Virtual Credit Cards and Your Business: Everything You Need to Know

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From cryptocurrencies and NFTs to virtual credit cards, every day it seems like there is some new finance technology to be aware of.

In the world of accounts payable, perhaps the most significant trend is the increase in usage of virtual credit cards (VCC). Accenture has estimated purchases using this method may reach as high as $355 billion (USD) this year.

Let’s take a quick look at what they are, and how they may benefit your business.

What Is A Virtual Credit Card?

A virtual credit card is a temporary credit card number that can be used when shopping online. It is processed in the same fashion as a typical credit transaction. They can be single-use, or set up with a spending limit and expiration date.

How Does It Work?

VCCs function just like a normal credit card, except they can only be used online, or in some instances over the phone.

The process for acquiring a VCC may vary, depending upon your provider. They can be issued by banks or automated payments software. When working with a bank, businesses have the option of having a unique number assigned to pay specific vendors or a new VCC number for every transaction. Banks currently offering this service include MasterCard, Visa, and American Express.

Using automated payments software, a new number is generated for each transaction, and most payments will integrate with your AP workflow–from purchases to payments–with your accounting software, offering payment options such as ACH and EFT. Providers such as Beanworks and Nvoicepay are two examples of automated payments solutions.

What are the Benefits?

When considering whether to use VCCs, there are a few key advantages to consider:

• Fraud remains a constant threat to businesses, especially as remote and hybrid work has become the new normal. The problem is so prevalent that the Royal United Services Institute stated that it should be considered a national security issue. Virtual cards provide a unique set of security features that help combat the risk. They function as an extra layer of protection in cases where a merchant you have paid is impacted by a data breach. They are also compliant with PCI DSS (payment card industry data security standards).
• A virtual card will fully integrate with your accounting system. Payments can be made and released directly from your AP automation software, keeping the process efficient.
• Typically, accounts payable is not considered a revenue-generating activity. However, using VCCs can potentially help you earn money through cash rebate programs that provide cashback on a monthly basis.

Companies large and small can benefit from the increased security and efficiency that comes with a virtual credit card. Not only that, they can gain revenue through cash rebates from every single transaction, making the AP process pay for itself.