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


 

 

Career opportunites

Planner

  • <500 000 Gauteng Operations, Planning & Inventory Supply Chain
Are you looking for new career opportunities as

Procurement Specialist

  • >500 000 Gauteng Procurement Officer / Specialist Strategic Sourcing Supplier / Business Development
As a specialist Supply Chain recruiter, I am

Logistics Controller

  • <500 000 Gauteng Logistics & Warehousing Procurement Officer / Specialist
Seeking dynamic up and coming candidates looking for

Supply Chain Manager

  • >500 000 Permanent Procurement Management Supply Chain Western Cape
As a specialist Supply Chain recruiter, I am

Business Process Specialist

  • <500 000 Gauteng Procurement Consultant Procurement Officer / Specialist Supply Chain
A company within the financial services sector is

LOC Procurement Manager

  • Gauteng Permanent Procurement Management Procurement Officer / Specialist
Your Responsibilities: Job Purpose To be the interface ...More

Account Manager

  • >500 000 Procurement Officer / Specialist Supplier / Business Development Western Cape
Key Performance Areas:• To ensure that all aspects

Consultant

  • >500 000 Gauteng Procurement Consultant Strategic Sourcing Supply Chain
Key Performance Areas:• You'll be concerned primarily with

Commercial Buyer

  • <500 000 Buyer Contracts Procurement Officer / Specialist Western Cape
A well-known Mining company is seeking the services

Technical Buyer

  • <500 000 Buyer Contracts Procurement Officer / Specialist Western Cape
A well-known Mining company is seeking the services

Business Development Executive

  • >500 000 Gauteng Supplier / Business Development
A retail solutions company is seeking a New

Financial Manager

  • >500 000 Contract Operations, Planning & Inventory Procurement Management Western Cape
Looking for an unemployed CA (SA) in Cape

Chief Financial Officer

  • >500 000 Gauteng Operations, Planning & Inventory Procurement Management
An exciting opportunity exists for a CFO with

Procurement Consultant

  • >500 000 Gauteng Procurement Officer / Specialist Strategic Sourcing
Key Performance Areas: A profound knowledge of sourcing

Commodity Specialist: IT

  • >500 000 Commodities Gauteng Procurement Officer / Specialist
Key Performance Areas:• Effectively applies acquired technical/functional skills

Senior Consultant

  • >500 000 Gauteng Projects / Category Management Supplier / Business Development
Key Performance Areas:• Adheres to best practice processes

Logistics Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Procurement Management
Key Performance Areas:• Manage warehousing and distribution 3PL's

Head of Franchise Network

  • >500 000 Contracts Operations, Planning & Inventory Western Cape
The opportunity to work for a multinational retail

National Driver Manager

  • >500 000 Analyst Contracts Logistics & Warehousing Operations, Planning & Inventory Western Cape
The opportunity for an extraordinary individual to join

Commodity Specialist: Industries

  • >500 000 Commodities Gauteng Procurement Officer / Specialist
Key Performance Areas:• Under the guidance of the