Commercial credit card trends: ‘Need to have’ vs. ‘Nice to have’

In the ever-evolving business world, the role of commercial credit cards has transcended traditional boundaries, becoming a pivotal tool for businesses in managing day-to-day expenses and facilitating operational efficiencies.

From streamlining procurement processes to ensuring timely payments for routine services, commercial credit cards have emerged as a vital component in modern businesses’ financial tool kits. This shift reflects an adaptation to the diverse and dynamic needs of today’s enterprises, where managing cash flow and optimizing transaction processes are fundamental to sustaining and scaling operations.

As the financial services landscape shifts to meet these needs, the entrance of challenger banks and fintech companies is reshaping market dynamics and traditional banks and credit unions must take notice.

These new players are introducing innovative solutions and customer-centric approaches, challenging conventional banking models. This transformation is not a critique of the traditional banking system but a reflection of the natural progression of the financial industry, where adaptation and innovation are key to meeting the changing demands of businesses.

Fintechs, in particular, have been disrupting the financial services industry and continue to reshape consumer expectations. Greater ease of financial transactions is one reason. More options for how consumers use financial services is another — whether that means online, mobile or at a physical branch.

The increased expectation for alternatives is closely tied to one commercial credit card trend that has been gaining ground as of late: mobile wallet integration.

Just like their personal credit or debit cards, businesses now expect their commercial or corporate cards to integrate with this payment technology solution.

With so much changing in the financial services industry, the question then remains, what are the “must-haves” when it comes to features, functionality and service in today’s commercial credit landscape?

Getting to know the nonnegotiables

One notable change that has paved the way for an emerging trend in commercial credit cards is the virtual card, and it is fast becoming a nonnegotiable for many businesses. The main benefit is convenience. Businesses can obtain these digital “stand-ins” at a moment’s notice and then use the unique account number to pay suppliers and vendors or provide team members the ability to pay for one-time expenses.

Virtual cards also enhance security, reduce the potential for loss, strengthen fraud detection and improve spending control. Businesses can set unique controls for each card based on everything from transaction limits and expiration dates to the merchant, vendor or business. On the backend, month-end reconciliation of expenditures is not as arduous of a task. Businesses can better understand where they are spending their money.

With the accelerated adoption of technology, businesses have now come to expect commercial credit card solutions to include expense management tools as well. It is about simplifying financial management by offering additional functionalities that track and categorize expenses, generate reports, automate approvals, streamline reimbursements and the like. Even a task as simple as opening and closing the card for a given team member is something businesses want to be able to do in a self-serve manner.

Still up for negotiation

As business credit card offers become more competitive, there will always be those features, functionalities and services that slowly but surely gain traction. And with an increasing number of people beginning to understand the abilities of artificial intelligence, it should not come as much of a surprise that this technology is on many businesses’ radars.

Just consider what it would mean to businesses if their lenders were able to offer financial insights into their operations. That can do a lot to improve the customer experience. Potential cost-saving opportunities would be greatly appreciated. The same can be said for how to optimize cash flow or help differentiate between legitimate and suspicious activity.

As mentioned, mobile wallet integration is becoming a popular commercial credit card feature for many lenders. People like flexibility, convenience and ease of use, and it shows. One report from July 2022 found that 65% of U.S. adults used their digital wallets at least once in the previous month to make a purchase. What’s more, digital wallets made up 49% of online transactions that same year. While not a nonnegotiable, it may be in the near future.

The makings of a smooth integration

Financial institution leaders understand the need to provide the above nonnegotiables by accelerating digital transformation. And concerns around security, compliance and operational efficiency are always top of mind.

Clearly, continuous risk assessment will be essential. Will mobile wallet integration lead to any potential security vulnerabilities? What do AI-powered insights mean for data privacy and security? Understanding the risks ensures financial institutions can enact appropriate security measures and controls.

Data encryption and tokenization can certainly help, as these measures keep account data safe and secure while transmitting information from one party to another. User authentication can also be of great benefit when integrating any number of commercial credit card features into operations.

As the financial industry undergoes rapid transformation and disruption, financial institutions must differentiate between the essential and the optional when it comes to commercial credit offerings. By staying on top of commercial credit card trends and adjusting their offerings to be customer-centric and compliant, moving ahead of the competition is possible.

Jacqueline White is President of i2c, Inc.