Chances are you’ve made a card payment or purchase this week. Maybe several. I’m not here to judge.
The point is, cards are familiar to you, and the convenience and security perks they bring to the table are obvious. That’s true in consumer and commercial settings, but for businesses, including a card option as part of your payment strategy is a more urgent need.
Why? Let’s count the ways:
1 - Cost reduction. Checks cost too much, paper invoices are a costly hassle, and your time is too precious to deal with exceptions and wasted time.
2 - Digitization is in demand. In today’s work environment, digitization is key. It improves visibility, and removing paper eliminates the cost and potential fraud risk of mail and other processes requiring people to be in the office.
3 - Better cash flow. Vendor discounts, more favorable contracts, dodging late fees and keeping cash in-house are all great outcomes at a time when global supply chain issues and uncertainty make flexibility critical. Also, in comparison to paper checks or ACH payments, virtual cards create added rebates when paying through a network.
Conventional (plastic) cards are handy for addressing some of these priorities, but virtual cards are emerging as the best way to address all of them. Virtual cards are credit or debit cards that contain the following account details needed for payments: account number, expiration date and CVV. Sometimes referred to as V-Cards, virtual cards are often digitally created for individual payments, improving security and providing an additional benefit for backend reconciliation. The unique virtual card eliminates the need to safeguard a physical card. In short, virtual cards provide significant efficiency gains for cardholders and suppliers alike, allowing for simple, secure digital payments.
If I had to pick four main benefits for virtual cards, I’d recommend the following:
Enhanced security. Fraud incidents and sophistication are always on the rise, so having a one-time use card that features a randomly generated 16-digit card number plus a security code and expiration date makes virtual card the most secure payment method imaginable. Your vendors get the assurance that this payment is destined for them and them alone, while fraudsters get what they should get: nothing.
Total control. Checks may as well be wild animals, as you turn them loose five to seven days before the payment due date and hope they arrive and are cashed on time. A card on file with a vendor creates the risk of abuse or accidental processing that leaves you scrambling to find out how much money you have left in your coffers. Virtual cards, meanwhile, can be scheduled for the payment date like an ACH, allowing you to control who is processing the transaction and what amount can be paid, and don’t require you to leave a card on file and expose yourself to additional risk. So long as you can notify the vendor that the payment will be available in a timely fashion, your control over your cash flow is nearly total.
Build relationships that last. Ideally, you’d keep your best vendors around and happy for as long as possible, forging relationships that limit the time you have to spend dealing with tensions or even searching for new partners. Virtual cards offer speedy payment, which matters a great deal to your suppliers, but also offer the option of delivering effectively unlimited, flexible remittance information. With the rich data that can be delivered alongside virtual card payments, you make it easier for vendor AR departments to reconcile payments, and they love that.
Put accounts payable in the spotlight…in a good way. Your finance teams are like a good pit crew in car racing; they’re invisible if they’re doing their job well. Sometimes you want to deliver something a little more eye-catching. Virtual cards make it easier for you to realize early payment discounts, save time and money, and earn cash-back rebates on spend. The value you generate doing so will be a boon for the business, and that will help earn recognition for delivering real value to the organization instead of looming as a cost and risk center.
At Paymode-X, we’ve seen increased adoption of virtual cards for all the reasons above and more. If you’re not adopting one of the most secure and efficient payment methods out there, it’s time to explore the real benefits of virtual cards for yourself.