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Finance Friday: Why credit cards do not work for meeting and event payments.

Posted by Trista Hannan on Mar 14, 2017 1:12:14 PM
Trista Hannan

Trista Hannan, SVP of Client Solutions, discusses why credit cards do not work for meeting and event payments.

 

 

"The first problem with using a credit card is the loss of front-end control. No matter the card product you are using, it requires the supplier to enter a number or swipe the card to affect the charge. By definition that means after-the-fact you have to review the charge to make sure it really matches what you approved. All of the after-the-fact activity requires an intensive reconciliation and expense reporting effort. That requires headcount, and leads to inefficiencies, cost, and a lot of wasted time on administrative tasks.

 

Fraud is another huge concern. Card-not-present fraud is estimated to be increasing year over year at a 20% rate. All of the fraud means when a supplier accepts a card-not-present payment, the merchant rate is much higher than a traditional rate, making it very expensive for them. When they are accepting a card, they are also accepting the risk of a chargeback, which is very disruptive towards their businesses.

 

Suppliers are struggling with credit card payments. Cards are not accepted everywhere in the world, especially in Europe it is a big problem for B2B payments. Companies are forced to go back to the time-intensive, bulky PO process, or outsource to a 3rd party which is expensive.

 

Lastly, the data you get back from a card is not granular enough to support category management for meetings and events. They do a great job at telling you how much you spent with a supplier on a given date, but it is not helpful to know how much you spent with a major hotel chain last year if you want to impact demand management and leverage your spend. You need to know how your cost breaks down into the different categories. Cards don’t have the invoice data and will never be able to provide you with that granular level of information.

 

Credit cards were the big innovation... in 1950. They were created as an alternative to cash for the consumer, and worked great because the consumer is the approver. When companies use them, the card holder is not the approver, so you have additional processes and other efforts to try and make them controlled and compliant. Companies are using credit cards way beyond their original intention. It is getting so bad that major card providers offer a service, which they charge for, to reconcile and reduce the burden of their own product. Though it is a great business model for the card providers, it is a horrible experience for the companies.

 

That’s why we created EvedPay. It’s a digital payment network purpose-built for meetings and event payments. We know it’s critical to have the control and compliance of a PO, but to also have the flexibility of the card. We don’t believe you have to accept the trade-off the card requires. There is a better way to pay, EvedPay. Give us an opportunity to show you how."

Topics: Event Payments, EvedPay, Finance Fridays