In Thailand, it is common to see people take out different credit or debit cards to pay for everyday purchases. Thai consumers are also gravitating towards using pre-paid cards for convenience, speed and security when traveling abroad. After all, it is not uncommon to see Thais holding multiple payment cards in their wallets. Digital payments have become a way of life for many Thais, and this growth has accelerated with the proliferation of digital wallets, mobile payment options and connected devices.
The same might not be said for corporates and small-to-medium-sized businesses (SMEs) that are just starting on their journey towards becoming cashless. Many of them are still using cheques and cash because they are not fully aware of the benefits that business credit or debit cards bring.
In Thailand, there are approximately 300,000 SMEs that contribute 43 per cent of the country’s GDP . The Thai government has tasked itself with a long-term nationwide digital transformation agenda, namely the Thailand 4.0 strategy. More specifically, it aims to develop digital capabilities in major economic sectors including agriculture, tourism, education, medical and investment to name a few.
SMEs and corporates are inclined to use cheques because this may help provide a buffer period for payments to be made to their suppliers. This gives them some flexibility with their cashflow.
It may be unknown to them that making payments on a business credit card will provide them more cashflow. They can "buy now and pay later" by using the interest-free days available. In some cases, this could be up to 55 days.
Take Singapore for example. According to Visa's data, approximately 20 per cent of consumer card transactions in Singapore exhibit similar spending patterns to those of SMEs. This could imply that a lot of SMEs are still using their personal cards for business expenses.
A possible reason for this is that some business owners think that by using their personal cards to pay for business items, they can benefit by earning rewards. Some are simply not aware that a business credit card is available to them, and others may not have been offered this product by their banks. It is also important to note that as business grows, the credit line on the owner’s card may not fit the actual business needs.
The advantages of using a business credit card are numerous and will add value to SMEs, large corporations and even governments by saving them time, helping their business grow and empowering them to control their business.
At Visa, we power businesses everywhere, and our vision is to help them pay and be paid seamlessly and securely.
As commerce continues to move towards digitally driven experiences, businesses – especially homegrown SMEs must adapt accordingly – and take on a digital-first mindset. This includes embracing payment solutions and being open to new technology in order to keep pace, grow and thrive.
Here are some common misconceptions about business payment cards.
• Losing out on rewards for the business:
SME owners worry about losing out on rewards such as cashback and points if they use their business credit cards. However, it is important to be aware that business credit or debit cards can provide similar benefits and more.
Visa has negotiated discounts at numerous providers for Visa business cardholders. These include discounts with Grab, Lalamove, Seekster, Skootar, Fastwork, Servcorp, Samitivej and Phyathai hospitals.
Such solutions are extremely useful for SMEs. They not only save costs but enable SMEs to become more efficient by helping them digitise processes, reach more customers, optimise business operation and even extend healthcare benefits to their employees.
• Better control of cash flow and liquidity:
Besides enjoying the convenience and security of using digital payments, many SME owners often overlook the use of business credit cards as a business planning and budgeting tool.
With business credit cards, SMEs can extend their days payable outstanding and optimise working capital, taking advantage of up to 55 days interest-free to improve their cashflow.
Moreover, with the recent push to go digital, some banks have raised cheque fees in a bid to encourage firms to eliminate the use of cheques. This is on top of the existing cost of managing cheques by business owners, such as courier service to collect and deposit cheques. These are minor expenses but eventually they add up on an SMEs’ balance sheet. Hence, we believe more SMEs will start using business payment cards, given the increase in costs for cheque payments. Furthermore, we believe that SMEs will have actual cost and time savings if they use business payment cards due to process costs of cash and cheque payments.
• Concerns that suppliers do not accept card payments:
Given that card payment acceptance among businesses may not be as prevalent, Visa is supporting expansion of acceptance of business cards. Specifically, we are working through partners – termed Business Payment Solution Providers (BPSPs) – to expand business-to-business (B2B) supplier acceptance.
BPSPs in Thailand are increasing. Their roles are to bridge the gap between buyers and suppliers by allowing a buyer to pay with a business credit card where the supplier is paid directly into their bank account. This also simplifies the reconciliation process for the buyer and supplier by sending payment data to both parties.
• Misuse of business payment cards:
Some SME owners are concerned that by providing their employees with business cards, they may misuse it, leaving the owner liable.
The truth is that giving a business card to employees removes the need for the business owner to reimburse their employees at the end of the month, which is time consuming for both the owner and employee.
The problem of reimbursement is a big issue for many. According to a Visa Study , 34 per cent of people say they experience personal cash flow issues because of their companies' expense submission policies.
To ensure that employees' misuse of business cards is mitigated, Visa can work with business card issuers to integrate transaction control features to manage how, when and where a business card can be used. This can be tailored based on the company’s policy. Coupled with enhanced reporting, SME owners should be assured that the business card will not be abused. This provides peace of mind for SME business owners to focus on growing the business.
In conclusion, when it comes to business payments, SMEs are gaining more attention as an underserved segment in Thailand. As the backbone of economies, SMEs play a pivotal role in building communities and providing economic growth. SMEs have to start embracing digital payments in order to realise their full potential. The answer to their next expansion plan may simply be in their wallets.
The writer is Country Manager for Visa Thailand