How Are Virtual Cards Beneficial for Businesses?


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2023 is ending, and Financial Tech (FinTech) is slated to evolve rapidly over the next year. Virtual cards are one among those evolving technologies. It has been beneficial to firms in many terms over 2023. Let us see how they can help them in 2024.

According to Juniper Research’s Virtual Cards Market Statistics 2023-2028 –

Virtual Cards Market

One can use a virtual card number to ensure a vendor cannot reuse the physical business credit card or charge amounts later. The fraudulent activities on a business account can increase when the physical credit card is used at various locations.

However, sharing card details with recurring vendors becomes an administrative challenge. This increases after fraudulent incidents on the business account.

This article explores the benefits of a virtual card for firms. Before delving into the benefits, let us understand virtual cards and how they work.

What is a Virtual Debit Card?

It is an electronic payment method that is not physical. It works like a regular credit card, except they get it in the mail instead of a physical card. They obtain a single-use, 16-digit number and a three-digit CVV code online.

Like our personal ATM cards, these are tailored for business applications. Corporations allocate funds to their business bank account, mirroring their card balance. Transactions with virtual debit cards involve spending from the company’s funds.

How Does a Virtual Credit Card Work?

A corporate virtual credit card mirrors a conventional credit card. The card management platform injects a credit sum. For instance, if USD 500 is credited to the balance, one can generate a virtual credit card, allocate budgets, conduct transactions, and settle the accrued amount after the payment period.

Comparison between Virtual and Physical Cards

These cards, often linked to the same account as a business’s physical card, exist virtually. When faced with fraud on the physical card, firms can use virtual card numbers. This can swiftly resume transactions without waiting for a replacement card in the mail.

Benefits of Virtual Cards

Firms adopt virtual card numbers to protect their information and improve secure management. Virtual card numbers empower them to improve fraud protection and regulate vendor payments. Also, they can align with business’ spending objectives and safely extend spending capabilities.

With multiple cards designated for various payment categories, visual data provides insights into expenditure patterns. The systematic recording ensures seamless reconciliation with the overall financial statement during accounting processes.

  • Improved fraud protection

These cards reduce the impact of fraud on a business. Some cards, like those provided to small business clients, are merchant-specific. These prevent fraud beyond the assigned merchant. Others may be unbound but still offer fraud benefits due to limited usage.

Virtual card numbers remain operational in case of fraud on a physical card while a new physical card is dispatched. If fraud is reported on a virtual card number, that specific number is locked while others remain unaffected.

  • Streamlining tracking and reconciliation

The finance team often struggles reconciling payments and tracking receipts across various teams. These cards reduce this burden with clear labels and expense codes. These labels and codes make it easy to identify payment recipients and initiators.

Moreover, submitting receipts during virtual corporate card payments is seamless. Software integrations allow every virtual card transaction to sync with the general ledger. It provides administrators with automated or manual syncing options.

  • Enabling the creation of single or multi-use cards

The business manages a diverse array of accounts payable. This includes one-time and recurrent payments. The issuance of single-use cards poses a challenge when dealing with physical cards. Also, blocking a card after use requires weeks after a request is raised.

However, business-oriented virtual cards offer the flexibility to designate a card for single or multiple uses. Tailor the virtual credit or debit card to suit the transaction clearance preferences.

Will Virtual Cards Replace Physical Cards?

A definitive judgment that physical cards lack utility is unwarranted. Physical cards excel in personal expenditures and in-store transactions. These cards are seamless payment options for online purchases and digital money transfers.

The merits of these cards lie in their advanced security. They protect original account information from online threats. On the other hand, physical cards signify brand value.

Issuing multiple cards is effortlessly accomplished with these cards.

However, obtaining multiple physical cards can be time-consuming. A successful financial structure for businesses is one that integrates physical and virtual cards.

According to Spherical Insights’ Global Virtual Cards Market Insights Forecasts to 2030 –

Global Virtual Cards Market

Also Read: The Benefits of B2B Digital Payments

Wrap up

Adopting virtual cards emerges as a strategic solution for businesses seeking improved security. It helps them streamline financial operations and provides flexibility in managing expenditures.

The comparison between virtual and physical cards highlights the advantages of virtual alternatives. It helps mitigate fraud risks and facilitates efficient tracking and reconciliation processes.

Recognizing that physical cards still hold merit in certain scenarios is essential. They must understand the importance of a balanced approach for a resilient financial structure. Integrating physical and virtual cards becomes imperative as firms navigate the evolving payment landscape. This helps meet diverse transaction needs and uphold a robust financial framework.

Tejdeep Desai
Tejdeep Desai
Tejdeep Desai is an accomplished technology writer currently working at TalkFintech. With over two years of experience in the B2B industry, he has established himself as a seasoned professional with a keen interest in Financial Technology. His passion for technology is evident in his writing, as he skillfully blends his technical expertise with a knack for explaining complex concepts in a concise and accessible manner. His articles provide valuable insights into the latest trends, innovations, and advancements in the technology sector, making him a trusted source of information for readers seeking a comprehensive understanding of the industry.


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