What are Virtual Cards and how do they work?
Virtual cards give you a unique, virtual credit card number linked to your credit card account of your choice. This added veneer of security would protect you against fraud from online shopping, or data breaches from banks or third parties.
In a company context, virtual credit cards are still protecting your money and data, but with a little more nuance. For instance, you could generate a unique credit card number that only works for a certain amount, or for use at a specific vendor.
You’d also be able to toggle more general spending limits as well as expiration dates, and manage the unique numbers electronically. Depending on your issuer, a virtual credit card number would also allow you to lock, manage and delete a virtual account.
What are the advantages?
For a newer technology, the advantages of virtual cards are quite extensive. With the ability to set spending limits and toggle expiry, limiting tail spend and overspending in general for employees becomes extremely simple. In most systems, you restore leftover amounts automatically to the main account upon expiry or deactivation of the assigned virtual number.
Visibility into expenses is also enhanced with the usage of virtual cards, as tracking expenses over specific periods of time and generating reports by employee, vendor, and so on comes built in with most providers. You’ll easily be able to spot rogue spend and ballooning budgets.
Virtual cards also have a profound effect on your organization’s spend culture, allowing authorization and permissions to be a proactive experience rather than a reactive one. Team members using their individual cards can make purchases and inform you after. The permission then starts with when that team member is issued a card in the first place, since every card number is linked to the primary account holder, effectively acting as a pre-approved purchasing tool.
Oh, and it’s also considerably cheaper for most companies. Especially when you consider the high fees for small businesses trying to get credit cards. Link virtual cards to a checking account or debit card. Team members don’t need access to those specific accounts, just the cards you choose to assign them, allowing for ultimate control and spend visibility.
Is this revolutionary?
Making the jump to virtual credit cards protects you from the most prominent sources of fraud, reduces the risk of data breaches and data entry errors, provides full visibility and organization into expenses, and supports true automation for most of the accounts payable tasks. This has never been possible with the usage and implementation of a single tool before.
With virtual cards, you reduce the risk and pain point of reimbursements, authorization, and even card theft. You can’t lose, duplicate or steal these cards. With pre-determined purchasing stipulations and amount limits, the security and comfort that comes with virtual cards for businesses cannot be understated.
How do I start using them?
The most popular usage seems to be single-use accounts or SUAs and are normal 16-digit account numbers. But you can only use them once. Team members make an expense request and they’re issued. When the finance or operations team approves it, the number is activated. This is now ready for use for the exact predetermined amount.
Now, there’s emphasis on security, precision and visibility. But don’t forget about how this impacts accounts payable. You can automatically generate and email numbers to vendors as soon as you’ve approved the invoice. The vendor, however, can only charge the exact amount and only make as many charges as you authorize.
This way, you don’t have to manage vendor mistakes. You can also pay much larger expenses without the risk of fees or surcharges. How’s that for a revolution?