If you are involved in purchasing or financial decision-making for your company, you have likely heard the excitement surrounding virtual cards over the last few years. The payment industry is moving towards paperless vendor payments, and it is essential to understand how they can benefit your business.
What is a virtual card? How do payments work?
A virtual card is a one-time-use digital payment method. Unlike traditional multi-use plastic cards, a virtual card is a unique, randomly generated 16-digit number issued for a specific amount and tied to a single vendor payment. These electronic payments are designed to be a faster and safer alternative to checks or ACH payments and can be accepted anywhere credit cards are accepted. Because they can only be used once and in a very specific way, they cannot be stolen or reused.
What makes virtual card payments particularly useful for businesses is that they allow you to set specific dollar amounts and expiration dates, emphasizing the protection of your company’s assets. You can even earn rebates on every dollar spent, similar to how a consumer earns cashback on a personal credit card.
The chart below shows the five main simple steps involved in processing a virtual card.
Paying your vendors and suppliers with virtual cards can:
- Eliminate the costs associated with printing and distributing paper checks
- Speed up the turnaround time in which your vendors receive payments
- Reduce the risk associated with lost and stolen paper checks
- Make your payment processes much more efficient
Do virtual cards sound like a valuable option for your business?