What Are Virtual Card Payments, and Why Are They Being Adopted?

Virtual cards are an increasingly common business-to-business (B2B) payment method renowned for ease-of-use, security, and efficiency. Replacing traditional physical cards for business transactions, virtual cards can be processed using existing point-of-sale systems but exist only in a digital format, where they’re commonly utilized for single-use or situational multi-use scenarios.

Each virtual card payment arrives with a randomly generated, unique 16-digit card number, an expiration date, and a Card Verification Value (CVV) security code, the same as any other card. Because they are used only once for a specific transaction, vendor, or both, virtual cards are a highly secure payment method, which has increased their appeal in an era of digital fraud.

In this article, we’ll explore virtual cards in more detail and then detail the benefits businesses realize by using them.

How Do Virtual Cards Work?

These B2B payments are initiated in much the same way as any other card payment, but instead of pulling a plastic card out of a wallet, a virtual card is generated at the time of the payment. The payment includes potentially unlimited remittance details to be customized by the payer, is debited directly from a designated account, and allows for details to be made available within an online portal for easy reporting.

Once the payment is made available securely, usually via email or an online portal, a supplier can easily key the one-time card number and details into their POS and have cash sent directly to their bank account. Suppliers will be billed the standard interchange fee assessed by card companies, usually docked directly from the payment, and then can use the enhanced remittance data available for easy reconciliation. As soon as the card payment is complete, the virtual card becomes defunct to prevent reuse and fraud.

Unlike the more manual, cumbersome processing associated with physical cards, which require the card to be either physically present or for details to be insecurely shared over the phone or email, virtual card payments can be handled and made by both parties in mere minutes. The time savings can be significant; for example, PYMNTS reports that vendors can shave processing time by 40% using virtual card.  

Why Are Virtual Cards Being Adopted by So Many Businesses?

Per the research firm Accenture, virtual card payment volume was expected to reach $662 billion in the United States in 2025, a 25% increase over 2024. While the payment type hasn’t reached the heights some expected, adoption is still increasing extremely rapidly.

Why? Businesses are facing growing pressure to digitize core processes, reduce costs and time, and improve cash flow. Virtual card payments are a logical way to check every one of those boxes because they help reduce the number of paper checks and manual steps to make B2B payments, speed up payment cycles and time to cash, enhance fraud prevention through tokenization of key data, and provide detailed remittance data to make suppliers happy and allow for easy reconciliation. The net effect is a much leaner payments process, one with a lengthy list of benefits.

Why Do Businesses Like Virtual Card Payments?

Better Operational Efficiency

You have to print, mail, and manually process paper checks on both ends of the transaction, but virtual cards are processed in a low-touch manner that takes seconds. Like ACH payments, virtual cards allow for far greater levels of payments automation than traditional means.

Improved Fraud Prevention

Because each card is one-time use and critical data is tokenized so it’s useless if intercepted, virtual card payments are inherently one of the most secure payment methods available, with just 5% of businesses reporting virtual card fraud incidents in 2024. Paired with a secure payments network that validates suppliers before they’re paid, virtual cards can help significantly reduce the risk of fraud.

Enhanced Rebate Opportunities

Like Premium ACH payments, virtual cards generate rebates. Those rebates are generally split between the card issuer, a payment processer, and the businesses, and are funded by suppliers accepting the card. Because vendors are used to receiving card payments, they are (generally) comfortable with paying these fees, increasing the likelihood of realizing rebate revenue.

Improved Vendor Satisfaction

Because cards are a familiar payment type, virtual cards are easy to process, and both security and remittance details are top-notch. Suppliers comfortable with paying a fee are often highly amenable to receiving this payment type. The ease of use and low friction help improve both vendor relationships and overall satisfaction.

Why Does Paymode Offer Virtual Card?

Through Bottomline’s secure B2B payments network, Paymode, payers can utilize both Premium ACH and virtual card. In contrast to checks, these two payment types make life easier for payers and vendors, reducing fraud risk and headaches.

Paymode prioritized the addition of virtual cards to the network's payments mix for the tangible benefits described throughout this article, including efficiency, vendor preference, and security. The shift away from checks is vitally important to the future of business payments, and as an enabler of secure payment methods for more than 600,000 businesses exchanging more than $500 billion per year, Paymode has a vested interest in offering one of the most streamlined payment methods available. The payers and vendors who use the network share that interest.

With fraud an ever-growing threat and inefficiency from legacy methods hurting businesses, the adoption of virtual card payments is a widespread priority, if not an outright must. A better business payments future will include virtual card, and we should expect to see virtual card adoption grow by leaps and bounds between today and the turn of the decade.

Learn more about Virtual Card