Payment Solutions News | The Drive for Optimization | Spring 2017

A Note from Jeff Felser, Senior Vice President

As businesses of all sizes continue to deal with a low-revenue growth environment, with annual changes in real U.S. gross output below 3% every year since 2010[1], they are looking to drive greater efficiencies and returns from their various operations.

For many, new technologies provide significant opportunities for achieving that transformation.

One of the operational areas that offers considerable potential for technology-based transformation is the payments system. Over the past decade, commercial payments have shifted significantly towards electronic payments methods.

  • U.S. commercial card volume rose from less than $400 billion in 2005 to more than $1 trillion in 2015.[2]
  • Commercial ACH transaction volume reached 4.7 billion in 3Q16, up 6.5% y/y.[3]

However, there has been a recent slowdown in the growth rate of electronic commercial payments.

  • Following a dip in the immediate aftermath of the Financial Crisis, total U.S. commercial card volume rose by annual double-digit rates between 2010 and 2014, but this rate slowed to just 8% in 2015.[4]
  • A recent AFP survey found that checks’ share of B2B payments rose slightly from 50% in 2013 to 51% in 2016, thereby reversing a long-term downward trend.[5]

This can be partially attributed to the fact that many technology-centric companies have already converted to electronic payments. Additionally, a significant percentage of organizations may be reluctant to fully commit to electronic payments due to a number of factors, including organizational inertia and the perceived cost of adapting legacy payment systems to handle the new payment methods. It can also be due to a company’s lack of in-house resources and external support to transition from trialing new payment methods to broad company-wide adoption.

To address these challenges, companies are looking to commercial card issuers for a range of payment solutions, as well as comprehensive onboarding and optimization support.

PNC provides industry-leading support when implementing and optimizing our commercial card clients’ programs. The strength of this support is demonstrated by better client performance:

Our average spending per corporate card and purchasing card in 2015 was significantly higher than that of other leading commercial card providers.


PNC Commercial Card Program Optimization

 

Important Legal Disclosures & Information

1. Source: U.S. Bureau of Economic Analysis

2. The Nilson Report, issue 863, August 2006, and issue 1093, August 2016

3. NACHA, The Electronic Payments Association

4. The Nilson Report, issue 1093, August 2016

5. 2016 AFP Electronic Payments Survey

This Payment Solutions News was prepared for general information purposes and is not intended as legal, tax or accounting advice or as recommendations to engage in any specific transaction, and does not purport to be comprehensive. Under no circumstances should any information contained in this newsletter be used or considered as an offer or commitment, or a solicitation of an offer or commitment, to participate in any particular transaction or strategy. Any reliance upon any such information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Neither PNC Bank nor any other subsidiary of The PNC Financial Services Group, Inc.  (“PNC”) will be responsible for any consequences of reliance upon any opinion or statement contained here, or any omission.

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