Visa and Mastercard Earnings Shine Spotlight on B2B Innovations

For the payment networks, the continued shift beyond consumer cards has trillions of dollars’ worth of B2B transactions firmly in sight.

And, as spotlighted in Visa and Mastercard’s most recent earnings calls, cross-border payments, small and medium-sized business (SMB) transactions, virtual cards and even the buildout of non-card networks are all part of the multi-year strategies.

PYMNTS Intelligence reported earlier this year that paper payments remain stubbornly entrenched, which in turn creates friction and delays in commercial transactions. As recently as last year, the average days sales outstanding (DSO) — how long it takes a business to get paid for services rendered — was nearly twice that in 2022, marking the largest increase seen since 2008. By the close of 2023, 42% of firms had agreed to payment terms exceeding 60 days, with 6% facing a DSO that eclipsed 120 days.

Automation, virtual cards and digital payments are becoming key B2B payments, with businesses recognizing their role in strengthening buyer-supplier relationships. There’s certainly room for improvement, as 4 in 10 firms still using paper checks to pay for commercial goods and services.

During Visa’s fiscal fourth-quarter conference call, CEO Ryan McInerney noted that Visa B2B Connect — the non-card-based network that is helping to streamline cross border commercial transactions between banks — has seen a 40% gain in banks signing on to the network, as measured year on year. The CEO also said that the number of transacting banks on the network has gained 60%.

He also noted on the call that Visa Direct transactions — tied to the direct movement of money between accounts — grew 38% for the quarter to 2.8 billion, and commercial volumes grew 5% year over year.

“We finished the year with almost 10 billion Visa Direct transactions and $1.7 trillion in commercial payments volume. Commercial credentials grew at 18% year over year, significantly faster than the 7% growth for total credentials … We are very focused on growing B2B in new verticals such as travel,” McInerney told analysts.

In Europe, the company expanded its existing cross-border P2P partnership with Revolut to now allow real-time card transfers for Revolut business customers via the Visa Direct platform in over 78 countries supporting over 50 currencies.

During Mastercard’s own call, CEO Michael Miebach told analysts that in the commercial segment, “we have the right solutions, and we’re expanding into new verticals with specialized partners who offer significant reach.” He pointed to the pact with CBC to provide card distribution, acceptance and financial education to two million retailers.” In addition, joint efforts with Yallo “will enable three million small and medium-sized customers to use Mastercard small business cards to make purchases.”

As he said during the call, with a nod to business transactions, “there’s a sizable opportunity in unlocking new flows across commercial payments and disbursement and remittances. We’re seeing strong momentum in these spaces,” and said later that “we’re seeing 11% growth in commercial” volumes, as measured on a currency neutral basis for the third quarter, measured year over year.

He told analysts, “We see a whole new generation of treasurers that are digitally minded and businesses that are having an expectation that their digital lives in the office should be not worse than their digital lives and their personal lives. So when we put out our mobile based T&E card proposition, then people are saying that … ‘we like that.’ So there are definitely changes happening.” There’s been particular momentum, management said, with Mastercard Move, which enables banks to make cross border commercial payments more efficient and near real time in nature.

Issuing partners, he said, are talking to their own corporate customers about the beneficial “working capital effect of a virtual card as part of their payment. That’s 30 days of working capital. That is a real winning argument that everybody can understand.”

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