Italy ranks fourth in Europe for Visa commercial programmes and the country’s growth in that commercial card market is consistently robust. However, the full benefits of a commercial card programme are currently largely unappreciated. Today, the timing is favourable for issuers to review their engagement in this market. To penetrate Italy’s commercial market requires a shift away from the culturally-based attitudes that make most of the country’s population predisposed to cash-based transactions, businesses included. The latent, though growing, demand for commercial cards in Italy amplifies the need for banks and other financial institutions to look anew at this opportunity and better understand how Italian companies could benefit from greater card adoption.
Multinationals and larger firms are well positioned to lead the change in commercial card adoption. That’s because of their familiarity with the product. However, for the Italian issuers, the real potential for scaling their commercial card programmes is through adoption by small and medium enterprises (SMEs). The volume of SMEs accounts for the majority in the Italian commercial segment.
So, what drivers can the issuers focus on? Which ones will drive those SMEs to adopt and use commercial card schemes?
Driver #1: Reduce Costs
Issuers have the opportunity to create new revenues by offering a commercial card programme to Italian businesses that provide valuable cost-reduction measures. Commercial card programmes can reduce business costs in several ways. The automated billing procedures can reduce costly billing errors such as lost cheques and duplicate payments. The data and analytics provided can help a business streamline its expenditure management. Furthermore, services made available by Visa like ‘taxback’, for VAT recovery of purchases made abroad, can help businesses recuperate funds much more easily than with their own individual efforts.
Driver #2: Improve Cash Flow
Streamlining the payment process through a commercial card programme enhances visibility into payments and expenses. This is especially true for businesses with a wide number of vendors and suppliers. Commercial card programmes increase the ability to control the timing of electronic settlement, making cash flows more manageable and predictable. They also improve transparency, auditing capabilities and forecasting.
Driver #3: Reduce Risk of Misuse
Businesses are very concerned about ‘misuse’ of cards by employees. When the appropriate card procedures and policies are implemented, commercial card utilisation can actually help companies reduce employee’s spending misuse. They can also boost compliance with company spending policies among both employees and third parties. The Visa Payment Controls solution already enables restrictions of purchases to select merchant category codes, time of use, or geographical areas. For example, an employee who purchases office supplies could be restricted from using his or her commercial card at a restaurant or bar.
Driver #4: Enable Further Innovation
Interest in commercial card programmes has led to flourishing innovation in the space. For example, the introduction of virtual cards for all types of spend, effectively replacing the classic purchasing card, has been key to driving greater commercial card programme adoption. Tokenisation, which substitutes the real payment card number with a separately generated identifier, is also a significant development. Together, these innovations allow businesses to use unique numbers for one-off secure payments, reducing the possibility of card details being compromised and, again, delivering much richer data for each payment. Additionally, many banks are exploring new possibilities in the mobile payments space, such as digital alerts and SMS capabilities. The digitisation of commercial cards opens up self-service opportunities, allowing businesses to manage and change strategies as needed. Through digitisation, products are becoming more flexible, adaptable and customisable down to an individual user level.