Issuing 10’s, 100’s, if not 1000’s of cards to employees can be a real headache for many businesses. But just imagine that within a few clicks of your mouse you are able to generate, send, monitor, limit, and cancel your company cards. This article will help you get to grips with the ins and outs of virtual cards for businesses.
What is a virtual credit card, and how do they work?
A virtual card is essentially the same as its plastic counterpart, without the plastic. Virtual cards usually act as prepaid debit cards. The user loads a selected amount from their balance to be transferred directly onto the card. No sooner as you click the generate button, a card will be created with a random 16-digit card number, CVV/CVC2 code along with an expiry date that is selected by the cardholder. After having designed the card for their specific needs, the user is displayed the virtual card which is immediately available for online purchases, phone orders, and subscriptions.
What are the benefits of switching to virtual cards for your business?
The short answer is – Getting full visibility and control over your payments, Preventing fraud and boosting security.
The traditional plastic credit card is vulnerable to fraud, both from employees and scammers. Business cards not only show the information needed to make online and offline purchases but also display sensitive information such as the account number. An employee can use business cards for personal expenditure in numerous ways. As the card can be passed from one employee to the next around the office, it is very difficult to keep oversight on the cards. Employees can use the card, or store the details of the card, for personal transactions that cost businesses thousands of dollars each year
In addition, the majority of business credit cards are not originally built for businesses in the first place. They’re essentially personal credit cards that have been given a business purpose. As we mentioned before, this leaves the cards open to fraudsters and scammers, who can exploit the information exposed on the card. As most business cards are linked to one central bank account, a misplaced or stolen card may put the entire account at risk before noticing the card is missing or being abused.
Virtual credit cards offer a practical solution to prevent fraud and boost security for businesses. Firstly, virtual cards have the option of being for single use. Once the transaction is concluded the card will expire, and therefore unable to make subsequent purchases. Secondly, the randomly generated card number and limited information displayed on the card alleviates any possibility to store the card details to be used for future payments. Thirdly, a virtual credit card can be cancelled with the click of a button. Unlike physical cards, virtual credit cards do not display the account number and are not connected to a bank account. As a result, a card can be cancelled or suspended without the need to cancel the whole account – which can be an expensive and time-costly operation.
Keeping track of your expenses
In large companies, it is difficult to keep track of spending. With multiple business cards passing from employee to employee it can become unclear as to the purpose of each transaction, and who made it. Many businesses have to employ teams to check and approve purchases. This can be time-costly and an expensive process.
The beauty of virtual cards is that each card is generated for a specific transaction. In a sense, you are logging the expense before the transaction instead of chasing up on the purchase after it occurs. Cards can be generated and shared with employees on a when and needed basis. Not only does this reduce the chances of fraud, it paints a clear picture of how much, where, and who made a purchase.
Easy to navigate internal controls
Virtual credit cards for businesses provide flexible controls on a wide range of features. The account holder can easily select:
- Amount per period: cards can be limited to a set amount within a specific period (great for subscriptions!).
- Multi-use or One-time use: users can choose whether you would like the card to be for one-time use, or for multiple transactions.
- Suspend or cancel a card at any time: The card can be suspended and reactivated when needed so that businesses don’t need to be afraid from unauthorized charges.
- Authorizations: via multi-level authentication and hashed keys cards will be securely generated to the account owner.
Key criteria to look out for in a virtual card
Internal controls: As mentioned before, it is vital to make sure you will gain the right controls for your business.
Currency: Make sure to check which currencies are available with providers of the virtual credit cards. While most companies work with Visa and Mastercard, platforms that support international transactions, it is best to check before signing up.
Limitations: Some virtual credit cards may have limits on the amount you can spend on a VCC. Ask to see if your monthly expense volume is suitable for the VCC’s.
The type of card: Whilst the majority of virtual cards are prepaid debit cards, some companies may offer a scope of different payment options. It is recommended to use prepaid debit cards as the balance of the card cannot be greater than the balance of the account, thus protecting your money further.
Benefits: Search to see what rewards are available on top of your virtual cards. Ranging from cashback reward schemes to features such as the Balance Shield, supplied by Mesh Payments, that automatically tops up your balance when it drops below a set amount, can help manage your businesses expenses.
What do the experts say?
In 2018, Accenture (a multinational professional services company) reported that virtual cards account for around $169 billion dollars’ worth of purchases. That roughly equates to one in every three card purchases by large businesses. Accenture further predicts that this figure will rise to $300 billion dollars by 2021