Moderated by Emily Digital Transformation Consultant at Hyperbots
Emily: Hello everyone! Good morning, good evening, or good afternoon, depending on where you are. Today on the call, I’m very pleased to have John with me. John is a CEO at LivData LLC. And today we’ll be talking about emerging new class of payments like VCP or virtual card payments for vendors. But before we dive into it, John, would you like to introduce yourself and give us a little more background?
John: Sure, thank you, Emily, for having me again. So my background is in finance automation, which is a big part of what I do. I go in, do assessments for companies, and figure out how to meet their strategic goals and objectives through people, process, and technology.
Emily: Thank you so much, John, for that introduction. So let’s actually, you know, begin with the basics. Can you explain what the emerging new class of payments such as virtual card payments entail and how it differs from the traditional payment methods?
John: Yeah, so there’s a lot loaded into that question because there’s different reasons to use virtual card payments. It can be budgetary for a business, allowing them to control the expense for a specific purpose that ties to an account. You can set up a virtual card payment for a specific purpose. There are two types of virtual card payments: single-use, where the card can only be used once for a specific approved PO, and multi-use, which can be set up for a specific category like fuel or a merchant-specific category, controlling how and where the card is used.
Emily: Got it. And John, what are the key features and benefits of virtual card payments for vendors, and how does it impact financial operations?
John: Yeah, it can make things more complex because there are more payment methods, which can lead to more manual processes than having all your ACHs regularly scheduled. If you don’t have the right tools and systems for the FinTech part of the payments process, it can be challenging. However, there are benefits such as participating in interchanging rebates, limiting single-use for security, and proper approvals to prevent unauthorized use. These controls enhance cybersecurity and overall financial operations.
Emily: Got it, got it. So moving to adoption and implementation, how widespread is the adoption of VCP among vendors, and what factors influence their willingness to accept such payment methods?
John: Currently, adoption is growing, especially among larger organizations that want the rebates and controls. Some vendors are reluctant due to the complexities and additional labor required. As FinTech solutions improve, making the process easier and more secure, adoption will likely increase. Understanding the cost of processing different payment methods also influences the decision, as some companies might switch back to ACH or checks due to perceived cost savings.
Emily: Got it, got it. So John, can you share any experiences or challenges encountered during the implementation of virtual card payments or VCP within your organization or even among other vendors?
John: The biggest challenges are getting vendors used to single-use cards, as they might prefer electronic methods or ACHs. Ensuring the process is automated and integrated with portals can ease this transition. The key is to make the system as seamless and secure as possible, similar to how ACH schedules work.
Emily: Got it, got it. So then, we go a little deeper into benefits and challenges. What are the primary benefits that VCP offers to organizations in terms of cost savings, efficiency, and security?
John: The cost savings from cash back and tying expenses to budgeted items with proper approvals are significant. It enhances efficiency by ensuring transactions match and are categorized correctly. The biggest benefit is improved security, as single-use cards reduce fraud risks compared to traditional methods like checks or ACHs.
Emily: Got it, got it. Conversely, what challenges or drawbacks might organizations face when transitioning to VCP for vendor payments in particular?
John: Not all vendors accept credit cards, and there’s resistance due to the interchange costs and manual processes involved in taking new cards regularly. The transition can be labor-intensive and requires significant effort to educate and integrate vendors into the new system.
Emily: Got it, got it. How does VCP impact vendor relationships, and have you noticed any changes in vendor behavior or preferences since implementing VCP?
John: Some vendors push back due to interchange costs and manual processing requirements. They may prefer ACH or direct payments for ease. However, as automation and ease of use improve, these relationships can become more streamlined and mutually beneficial.
Emily: Speaking about security and compliance, how do VCP solutions ensure security and compliance with regulatory requirements, particularly in terms of data protection and fraud prevention?
John: VCP solutions offer enhanced fraud protection through single-use cards, reducing the risk of misuse. They also eliminate the need to store sensitive information like bank details, which can be a compliance risk. This makes VCP a more secure option overall.
Emily: Can you discuss the integrations of virtual card payment systems with existing financial systems and workflows and elaborate on how scalable these solutions are to accommodate growth and changes in payment volumes?
John: Integration capabilities are robust, with APIs allowing connections to various ERPs. When set up correctly, VCP systems are very scalable, benefiting large organizations with established portals and workflows. For smaller companies, the initial setup cost can be a barrier, but overall, scalability is high as technology advances.
Emily: From a future outlook standpoint, what do you foresee as the future of emerging payment methods like VCP, and are there any emerging trends or advancements that you believe will shape the landscape?
John: I believe the future will see a shift away from checks towards more secure and efficient methods like VCP. Emerging trends include the use of cryptocurrencies for global payments, which could further revolutionize the payment landscape. Enhanced fraud protection and ease of use will drive adoption.
Emily: Based on your experience and insights, do you have any additional advice or recommendations for finance professionals considering the adoption of emerging payment methods like VCP?
John: Be aware of the implications and understand the true costs of different payment methods. Stay informed about the tools and technologies that make these processes easier. Embrace innovation and don’t get frustrated with initial challenges. The benefits of security, efficiency, and cost savings will be substantial in the long run.
Emily: Thank you so much, John, for sharing your expertise on the topic of emerging payments. The discussion was truly fruitful, and it was great having you here.
John: Thank you.
Emily: All right, thank you, John.
