Global financial research firm Juniper Research estimates virtual card payments in 2025 will be valued at $5.2 trillion globally, an increase of 175 percent from 2021, and that growth will accelerate over the next four-year period, with payment value in 2029 up 235 percent from this year. Mastercard this year has made some moves that will contribute to that growth rate, particularly in expanding connections between issuer banks and third-party technology suppliers.
In April, the payments network launched a program through which banks using its Virtual Card Number technology could easily embed the technology into third-party systems. That includes HRS, which thanks to the program can issue virtual payments from any of the more than 90 issuers in the program via a single integration with Mastercard versus having to integrate with every individual bank, which would be extremely labor-intensive, HRS VP of payment consulting Alex Olsen told BTN. That in turn will enable HRS to work with smaller, regional banks, including in "non-core markets," that it otherwise wouldn't have the bandwidth to work with, according to Olsen.
In recent months, Mastercard announced it was expanding that VCN program, including integrations with SAP Concur and Grasp Technologies.
"In travel, there are many software-as-a-service-type solutions and platforms that we need to ensure we've partnered with and embedded our capability to provide that enhanced experience," Mastercard EVP of global corporate solutions Marc Pettican said. "It ensures we're reducing fraud and that payments are happening more real-time and taking the friction out of what can be quite a manual, cumbersome process."
Mastercard this year also announced new clearing controls capabilities for virtual cards, through which transactions can be blocked at the clearing stage, prior to the settlement stage, if they are not compliant to parameters including transaction limits and merchant code restrictions. That has "further enhanced the security around these solutions," Pettican said, while also helping to reduce chargebacks, which is a larger problem for the travel and hospitality industry than other sectors, according to Mastercard.
In addition, Mastercard also is working to boost acceptance of virtual cards in the B-to-B context with a marketing campaign targeting acquirers and merchants, and "travel is right at the epicenter of that," Pettican said.
While Pettican's scope extends beyond just travel-related corporate solutions for Mastercard, he noted that travel was a "critical vertical" with a dedicated team at the company, and its advancements in the virtual card space is benefiting its larger corporate payment business as well. "We're doing a lot of work around fleet, logistics and health care, and the capabilities we build for travel we then effectively adapt," he said. "In a way, travel is the innovator for us, because some of the stuff we've built is being deployed into other verticals."