Card-accepting suppliers can increase their revenue

| 0 Comments

 

CardAcceptance.jpgResearch conducted by MasterCard, with Kaiser Associates, on the buying habits of corporate purchasing managers to evaluate the effect of card acceptance on corporate purchasing found that card acceptance can lead to increased revenue for card-accepting suppliers.


When considering strategic options to help grow revenue and increase customer loyalty, organisations often neglect to consider changes to revenue receiving methods, in favour of product innovation and brand-awareness campaigns. This is an oversight, as changing a company’s payment-receiving process can provide strategic advantage over its competitors.


MasterCard found four revenue benefits for suppliers; increased volume per customer, greater revenue consistency, increased likelihood of initial vendor selection and decreased customer churn.


REVENUE BENEFIT #1: Increased volume per customer


Many suppliers already know that buyers appreciate the value that cards offer, however, many suppliers do not appreciate the extent to which buyers would alter their spending habits to realise this value - customers are more likely to increase purchasing volume with a previously non-accepting supplier, once they start accepting cards. Data from the study indicates that this increase in volume is owed to three key drivers:


1. Buyer interest in consolidating suppliers: Card acceptance is a significant decision driver for buyers considering vendor consolidation opportunities.
 

2. Buyer willingness to substitute card for early-pay discount: Suppliers lose top-line revenue when offering early-pay discounts in order to incentivise speedy payment. By accepting cards at the point of purchase, even speedier payments can be achieved, and without a reduction in price for the supplier.
 

3. Facilitation of ad-hoc purchasing: Cards provide a level of control and fraud prevention that is often beyond what traditional payment methods can offer. An example of de-centralised purchasing occurs when a manager circumvents the traditional procurement processes, most often in the case of a time-sensitive purchase. By accepting cards, suppliers make themselves more accessible for this type of purchasing.


REVENUE BENEFIT #2: Greater revenue consistency


Paying with cards enables a more streamlined purchasing process for buyers. The streamlining effect comes from removing multiple manual processes, such as the need to write a cheque, or match an invoice to a payment. Data suggests that cards streamline the payment process so much that they encourage buyers to purchase more frequently from their suppliers.


REVENUE BENEFIT #3: Increased likelihood of initial vendor selection


Buyers’ preference for using cards leads them to seek out card-accepting suppliers. This effect was observed across all spend categories and was strongest in non-strategic spend categories. The top four spend categories with the greatest supplier selection effect owed to card acceptance were fuel, travel, office equipment and printing services.


Adding card acceptance to a firm’s capability list has proven to be a simple way to increase competitiveness, the research noted.


REVENUE BENEFIT #4: Decreased customer churn


Suppliers appealing to buyers’ preference for using cards for purchases may see an increase in customer satisfaction. Managers in the study indicated that an increase in satisfaction would increase relationship longevity by over 60%. Card acceptance can thus facilitate considerable growth in the lifetime value of customers.


Why do buyers prefer cards?


• Purchasing control: Cards provide for protection against unintended and fraudulent purchases, errors and misuse by employees.
 

• Level-three data: Data provided at the line-item detail level allows for efficient reconciliation, tracking of purchases, and oversight of compliance.
 

• Payment float: Card billing cycles lengthen the gap between the time of purchase and the time of cash disbursement – helping to achieve lower working capital requirements.
 

• Streamlined enrolment: Eliminating trade credit mitigates the need for a vendor-sponsored background credit check – thereby streamlining the vendor enrolment process.


The research conducted in this study reveals that buyer decision-making and purchasing habits are influenced considerably by the card-acceptance status of a supplier. By opening up card acceptance as a payment option for business customers, suppliers can position themselves to earn higher revenue and better compete against their non-accepting competitors.
 

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

Career opportunites

Head: Supply Chain Management (P6)

  • <500 000 >500 000 Limpopo Permanent Procurement Management Supply Chain
North east of the Tropic of Capricorn, just ...More

Purchasing and Supply Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supply Chain
Purchasing and Supply ManagerThe CSIR has a vacancy ...More

Senior Manager Public Sector

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 Senior Manager Public SectorTotal Cost to Company: R1.1mil ...More

Senior Manager: Mining

  • >500 000 Gauteng Industrial Engineer Permanent Projects / Category Management
Senior Manager: MiningTotal Cost to Company: R900k – ...More

SUPPLY CHAIN MANAGER

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
SUPPLY CHAIN MANAGER(Total Cost to Company R750k – ...More

Master Data Management Advisor

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 MASTER DATA MANAGEMENT ADVISOR(Total Cost to Company R750k ...More

PRO - Performance Reporting

  • >500 000 Permanent Procurement Consultant Procurement Management Projects / Category Management
PRO - Performance ReportingTotal Cost to Company: R800k ...More

PRO - Risk & Governance

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
PRO - Risk & GovernanceTotal Cost to Company: ...More

Supply Chain Site Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Supply Chain Site ManagerTotal Cost to Company R1mil ...More

Chief Financial Officer

  • >500 000 Gauteng Permanent Procurement Officer / Specialist
Chief Financial OfficerTotal Cost to Company R1.5mil – ...More

Process Engineer- WMS

  • <500 000 >500 000 Industrial Engineer Permanent Projects / Category Management Western Cape
Process Engineer- WMS(Total Cost to Company R350K – ...More

Forecast Analyst

  • <500 000 Analyst Permanent Procurement Management Western Cape
Forecast Analyst(Total Cost to Company R350K – R500K) Location: ...More

Group Category Manager: Indirects

  • >500 000 Permanent Procurement Management Projects / Category Management Western Cape
Group Category Manager: Indirects(Total Cost to Company R700K ...More

Group Category Specialist: Chemical

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Group Category Specialist: Chemical(Total Cost to Company R700K ...More

Sourcing Specialist - 3rd party

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Sourcing Specialist - 3rd partyTotal Cost to Company ...More

Global Procurement Lead (Processing)

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
 Global Procurement Lead (Processing)Location: JohannesburgTotal Cost to Company ...More

Global Supplier Performance Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Global Supplier Performance Manager Location: Johannesburg  Cost to ...More

Group Customer Service Lead

  • <500 000 >500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
Group Customer Service Lead  Location: Johannesburg As the ...More

Business Intelligence Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supplier / Business Development
Business Intelligence Manager Location: JohannesburgLead the development, implementation, optimization ...More

Group Procurement Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management
Group Procurement Manager Location: Johannesburg  A Global Organization ...More