A virtual card is a 16-digit unique card number for one vendor transaction between payer and payee. It’s a digital payment solution, designed to help modernize traditional processes, reduce errors, and save time. Virtual card payments improve security and accountability to increase the efficiency of your accounts payable processes.
Hence the name, virtual corporate cards, are not physical cards. They are digital, meaning the transaction is made between accounting departments. This form of electronic payment is growing in popularity as businesses recognize the value of simpler, faster, and more secure payments.
This article will explain some more benefits of adding virtual payment cards to your business, and the impact they could have.
Enhanced security
Virtual payment cards do not require a supplier to share their bank account number. Any payment information is never tied back to your bank account. Virtual payment cards are always locked down to a time limit, specific amount, and maximum credit limit. That means if a thief were to steal a virtual card number outside of the time window and try to spend more than the exact payment amount, the virtual card would not work.
Normal credit cards can create a huge risk for your business. If one of your accounts is hacked; all payment information for suppliers could potentially be in danger. However, with virtual card payments, there is no physical trail to a card – increasing the protection of private details. This type of real-time protection offers one of the best levels of payment security you can find.
Reduced processing costs
Virtual cards come with a lot of cost savings, as they don’t require manual workflows that lead to bottlenecks or errors. Like other digital payments, virtual cards eliminate the time, and resources.
Using this method means your account will never process payments for any amount higher or lower than what you’ve pre-set. This type of financial control eliminates the possibility of short paying or overpaying your vendors.
Improved accountability
A positive of virtual cards is the increased accountability of your company’s finances. By assigning virtual payment cards to specific employees and suppliers, you can track expenses better.
A purchase made on a virtual card will automatically show up in your payment system with the transaction details attached. This eliminates the need for manually tracking and reconciling payments. No more chasing down paper receipts, comparing transactions to purchase orders, or deciphering confusing credit card statements.
Simpler supplier payments
By using virtual credit cards, your suppliers will receive virtual card payments in real time instead of waiting for a cheque in the mail, making the process take minutes, not days. Additionally, with a virtual card, the payment data is attached to the transfer, enabling both buyers and suppliers to identify a transaction by the following:
- Date
- Amount
- Purchaser
- Item
This payment data can then be automatically entered into your accounts payable system without the need for any manual data entry or additional paperwork.
Managing spending
Although many business tasks have become digital, supplier payments are often still physically recorded.
Additionally, virtual cards are only issued when approved; restricting employees to authorized purchases. This ensures your company’s policy compliance is met and the spendings match the transactions.
Plus, you can use virtual cards to avoid accidental overspending. Let’s say your business pays for an annual membership with a professional association. You can pre-fund a virtual card with the exact cost of the membership and leave it on file with the vendor. Making it really simple to pay, but also keep an eye on finances.
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Hopefully this article has allowed you to see the benefits of using virtual payment cards within your business. Why not grow with business-based technology and use this payment method going forward?
