Outsourcing Payments? Here’s the Data on Virtual Card Supplier Acceptance

One of the main questions real estate companies ask before outsourcing their AP payments is will their suppliers be open to accepting new forms of payment, in lieu of a paper check? Or, more specifically, will their suppliers agree to accept a virtual card - which is similar to a credit card, but it’s sent electronically and is only for payment of a pre-designated transaction or transactions.

After working with hundreds of clients, and processing billions of dollars, Nexus has data showing that many suppliers are indeed eager to receive payment with a virtual card. We also collected data about which supplier industries are most likely to accept virtual cards, as well as how acceptance rates are changing – and growing fast.

Certain Types of Suppliers Are Already “Known” Card Acceptors

Several supplier industries regularly accept virtual cards, and they happen to be used extensively across real estate. The reason why? These industries regularly accept credit cards and accepting virtual cards isn’t much different. They even carry the same credit card processing fees.

With both a credit card and a virtual card, a supplier simply inputs the 16-digit card number, expiry data, and CVV into their POS system. The money is then transferred to their bank account - less standard credit card processing fees.

The supplier types that are likely to accept virtual cards from you on Day One when outsourcing payments include:

• Flooring Carpet/Hardwood Flooring
• Hardware/Materials Supplier
• Landscape Design/Care
• Marketing Services
• Pest Control
• Plumber/HVAC/Appliances
• Security Services
• Software/Technical Services

More Supplier Industries Are Likely to Accept

COVID-19 has made it more likely for all types of suppliers to accept a virtual card, instead of a paper check, because it means that suppliers don’t have to go to the office to collect their checks and then to the bank to cash them. Virtual cards offer many other benefits as well:

Guaranteed payment

In the case of Nexus, Visa guarantees each and every card payment, even in the unlikely event that the supplier’s systems are hacked.

Accelerated payment

Suppliers receive card payment within days – after invoice approval – and can process instantaneously.

More visibility

Suppliers can track invoice and card payment status online 24/7 using an online portal (in the case of Nexus, they can use NexusConnect, where they submit their invoices).

Improved reconciliation

Suppliers receive complete remittance details in each card notification email, as well as in their payments portal.

Suppliers Are Excited About Virtual Cards

In the past year, suppliers - from all industries - have embraced virtual card in record numbers. Starting in March 2020, adoption of virtual cards climbed by 42%, compared to the same month in the previous year. And the increases kept coming all year long.

Thus, it wasn’t surprising that in Q4 of 2020, Nexus found that 66% of suppliers said they planned to increase the number of customers from whom they received electronic payments in 2021 (both virtual card and ACH).

66%

of suppliers plan to accept electronic payments (virtual card or ACH payments) from MORE of their real estate customers in 2021.

*Nexus Supplier Survey, October 2020.

Most of Nexus's Suppliers Serve Real Estate

While the number of suppliers accepting virtual card is often used as a selling point by outsourcing payments companies, it’s important to note that supplier networks can vary. Many supplier networks count a broad range of suppliers for health care, manufacturing, automotive, etc. because their clients are in those spaces.

Nexus only serves real estate and therefore all the suppliers in the Nexus network provide services to multifamily, CRE, mixed-use, retail, storage, student living, senior housing, and/or construction companies.

So, it's likely that most of the suppliers with whom you work are in the Nexus network - and already accept virtual card. And if your eligible suppliers don’t accept virtual card yet, Nexus is happy to contact them and tell them about the benefits of card acceptance.