Corporate Cards Evolve from Expense Payments to Cash Flow Management... Stronger Push for Corporate Market

Strong Potential Demand for Corporate Cards
Actual Usage Remains Low in the Field
Card Companies Enhance Convenience and Expense Management for Businesses

While the use of corporate credit cards in business-to-business (B2B) transactions among mid-sized companies in Korea remains limited, the card industry is taking steps to strengthen services aimed at corporate clients. With high awareness and potential demand for the deferred payment effect of corporate cards, issuers are looking to expand usage by linking expense management and accounting systems, simplifying issuance procedures, and other means.

According to the financial sector on September 13, Visa, a global payments technology company, recently released its “Survey on Working Capital for Domestic Mid-Sized Enterprises.” In this survey, 90% of respondents indicated that they are aware of the “deferred payment effect,” meaning they can utilize cash after a corporate card transaction until the actual payment is withdrawn. Also, 78% said that it is important to flexibly manage cash flow and to adjust the timing of payments.

However, despite this high level of awareness, actual usage remains limited. Of the companies surveyed, 51% said they either do not use corporate cards at all or use them for less than 10% of their domestic B2B transactions. This means that more than half of Korea’s mid-sized enterprises virtually do not leverage corporate cards for B2B transactions.

The primary reason for the low usage of corporate cards is established transaction practices. The largest share of respondents, 21%, pointed out that traditional methods like wire transfers or cash payments have become the norm. Another 16% cited lack of awareness that high-value payments are possible with corporate cards, and 13% mentioned concerns about fees.

If these barriers were addressed, 88% of companies said they would consider adopting or expanding the use of corporate cards. Although current usage rates are low, companies are open to broader adoption if old transaction customs, cost, and convenience are improved.

Expense Control and Streamlined Issuance... Advanced Corporate Card Services

The card industry is moving to increase corporate card utilization by enhancing convenience and strengthening expense management functions for business clients.

Mastercard is preparing a service in cooperation with local B2B fintech company Gowid. This service, based on virtual card numbers (VCNs), allows companies to pre-manage expenses. Traditionally, employees used a corporate card and then submitted receipts for reimbursement. By contrast, this service enables companies to set preconditions such as usage destination or transaction amount prior to payment. Payments that violate company policies or exceed company-set limits can be blocked within the system. This demonstrates how the corporate card is evolving into a tool for controlling and managing company expenditure.

The corporate card issuance process is also becoming digitalized. In August, KB Kookmin Card became the first card issuer to introduce the Ministry of the Interior and Safety’s “Corporate Public MyData Service” into the corporate card issuance process. The issuance process leverages six types of corporate information held by the National Tax Service and the Ministry of SMEs and Startups. This helps business customers reduce document preparation, while the card company can more efficiently verify information such as company type and financial details needed for issuance.

Efforts to broaden contact points with business clients are also emerging. On September 8, Woori Card signed a business agreement with NICE D&R, operator of the private bidding solution ‘Qbid’, to diversify channels for recruiting corporate card clients. Both companies plan to utilize their respective business client bases to expand their presence in both the large enterprise and SME markets.

An industry official remarked, “As business-to-business transactions become more complex, not only the exchange of payments but also efficient management of settlement and cash flow is critical. Corporate cards can extend their utility beyond cash flow management to include expense control and links with accounting systems. Therefore, the key lies in how much related infrastructure and user convenience can be enhanced.”

This content was produced with the assistance of AI translation services.