the COVID-19 pandemic. As that was the time when businesses started encouraging their employees to work from home, contactless payments, especially corporate cards, became the savior. This is also because during the pandemic conventional modes of payment could not fulfill the contactless transfers agenda and requirement.
According to statistics, India alone recorded 4,572 crore digital transactions in the years 2019- 2020. Moreover, as fintech came into the picture to partner with major banking firms, more and more businesses of all sizes started migrating towards the safe and faster option — corporate cards. Even after proving its worth and various benefits, there is a good percentage of companies that do not use corporate cards or are not aware of their existence. Hence, there is still a transition going on from traditional to modern digital methods of payment.
Corporate cards and digital payments in India
The number of digital payments has seen a stark rise in the country. From 4,572 crore transactions in the year 2019-20 to 8,840 crore in the year 2021-22. The estimation for this year goes up to 9,192 crores.
For businesses, corporate cards have proved to be the most advantageous digital payment solution. Why? This is because corporate cards are a part of the corporate card program, and these cards are assigned to employees. Plus, these cards are connected to the business’s fund account or the credit borrowed by the company. All transactions made through these cards are tracked and recorded in real-time. Furthermore, more features like high-tech security, spending controls, international transaction support, and many more are inbuilt into a corporate card. Moreover, the current business demands for fast, secure, contactless, and system-integrated payments cannot be fulfilled by the traditional modes of payment like cash and cheques.
The rise of digital payments and fintech came hand in hand. Today there are various players in the market, like Volopay, Razorpay, Paytm, Bill Desk, Lendingkart, etc. These platforms are reliable providers of the best corporate cards and expense management systems in the country.
What are the benefits of using corporate cards for business payments?
Enhanced financial control and oversight
With corporate cards, financial managers or department heads can easily set spending limits and determine approval workflow to keep all expenses under check. This means that every expense made by the employee through the card will be automatically approved if under the spending limit. Any requirement for more than the assigned amount will have to be approved by the managers. However, the approval process through corporate cards is just a matter of a few clicks. Ultimately, the business gets better financial control and oversight.
Streamlined expense management
One of the most amazing benefits of corporate cards is expense management. All transactions made through the corporate cards get tracked and recorded in real time. This means that as an employee makes a transaction through the card, it is converted into an expense in the system. Not only this, corporate card transactions get automatically reconciled with the company’s accounting system. Hence, all the grunt work of expense data entry and reconciliation gets automated.
Increased transparency
With spend controls and real-time tracking of all corporate card activities, businesses get easy and transparent visibility into all expense activities. Plus, as everything gets reconciled into the accounting books, there is no scope for error or miscommunication. With corporate cards business, heads can see all precise expense data and make decisions accordingly. Plus, this also helps improve accountability amongst the employees.
Improved cash flow management
Once a business adopts corporate cards and mandates that all expenses are to be made through those cards, cash flow management automatically improves. As everything will be instantly recorded and sorted in the system, it will be easy to make calculations and set limits. Along with this, as these cards are assigned to employees or departments, there is a clear bifurcation of expenses that can be undertaken and how much money can be utilized. Hence, you will always know what is being spent and how the process can be optimized.
Rewards and incentives
Another amazing benefit of using corporate cards for your business is rewards and incentives. Many corporate card providers offer discounts, cashback, and incentives on a certain amount of transactions or a certain total value of transactions. So, along with beginning a smart payment mode, corporate cards also help you save money.
Improved compliance and audibility
By using corporate cards, there is no possible way to open the business to fraud. Receipt manipulation, account breaches, etc., nothing can go through these cards. Hence, the finance team will have accurate information about all the transactions, which means all the loopholes in the reconciliation system will be eliminated from the root. Hence, the overall compliance and audibility of the business books increase. Every expense detail is available with just click-through corporate cards.
Emerging Trends in corporate card usage in India
Customization and personalization
The most popular and beneficial corporate card trend is customization and personalization. Corporate cards are made to cater to the financial needs of businesses. Keeping this in mind, card providers are coming up with more and more customization options. For example, you can choose what spending controls you want, spending limit, purpose, etc.
Digital wallet integration
Another emerging trend in corporate card usage is integration with digital wallets. Instead of linking the corporate card to your business bank account, you can choose to link them to a digital wallet. Similar to normal wallets, you can store and make transactions from the digital wallet. So, once you connect the card to the wallet, all expenses will be made through the wallet. This provides extra protection as there will be no direct traceable link to the actual source of funds.
