‘As a key tentpole of our strategy, we’re focused on accelerating the adoption of virtual cards’: 3 questions with Mastercard’s Chad Wallace

Very little appears to be staying the same for the payments industry in 2023 compared to where it’s headed in the next five to seven years. 

This holds true for B2B payments as well.

B2B payments are evolving. Moving away from check payments and leaning toward electronic transactions is perhaps one of the most recognizable trends within the B2B payments ecosystem.

I spoke with Chad Wallace, global head of commercial solutions at Mastercard, about what strategies Mastercard is implementing in its B2B business and where he sees B2B payments heading in the next few years.

What strategies is Mastercard incorporating to advance its B2B business?

Chad Wallace: We recognize the pace at which things are changing across the payments industry and are focused on delivering on the evolving needs of our customers for more convenience, flexibility, and choice in payment experiences. To do so, we are shifting our thinking beyond cards, focusing on delivering an embedded financial experience, and partnering with fintechs – by taking a consultative approach, shadowing and understanding the customer and their business to drive innovation and modernize B2B payment processes.

One of our primary areas of focus is driving embedded B2B financial services to deliver consumer-grade experiences in the corporate world. We’ve been embedding our products for many years and are continuing to integrate payments and services into corporate applications and marketplaces to help commerce ecosystem players deliver a user-centric and secure experience. For instance, we are working with procure-to-pay platforms and ERP (Enterprise Resource Planning) systems to place virtual cards at the center of these tools to deliver increased convenience.

In particular, virtual cards have the potential to play a significant role in simplifying complex B2B payments, and it’s a technology that we’ve been pioneering for over a decade at Mastercard. Businesses making the switch to virtual cards have quickly realized the core business and operational benefits of secure controls of payment, transparency into payment status for cash flow management, liability, and fraud protection, and detailed data for tracking, reporting, and reconciliation. As a key tentpole of our strategy, we’re focused on accelerating the adoption of virtual cards across new use cases and industries as diverse as travel, healthcare, insurance, freight and logistics, and education.

What cybersecurity concerns are keeping the payments industry up at night and how to mitigate them?

Chad Wallace: The frequency and impact of fraud and identity theft have increased with more digital interaction points and associated vulnerabilities, with the expected global cost of cybercrime projected as $24 trillion by 2027, surging from $8.4 trillion in 2022.

The shift to digital means organizations increasingly need to verify their customers are who they say they are, along with a smooth experience. As new technologies drive faster, frictionless checkout experiences, the ever-expanding volume of personal data also requires additional protections.  

At Mastercard, a single cyber-service is created that protects digital interactions even beyond payments with real-time assessment of identity attributes and behavioral biometrics. We are also planning for the future, as IOT (The Internet of Things) and new emerging technologies bring opportunities and challenges.

Where are B2B payments headed and what are some of the key trends accelerating the shift toward electronic B2B payments?

Chad Wallace: Business payments have long been plagued with slow approval processes and have historically been slower to adopt new payment technologies. However, coming out of the pandemic which disrupted traditional, legacy processes, we’ve seen a significant shift to digitization. In addition to consumers having expectations for digital-first solutions in businesses, we are also experiencing a generational shift that is permeating the business world. As more digitally native individuals ascend the ranks of organizations, there is a greater appetite to adopt automated technologies that will allow for intuitive, user-friendly interactions.

Simultaneously, the economic landscape and tighter margins have underscored the need for businesses to operate more efficiently. As a result, we’ve seen an increasing emphasis on data-centric digital payment technologies that enable businesses to better manage their operations and protect the health of their supply chains and working capital. 

With each of these dynamics at play, the B2B payments landscape around the world is ripe for transformation. We can expect to see a continued shift towards the digitization of workflows and processes, and payments will become increasingly accessible with the migration to the cloud and the rise of API-driven access.

This convergence of SaaS platforms and payments products will continue to fuel the emergence of business models placing the virtual card at the center. Additionally, we can expect to see more robust applications of AI allowing businesses to focus more on strategic priorities.