And the rebate paid to card users can provide a boost to businesses' bottom line. "We pay our customers to use it," Goodman said. "They get the cash back."

Companies could earn rebates worth "eight digits plus," he said. "This is big dollars." Some corporates earn enough to fund their finance department, Goodman said.

By the end of this year, approximately 50%
of Fortune 500 companies plan to adopt
a virtual card program. It's definitely
a solution that's gaining momentum.

—Seth Goodman, Citi

While buyers earn rebates when they pay by card, sellers that accept card payments get hit with interchange fees. Traditionally, having to pay that fee when accepting payments made with cards has been a factor in some suppliers' refusal to accept cards. But for many suppliers, that cost is now being offset by the working capital benefits that are possible with card payments.

Ro Susalla, lead of the supplier optimization team at Fifth Third Bank, said that the credit card payment cycle means the buyer doesn't have to come up with the cash for some time. "A card can extend working capital anywhere from 30 to 55 days, depending on the date of the payment and the statement cycle," she said.

That gives the buyer room to pay its vendors earlier than it would otherwise.

"If a company understands their extension is upwards of 55 days, they would be willing to give up some of that to the vendor—pay the vendor two weeks early, say," Susalla said. "We're hearing many of our customers would be willing to pay 15 days earlier just to use the card. And if the supplier is borrowing and they can get paid 15 days earlier, that's pretty attractive to them."

"The working capital benefit outweighs the interchange," Citi's Goodman agreed, citing the example of a supplier normally paid in 60 days that now can receive payment in 30 or even 15 days. "That extra month is valuable."

When it comes to interchange fees, Goodman noted that accepting card payments on B2B transactions is often a lot less expensive than accepting consumer payments, for which vendors might pay fees of up to 5 percent. And he said that Citi can work with suppliers to help them lower the fee they're charged on card payments they accept.

"If we understand that cost is a barrier, we help suppliers get set up with a B2B Merchant Account that optimizes acceptance to drive lower rates," Goodman said. "We can reduce the cost to accept cards considerably, and help optimize further with reduced interchange tiers for large-ticket or straight-through-processed payments."

A card can extend working capital
anywhere from 30 to 55 days,
depending on the date of the
payment and the statement cycle.

—Ro Susalla, Fifth Third Bank

Goodman also cited APIs that Citi provides to facilitate clients' use of cards. For example, one API provides a real-time connection that companies can use to generate a virtual card number, Goodman said.

He cited the example of a client making a payment to a supplier it deals with infrequently. The API allows the company to generate the 16-digit virtual card number they need. "Often they can print that on a piece of paper, give the number to the supplier, and make the payment instantly," Goodman said. "The immediacy is important, especially to an infrequent supplier."

Kathleen Dwyer, principal product manager at ACI Worldwide, said companies appreciate the security that card payments provide, as well as the real-time information.

"The one downside of a card [is] there is no opportunity to send any additional information along with the card," she said. "If you have invoice-related data, discount information, today there isn't an opportunity for that."

Basel III

Ambrish Bansal, director and head of market management at Citi Treasury and Trade Solutions in North America, said the Basel III capital requirements are having an indirect positive impact on suppliers' acceptance of cards and other forms of financing or early payment solutions because the tighter restrictions on bank capital have made it harder for lower-rated suppliers to access capital.

"It inhibits the ability of a lower-credit organization to tap into avenues that were much more available from a capital-raising perspective in a pre-Basel III," Bansal said. "If they can receive their own capital a lot faster from their customers, it becomes a win-win situation for them."

Nancy Atkinson, a senior analyst at research firm Aite Group, said that while card payments have grown, "they tend to be a very small percentage of overall B2B payments."

According to the AFP survey, just 5 percent of payments to major suppliers were made using purchasing cards, while another 2 percent of payments were made using other types of cards.

"It is true that suppliers are not as negative about cards as they once were," added Atkinson, who also cited companies, especially smaller businesses, that are having a hard time getting funding.

"If they are paid by card and they can get paid early, they are better off even if they have to pay the interchange that comes along with it," she said. "And the purchasers in many cases are using cards, because then they're not using their own money to fund the early payment to their suppliers because they don't owe the money to their bank for another 30 days. To some extent it is a win-win-win."