P-Card Acceptance Update (Part 3)

Navigator Editions: Commercial Payments: Special Edition Navigator, April 2014
By: Frank Martien

In the November / December 2013 Navigator (part 1), we explored p-card acceptance rates; and in the February 2014 Navigator (part 2), we reviewed key decision criteria for B2B suppliers considering whether to accept cards. In this part 3 article, also based on a 2013 First Annapolis Consulting / NAPCP (www.napcp.org) purchasing card acceptance survey, we explore several observed best practices by corporate buyers to promote card acceptance by their suppliers.

Strategy #1: Ask your supplier upfront to take cards:

Figure 1: Card-related questions/terms “standard practice” with suppliers
Fig-1_-Card-related-questions-terms--standard-practice--with-suppliersQ#8 How often does your org address or include card-related questions and terms within RFPs and RFQs (bidding processes)?
Q#9 When card payments are the intended payment method, how often does your org address or include such terms within contracts with suppliers?
Source: NAPCP supplier acceptance surveys of 2009 (n=146) and 2013 (n=103).

As shown in Figure 1, the prevalence of corporate buyers asking their suppliers, within RFPs, RFQs, or contracts, to take cards has increased demonstrably from 2009 to 2013. Typically speaking, questions / terms are more exploratory when a buyer’s leverage to oblige a supplier to take cards is limited and more forceful when buyer leverage is greater.

Strategy #2: Consider card acceptance when selecting your suppliers:

Figure 2: Importance of card acceptance to selecting suppliers
Fig--2_--Importance-of-card-acceptance-to-selecting-suppliersQ#7 When selecting suppliers for indirect and direct spend, how important is card acceptance to your org? Indirect spend is not directly related to operations; for example, office supplies, computers, etc. In contrast, direct spend is directly related to operations/manufacturing; for example, raw materials.
Source: NAPCP supplier acceptance surveys of 2009 (n=146) and 2013 (n=103).

As with asking suppliers to take cards, corporate buyers are also more frequently considering their suppliers’ willingness to take cards when making supplier selections regarding purchases of specified goods or services. Whereas the 2009 survey only included a “blanket” question pertaining to all corporate spend, the 2013 survey was segmented into prevalence for so-called indirect and typically non-strategic spend categories versus direct spend, which is more frequently for direct cost-of-goods-sold inputs from strategic suppliers. Either way as shown in Figure 2, buyers are more willing to consider acceptance in selecting suppliers in 2013 than in 2009.

Strategy #3: Ask for assistance from your commercial card issuer provider:

Figure 3: How my provider has assisted me
Fig--3_-How-my-provider-has-assisted-meQ#13 How has your card provider assisted your org with supplier acceptance? Check all that apply.
Source: NAPCP supplier acceptance surveys of 2009 (n=146) and 2013 (n=103).

A significant percentage of corporate buyers have received some type of assistance from their commercial card issuer providers in securing acceptance from B2B suppliers. As shown in Figure 3, without exception, this prevalence has increased for various tactics. For example, more than half of corporate buyers are now provided with lists depicting which of their suppliers have accepted cards from other corporate buyers – a key piece of information when asking to pay by card. Almost half are now educated by their providers regarding supplier acceptance; and more than a third are provided with prioritized lists of which suppliers to target first.

Of course, corporate buyers and their commercial card issuer providers utilize a myriad of sophisticated tactics to help secure use of cards in what are often called supplier enrollment campaigns.

With U.S. B2B supplier acceptance rates approximating 68% (see part 1 for more detail), we are hardly at universal acceptance or close to acceptance rates observed for general purpose consumer credit cards; however, B2B acceptance rates are steadily improving as corporate buyers seek process savings and spend visibility, supplier awareness of working capital and process improvements grows, and merchant acquirers increasingly recognize the favorable KPIs of B2B acquiring.

For more information, please contact Frank Martien, Partner, specializing in Credit Card Issuing, frank.martien@firstannapolis.com.

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