Mastercard announced Monday a mobile virtual card offering aimed at its corporate customers.
The card – introduced with partners TSYS and Extend – is designed to allow for virtual corporate cards to be easily loaded into a mobile wallet “for fast and secure contactless payments.” TSYS (Total System Services) is a global payments provider that was acquired by Global Payments Group in a $21.5 billion deal. Extend is a three-year-old virtual card startup.
It’s yet another example of the COVID-19 pandemic fueling demand for digital, contactless commercial payments as more people work remotely.
In the third quarter, in-person contactless transactions made up about 41% of total transaction volume, compared with 30% in the same period last year, according to Adam Jones, SVP of travel & expense for Mastercard’s commercial and B2B solutions’ unit.
“That’s been driven by user experience and the pandemic’s acceleration of that,” he told FinLedger.
As Mastercard points out, previously one of the biggest obstacles to wider adoption of virtual cards has been the inability to load them into a mobile wallet for use at physical point-of-sale terminals. But Mastercard says its new offering gives employees or contractors the ability to load their virtual corporate card into their mobile wallet.
The new offering represents another example of incumbents partnering with fintechs to offer more digital solutions rather than attempting to build them out internally.
“Over the last several years we’ve seen a tremendous uptick in virtual card interest across the industry, but until now, they were irrelevant for in-store purchases, ” said Andrew Jamison, CEO of Extend. “This partnership with TSYS and Mastercard has really eliminated the last thing holding virtual cards back from fully penetrating the market and showing us how much potential they really have.”
Extend has been a Mastercard partner since joining the Mastercard Start Path program in 2018. Besides its core virtual card platform, Extend’s API Gateway offers a range of capabilities, including what it describes as an “industry-first” tokenization service. It was founded in 2017 by industry veterans with decades of experience at companies such as American Express and Capital One.
How it works
The offering “solves for all corporations out there that want to take advantage of secure seamless mobility that contactless capabilities offer,” Mastercard’s Jones said.
With its new virtual credit card, “corporations can transact how they want and when they want,” he told FinLedger. “They can also have more confidence to transact.”
The new offering uses Mastercard Digital Enablement Services (MDES) to tokenize virtual card numbers (VCNs) for secure mobile payments,
MDES turns card numbers into tokens that become “useless to fraudsters and eliminates the frustration of manually updating card numbers,” the credit card giant said.
Businesses can use Extend to issue a single or multi-use virtual card to employees, enabling them to fund and manage authorized purchases. TSYS generates the virtual card number, which is accessed in the Extend app and then seamlessly loaded into a mobile wallet.
The new virtual card solution, according to Mastercard, will:
- Make it easier to pay with a mobile device: Users will be able to load the virtual card into their mobile wallet to easily pay with their mobile device for easy, secure transactions at contactless point-of-sale terminals.
- Simplify the issuing virtual cards: A program administrator can easily create and issue a virtual card to an employee or contractor via the Extend mobile app or web-based application.
- Provide more control over spending: Companies will be able to set controls including specific time frames, amounts, and approved merchant categories.
- Create new opportunities for issuers: Issuers are now able to offer mobile VCNs to their corporate clients for carded and non-carded employee use. They can also be instantly issued to an interview candidate for travel costs, or contract workers for the purchasing of supplies and materials.
“Overall, this mobile digital enablement will streamline the process of commercial payments while reducing markedly the risk of fraud, while being very fast and easy to integrate,” Jones said.
Historically, he said, administrators were required to be part of the process in the corporate payment space.
“Those administrators were given the control within the corporation,” Jones said. “But now the reconciliation process is simplified and can be completely controlled in the operating environment of the corporation.”
Meanwhile, on November 23, Visa announced it had partnered with Conferma Pay, a London-based provider of virtual payments technology, to launch Visa Commercial Pay.
Visa described the new initiative as a “suite of B2B payments solutions” designed to help improve cash flow for businesses and eliminate “outdated manual processes.”
Also, on November 16, Mastercard announced that it added an account-to-account (A2A) payments functionality to its recently launched Track Business Payment Service.
Mastercard launched the new service – which it describes as an open-loop solution designed to give businesses greater control of their payments – in May as part of its plans to “modernize the $125 million global B2B payments market.”