Prepaid Card Positions Itself In The B2B Payments Ecosystem

Saturday, August 22nd, 2020

According to a report by Allied Analytics, LLP, the prepaid card market was reported to be valued at $1.85 billion back in 2019. It is expected to hit $5.51 trillion by the year 2027. 

Prepaid transactions have evolved from basic paper vouchers to prepaid cards that serve multiple purposes. This current trend is projected to persist in the next few years, mostly due to its liquidity.

B2B payments are currently facing challenges on many levels and there are some companies that have created their own solution to these challenges. 

Employee Expense Management and Contractor Payouts

One glaring pain point that is needed to be addressed is that of managing employee expenses and paying contractors once their job is complete. 

Enter prepaid commercial card tools.

It is critical that controllers have the ability to see and control how employees are spending their money. In the current COVID-19 work environment where millions have been driven to work from home, prepaid cards certainly fill that gap. 

Kieran Draper, Managing Director of North America’s B4B Payments, had this to say about their commercial prepaid cards:

“It gives freedom, in terms of doing things much quicker and at lower cost. You can disburse funds in real time, you can see how cards are being used and place limits onto where they can be used, and you can actually see the transactions as they happen to monitor and control expenditure much better than other methods allow.”

The beauty of these commercial prepaid cards is that they include “pre-set restrictions”, something that is not commonly practiced when an employee is issued a company credit card. Employers don’t have to labor through filing, reconciling, and finally paying the employee reimbursements. Employees win as they wouldn’t have to endure the opening of a separate bank account, undergo a credit check, or “front the bill for their employer.”

Another valuable feature about prepaid cards, especially during these times, is the ability to continually manage the card, despite the current remote work condition. Employers can do this by simply modifying the restrictions digitally or reloading the cards. 

Getting Paid Is Easier

The use of the prepaid card technology is also looking to serve contractors as this would greatly facilitate payment for those who don’t have steady work.

Since contractors rightfully request immediate payment after the completion of their task, access to this payment would be expedited. They can also keep track of all their earnings for the purpose of reporting. 

The advantage from a controller standpoint is that by issuing a prepaid card, the controller does not need to gather highly sensitive information from the contractor, such as bank account information.

Similar to that of employee expenses, both controllers and the management can easily control how much goes into each prepaid card. This can be added by the controller. 

Although direct deposits, checks, or ACH transfers are not disappearing or becoming obsolete, it is clear that commercial prepaid cards do save time and money. Simply disbursing funds via prepaid cards is easier and more efficient.

Prepaid Cards Will Continue To Grow In Favor

There is no doubt that prepaid cards have come a long way from its humble beginnings. The great thing about the payments ecosystem is its ability to evolve along with new discoveries in payment methods and “multiple technologies”. Their aim is to eliminate friction and resolve complex pain points.