Increased adoption of corporate virtual cards
Corporate cards are available in two forms — physical and virtual. To avail better security and easier payment transfers, more and more businesses are getting virtual corporate cards. All the functions and features of these cards are similar to normal corporate cards. Just the difference is that virtual cards are intangible and are stored in the cardholder’s mobile.
Greater emphasis on security
The whole concept of virtual cards being intangible provides extra security in comparison to any other payment method. Along with this, two-factor authentication and no direct connection to the business bank account add an extra layer of security. Virtual corporate cards can be understood as randomly generated 16-digit numbers with a CVV, which you can choose to use for recurring payments or use just once.
Challenges and opportunities for corporate card providers
Challenges
Acceptance issue
Even after being an extremely convenient and modern payment solution, there are many merchants/vendors who do not accept corporate card payments. Due to this, businesses have to resort to traditional payment methods ultimately.
Low awareness and reach
Though the concept of corporate cards is catching pace, there is still a majority section of businesses, especially small and medium-sized businesses which are unaware of the availability of corporate cards. Even if some know the concept, they are unaware of the availability of SME corporate cards.
Competition from traditional payment methods
A large number of businesses still tend to rely on conventional modes of payment like cash and cheques. This is because they are used to it, and these modes have been utilized since the beginning of time. Businesses hold a certain familiarity with the processing and dealings of the traditional methods of payment. Ultimately, organizations become skeptical about trying anything new.
Compliance
Another challenge for corporate card providers is RBI and legal compliance. As corporate card technology is being upgraded every now and then, it can be difficult for providers to keep up with all regulatory and compliance requirements. RBI is coming up with various rules regarding cards. Hence, the provider needs to ensure that their product is up-to-date with all mandates.
Opportunities
Growing demand for digital payments
As stated above, the COVID-19 pandemic brought a revolution in the acceptance of digital payment technology. More and more businesses and consumers moved towards using online payment methods. The growing need to fast, secure, and system-integrated payments can only be fulfilled through a corporate card. Hence, corporate card providers have to appeal to this requirement precisely for all businesses.
Expansion of the SME market
The small and medium-sized business market is expanding by leaps and bounds. The main motive of all these businesses is to make the best with minimal resources. Corporate cards are the tool that helps them spend mindfully, track all expenses, sort everything for better management, and also support international transactions.
Increasing focus on expense management
Businesses cannot just randomly run operations. Expense management has become immensely essential. Having oversight of where the money is going, and other details of the transactions gives the managers enough data to make decisions about future purchasing and cost-cutting. Providers need to pitch their products as a tool to ease the manager’s and employees’ jobs.
Growth of the travel and entertainment industry
Now that everything’s back to normal, businesses have started engaging in more work trips for stronger global expansion. On such trips, carrying around cash or cards can be a burden as the employee has to be careful regarding its safety all the time, plus employees might have to make many out-of-pocket expenses that later increase the burden of the financial team for reimbursement. However, if employees are given corporate cards, especially virtual they don’t have to worry about any fraud; all expenses will be made from the company’s funds, and transactions will be recorded immediately, hence no receipt collection.
Choose the right provider to get the maximum benefits
Before jumping to get a corporate card, consider the following features to select the right provider.
Product Features:
The corporate card you choose for your company must have all basic and advanced management features, such as budget limits, spend controls, real-time tracking, automatic expense bill generation, unlimited virtual corporate cards, etc.
Perks and privileges
Not only are the features important, but other perks and rewards like cashback, discounts, travel lounge access, concession on bookings, etc., should also be considered before choosing a provider.
Annual fees and other charges
Depending on the requirements of your business, look for a provider that offers you the maximum at a low price. Getting fewer features at a high price is not exactly a smart deal. Hence. Choose the package that best fits the company’s cost and needs.
Credit limit offered
Another major offering to look for in a corporate card provider is credit. Various banks offer credit on corporate cards but for a limited amount at a higher interest rate. So, look for a corporate card that provides a greater credit limit at a concise interest rate. Platforms like Volopay, and RazorpayX extend credit lines to businesses of a higher total amount and lesser interest rates in comparison to others in the market.
Ease of applying
You don’t want to waste time by filling out long application forms, submitting various documents, standing in line to get approved, and then receiving the card after several business days. Hence, choose a provider that gives you the facility to apply easily online and receive the card as soon as possible.
Security and support offered
Corporate cards are meant to provide tight security for all transactions. Hence, when choosing a provider, ask and research all the security measures they offer with the corporate card. There must be advanced features along with the basic ones.
