Virtual cards present a strategic opportunity for B2B payments in the healthcare industry. A recent Juniper Research report indicates that virtual card transactions will grow 370% from $1.9 trillion in 2021 to $6.8 trillion in 2026. B2B payments are expected to account for 71% of total virtual card transaction value by 2026 as well.
Here we cover why more healthcare providers aren’t already using virtual card payments, what the benefits of this payment method are, and how you can get started making virtual card payments and streamlining your processes today.
Why Aren’t Healthcare Providers Using Virtual Card Payments?
Juniper Research predicted in 2019 that only 4% of healthcare institutions around the world would adopt virtual cards. The main reason given was that the processing charges, just like with standard credit cards, can be high for suppliers. At the same time, healthcare was expected to be the highest value sector, with $277 billion in transactions expected by 2022. What these institutions may not realize, however, is that many virtual cards come with cash-back rewards programs and offer a number of benefits over traditional forms of payment for both finance teams and their suppliers.
Lack of Awareness
Perhaps one of the biggest reasons that more healthcare providers aren’t using virtual card payments may simply be a lack of awareness. Virtual cards haven’t been around as long as check or ACH, but they are among the fastest growing B2B payment methods. In fact, according to recent MineralTree platform data, the percentage of virtual card transactions grew 156% and the percentage of spend climbed 270% compared to the same period two years ago.
In order to make virtual card payments to suppliers, those suppliers must accept credit cards as a form of payment. Because virtual cards work similarly to credit card payments, most places that accept credit cards will have no issue accepting virtual cards. Even for those that do not currently accept this form of payment, the right AP automation or payment automation service provider can reach out on your behalf and enroll them to begin accepting virtual card payments.
Take for example, MineralTree. We can analyze your list of vendors against our virtual card payments network to identify who already accepts this type of payment. For those vendors who are not already enrolled in our network, our payments team will contact them personally to see if they would accept. And because we provide continuous enrollment of new suppliers – in addition to an initial campaign – we help customers grow their virtual card spend, and benefits, over time.
What Are the Benefits of Virtual Cards for Healthcare Providers?
Every day, healthcare organizations make vendor payments to various suppliers for things like medical supplies, healthcare technology, PPE, and more. Virtual cards improve this process by streamlining payments and enabling organizations to create a new revenue stream simply by paying their suppliers.
Virtual Cards Cut Down on Paper Processing for AP Departments
According to PYMNTS.com’s recent Digital Shift report, 30% of AP professionals say that their companies struggled to process invoices efficiently in 2019. The average number of days between invoice receipt and payment for businesses receiving more than 20,000 monthly invoices was 11.6 days, and 69.8% of AP professionals were interested in innovative ways to save more time.
One key benefit of virtual cards is that they significantly reduce the amount of paper processing required of accounts payable departments, saving both time and manual effort. Because these payments are handled electronically, there is no printing, signing, packing, postmarking, or mailing of checks.
Virtual Cards Are Flexible Enough for Irregularly Occurring Disbursements
When it comes to the healthcare AP process, irregularly occurring disbursements are more the norm than the exception. Just as paper checks are made out in a specific amount to a specific individual or entity, a new virtual card number is uniquely created for a single use in a specified amount to a specific recipient.
In other words, virtual cards are just as flexible as check payments, but without any of the hassle of physical paper or manual tasks involved in check disbursement. Moreover, virtual cards are significantly safer than paper checks. Paper checks contain a lot of information, including account and routing numbers, that could be detrimental if found in the wrong hands. In 2020, checks were found to be the payment method most impacted by fraudulent activity at 66%. Each virtual card payment is made with a unique, one-time use payment token that masks any information about the account it came from.
Virtual Cards Help Healthcare Organizations Make Payments
Because healthcare providers make so many payments to so many different places each month, the more quickly and efficiently each individual payment can be made, the better. With virtual cards, a new card code is automatically created to authorize each transaction digitally– a much faster process than generating, printing, signing, and mailing checks.
Suppliers also often prefer receiving their funds this way, because payments are made faster, funds are assurance, and virtual card payments include rich remittance information, making their own reconciliation easier.
Virtual Cards Create New Revenue Streams
No matter the industry, it’s always important to look for ways to save cash and generate new streams of revenue. Healthcare providers should look for a payment service provider that has the top suppliers in the industry in their virtual card payments network. This will allow healthcare providers to more easily convert a higher percentage of AP spend and generate more rebates.
Oftentimes, our healthcare customers generate rebates that exceed their platform costs, giving them a new revenue stream they can invest elsewhere. According to Matt Santell, Controller of BrightView Health, “We were making [supplier] payments anyway, so the fact that MineralTree helps us generate a new revenue stream from them is a huge win. It’s been great for the accounting team to show that we’re not just a cost center—now we’re able to contribute to the company’s financial success, too.”
Why Use MineralTree’s SilverPay?
MineralTree’s SilverPay virtual cards offer a free and secure method for streamlining your payments. These virtual cards are sent to payees via email and processed the same way as a credit card–quickly and efficiently. MineralTree even contacts suppliers on your behalf to determine if SilverPay will fit with their current processes. And in addition to an initial enrollment campaign, we provide continuous enrollment of new suppliers—often enrolling them before the first invoice is approved.
This method is faster and more secure than checks. Virtual cards are easy to use, offer cost benefits, and ensure suppliers get paid more efficiently. You’ll even earn a cash-back rebate with every SilverPay payment made. Learn more about SilverPay from MineralTree, and start optimizing your payments today.
Check out our E-Book about Payment Automation in Healthcare!