How do Instant Payments and Virtual Card Accounts Fit In?

Immediate payments are quickly becoming the norm in today’s hyper-connected world.

Increasingly, tech-savvy consumers turn to their computers and mobile devices to make purchases in seconds. As a result, expectations with regard to speed, convenience and transparency in the C2B and B2C arenas are migrating into the world of B2B payments.

The good news is payment networks and services that respond to these expectations are proliferating around the world, ushering in a new era of transactions that are both instant and seamless.

Some of the most exciting developments have been around instant payments, which are real-time, account-to-account transfers, and virtual card accounts, which are a cardless payment solution that generates transaction-specific virtual card numbers at the time of purchase.

Both instant payments and virtual cards offer faster, convenient alternatives to traditional payment methods such as cash, checks and ACH. They also can serve as cash management linchpins for new e-commerce business models and streamlined supply chains.

Elena Gomez,  Senior Vice President, Global Product Manager,  Payments

Instant Payments: Changing Paradigm

Consumer goods companies, for example, who are bypassing wholesalers and retailers to sell their products directly to buyers through on-line stores or electronic marketplaces can use instant payments, including request-to-pay, to collect high volumes of small payments quickly, securely and around-the-clock.

Companies are also using instant payments to provide just-in-time funding that speeds up the release and delivery of goods from global trading partners, and to meet liquidity needs among internal  business units or subsidiaries, for instance.

More than 30 markets have already implemented instant payments. By 2020 such schemes are expected to be live in all major markets, globally.

As these new payment systems spread across the globe, financial institutions such as Citi are creating solutions that are of value to businesses and their customers.

Toward this end, Citi offers its clients a single global banking platform that will provide consistent connectivity to all key local instant payments systems through a globally consistent API.  The platform currently supports 20 markets and by year-end 10 more markets are expected to go live.

Citi is also leveraging its vast foreign exchange capabilities to incorporate cross-border instant payments into the platform, where possible. While instant payments are domestic by nature today, the future will likely see many of these schemes opening up to cross border flows.

Virtual Cards: A Powerful Instant Payment Tool

APIs and system-to-system connectivity between banks and their corporate clients also have played a key role in the evolution of virtual cards.

“Cards” is actually a misnomer since there are no physical cards involved but rather unique 16-digit reference numbers that have one-to-one relationships with underlying orders or business transactions.

Virtual cards, like instant payments, are particularly popular with companies that need to streamline the order-to-payment processes and automate straight-through reconciliations on the backend.

Paul Horn, Managing Director, Global Head of Product and Sales,  Commercial Cards

Because the payment for a particular business transaction or order travels with it, the unique relationship between the two creates a complete and clean reconciliation.

Virtual cards and instant payments, in fact, share a host of benefits–everything from transaction transparency and efficiency to improved cash management to a frictionless and trusted payment method that leads to better customer experiences and supplier relations.  Virtual cards, however, offer the added benefit of payment financing by leveraging card billing cycles.

Instant payments and virtual cards can unlock a host of cash management enhancements and efficiencies, irrespective of industry or company size and maturity–everything from emerging fintechs and e-commerce enterprises to century-old Fortune 100 multinationals.

They also can coincide in many treasury operations. Regardless of a company’s unique payment requirements or business model, there is a solution that will align with its specific needs.

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