Virtual Credit Card for Business Tips
In the world of accounts payable, checks, credit cards, and the ACH have long been heavyweight champions, with a recent survey by Stampli and Treasury Webinars finding they account for 90% of the preferred methods of payment.
But the virtual credit card for business could be starting to change things.
Cards that can be created for each transaction, with unique 16-digit numbers and other customizable features, the virtual credit card for business has been growing in popularity amidst the rise of digital payments, and especially throughout the COVID-19 pandemic. The reason for this? Virtual cards are great for distributed payment operations, with cheaper invoice processing costs and better security to boot than other forms of remittance.
Join us as we explore the ins and outs of the virtual credit card for business, with ways to know if it’s right for your company and the benefits of Stampli Card.
Virtual Credit Card for Business Basics
When we say virtual credit card for business, what do we mean exactly? Essentially, it’s a virtual card in that it can be created for either a single transaction or multiple transactions, and can also be cyclical. The card itself might be a physical entity that a purchaser can hold in their hand — or not, but the element is that the virtual card exists in a digital format online.
The way it works is that whoever creates the card generates a unique 16-digit code for a given transaction type. They also set the dollar amount that can be spent through the virtual card. Virtual cards for business can be set to a hard limit, meaning companies don’t have to worry about rogue spend over and above with the same card. Once the transaction is made and the limit is reached, then the card is effectively useless if it’s a multiple use card. In the event it’s a cyclical card, then the limit will reset depending on the frequency of the cycle.
How Popular Virtual Credit Cards Are in Business
As we noted earlier, Stampli and Treasury Webinars collaborated on a 2021 survey, “How & Why Companies Choose Payment Types.” The report noted something that probably isn’t too surprising: Just 4% of companies prefer to make payments with virtual cards.
Still, there are other signs that the virtual credit card for business could be gaining in popularity with the report noting that “virtual/ghost cards are gaining meaningful traction as a payment type and companies are actively pushing their suppliers to accept them.”
Certainly, companies in the survey were aware of virtual cards, with a full 61% of companies attesting that they’d made virtual card payments.
Why it’s Good for Businesses to Use Virtual Credit Cards
We should probably note that Stampli is firmly payment agnostic, believing there isn’t a right or wrong way to make a payment. Different situations and vendors can call for different forms of payment. Where the ACH is generally perfectly fine for getting employees paid or for larger payments to vendors. And some vendors still prefer a paper check.
As companies get to know the virtual credit card for business a bit more, they might find they prefer them, too, in some situations. The cards are easy and quick to produce, which makes them a great option in a pinch. As PYMNTS.com noted in a recent post, “The major benefit of virtual cards is the ease of access and utilization.”
The options available when it comes to the types of cards (single use, multiple use, or cyclical) offers an extra layer of protection against fraud, which remains a big problem in accounts payable these days.
How to Know if the Virtual Credit Card for Business is Right for You
As we noted a moment ago, Stampli is payment agnostic. We aren’t here to try and sell companies on one and only one way to make payments, even if we recently debuted the Stampli Card. We simply added virtual credit cards as a convenience for customers.
The virtual credit card for business is simply another payment option. For companies that make a lot of payments or have a lot of remote workers who might need quick and easy payment access, virtual cards are a great payment method to have in the mix.
It’s one of the reasons we offer it for any of our customers who want to give it a shot. It’s there for anyone interested, whenever they’re ready.
Key Virtual Credit Card for Business Stats
The virtual credit card for business looks like it’s in the midst of seeing tremendous growth. Last year, Payments Dive noted research attesting that virtual card use could go up more than three times to over $5 trillion by 2025.
The vast majority of use could come in the business world, with Payments Dive noting that around 80% of virtual card use was to come from B2B. For whatever reason, virtual card use isn’t catching on as quickly in the consumer world, not to say that there aren’t benefits for everyday consumers.
Overall, virtual cards are expected to grow by 363% over the next five years, with total transaction value of $6.8 trillion by the year 2026. Here are some key statistics that attest to the growth of the virtual credit card for business.
Fraud Rates and Other Vulnerabilities
One of the primary benefits of the virtual credit card for business is its security, with Experian noting, “Virtual credit cards essentially give you a leg up over fraudsters, especially if you’re using a single-use number. Not only will it mask your actual account number—it’ll also be invalid after one transaction, rendering it useless to hackers.”
Not surprisingly, fraud rates are astonishingly low with virtual cards compared to other payment means. A 2021 survey by the Association for Financial Professionals found that 66% of organizations had check payments that were subject to fraud while just 3% had virtual cards subject to fraud.
The protection can be both internal and external, with use of the virtual credit card for business solutions such as the Stampli Card able to be suspended at any time.
The virtual credit card for business can also fare better against other vulnerabilities, too. One frustration with auto charges on credit cards is that they can falter if billing information changes. Businesses never have to worry about missing a payment with virtual cards, though.
Processing Costs
It wouldn’t be accurate to say that the virtual credit card for business is cheaper across the board. In fact, Stampli and Treasury Webinars’ survey found that “a significant number of suppliers may well not understand the cost of accepting them, which can be 3% of each payment if not more.”
Still, there often can be savings associated with the process costs for virtual cards. One online source found that while processing an invoice and cutting a paper check might cost more than $30, using a virtual card can make the processing costs less than $10.
Companies can also look for workarounds with the processing costs their vendors might encounter for accepting virtual cards, such as offering to cover any fees or providing other incentives.
Getting Vendors Onboard
The virtual credit card for business isn’t super-common yet, but it’s not that companies aren’t trying.
In Stampli and Treasury Webinars’ recent payments survey, 63% of respondents had programs to convert suppliers to accept virtual cards. Meanwhile 67% were working with AP automation providers to get their suppliers onboard with virtual cards.
For anyone curious, Stampli is happy to help companies show their vendors the benefits of using virtual cards and how the Stampli Card in particular is especially advantageous.
How Stampli Can Help Your Firm Deploy Virtual Credit Cards
Stampli and Treasury Webinars’ recent survey noted a sobering stat: A full 60% of companies working with AP automation providers on virtual card programs “conveyed that the success of the programs fell short of what was promised to them,” as the report noted.
It’s all about finding an experienced partner such as Stampli who can step up to the plate and help your company debut a virtual credit card for business.
Introducing the Stampli Card
In the fall of 2021, we introduced the Stampli Card. With it, we aim to cut out the middleman of third-party payment providers and offer the companies we partner with lower fees and easier functionality with our established AP automation platform.
By using the Stampli Card through our platform, companies can enjoy more control over corporate spend. They can view purchases as they happen, not having to wait until the end of the month for spend visibility. Companies will also have the ability to instantly suspend or otherwise halt use of any Stampli Card in their system.
Creation of Stampli Cards can be instantaneous after approval, with it a breeze to set limits, types of use, and much more.
How the Stampli Card Fits Into Our Broader AP Automation Platform
We’ve been known since 2015 as one of the best AP automation solutions on the market. We offer an award-winning SaaS-based platform that leverages artificial intelligence and machine learning to help companies process invoices cheaper, faster, and more efficiently.
Over time, though, we’ve realized we could help companies in additional ways.
One thing we noticed was that companies could enjoy great invoice processing in our system but were having to go elsewhere to actually pay bills, which created a disconnect and the potential for mismatched data.
Thus, we introduced Stampli Direct Pay in 2020 so that companies could schedule ACH payments and cut checks directly from our system. The Stampli Card is more or less an extension of this and recognition of an emerging payment trend. We look forward to helping the companies we work with gain full advantage from it.
Making virtual payments a reality. Try the Stampli Card today.
