A new study has revealed that virtual cards will be the fastest-growing B2B payment method by transaction value globally by 2028.
It is forecasted that virtual card transactions, randomly generated, and often temporary, card numbers used to process payments, will grow from $3 trillion in 2024 to $11 trillion 2028.
The top three fastest-growing payment channels between 2024 and 2028 are:
Virtual Cards – 276%
Instant Payments – 208%
All Cards – 97%
The report identified that the greater traceability of digital payments is driving this high growth; replacing cash and cheques for businesses.
The increased traceability for automated payment processing and reconciliation reduces the complexity of processing accounts payable and receivable.
Virtual cards combatting expenses fraud
The ability to control elements of B2B virtual card transactions, such as placing limits on the value and frequency of transactions, will enable businesses to better combat fraud, such as expenses fraud.
“To maximise fraud mitigation efforts, virtual card providers must offer management platforms that provide real-time visibility of these transactions; providing alerts of potentially fraudulent usage,” comments report author Michael Greenwood.
B2B e-commerce driving card use
The report also forecasts an increase in all B2B card use, with the value of B2B payments by this method growing from $11 trillion in 2024 to $22 trillion globally by 2028.
It predicts that the greater convenience of B2B eCommerce over traditional invoicing will be a significant driver of this growth. To capitalise, card providers must offer card holders rewards, such as cashback or reward points, for using cards at partnered B2B eCommerce sites.
Open Banking boosting instant payments
The instant payments market will grow by 161%, up from $22 trillion in 2024. This substantial growth will be driven by increased popularity of A2A (Account-to-Account) wallets, such as iDEAL and Twint, along with the rising popularity of Open Banking.
Open Banking allows digital wallets to leverage bank payments without requiring partnerships with individual banks; boosting access significantly.
The report forecasts the ability to quickly and securely access bank accounts through Open Banking, alongside bank-backed A2A wallets, will increase consumer instant payment transaction volume from 252 billion in 2024, to over 600 billion by 2028.
A2A wallets are popular for peer-to-peer transfers, often used for informal lending and repayments to friends and family, features such as splitting payments between multiple users are a key driver of their popularity.
Additionally, the report recognised the need for greater merchant acceptance of bank payments, both at physical checkouts and e-commerce, as the pressing hurdle to greater consumer adoption.
“To increase adoption, we recommend merchants incentivise consumer use by offering purchase discounts when using bank-linked payments. By encouraging adoption, merchants will benefit from lower fees for each transaction in comparison to cards,” concludes Greenwood.
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