Can virtual cards alleviate supply-chain woes?

By letting small and midsize businesses (SMBs) issue instant cards to vendors, Mastercard looks to reduce payment cycle times to one day. The new system automates invoices through machine learning, leaving suspicious payment requests for manual review.

Why should we care?
Mastercard’s new feature uses innovative technologies as well as existing payments infrastructure to alleviate an elemental—and increasingly urgent—business need. According to May 2021 research by B2B payments company Melio, 30% of U.S. small businesses believe delayed payments affect their ability to continue operating; as a result of this problem, 40% of these businesses have considered delaying hiring, 39% have delayed purchasing inventory, and 36% have cut employee hours. And, given continued supply-chain issues, which have lengthened procurement and distribution cycles, payments woes have far from disappeared in the months since Melio’s research findings. A negative feedback loop has actually worsened payments cycles, exacerbating inflation and the delivery of crucial consumer goods. In terms of solutions, SMBs remain wedded to more old-school financial processes. By adding AI-powered efficiency to its familiar tools, Mastercard lets small businesses improve their financial prospects without a massive technological overhaul—a crucial lesson in user experience. In the long run, the expansion of this payments infrastructure could have positive ripple effects: 64% of small businesses think expedited payment cycles would let them grow, hire more employees, and extend hours. A virtual card alone won’t solve supply-chain shortcomings, but a tighter payments cycle and more reliable staffing across sectors will certainly help with reliability.