Virtual credit cards and ACH: Complementary, not competitive

Corporate Payments And Payables

Paul McMeekin

Paul McMeekin

Jun 16, 2022

You can’t throw a rock in the payments space without hitting someone who will, after complaining about being hit with a rock, complain about paper checks. There is a widespread recognition that checks are an antiquated payment method, but there continues to be a divide over which digital payment method is best.

You can read plenty about virtual card benefits and the advantages of Automated Clearing House (ACH) payments, and some of those sources will recommend you to put all of your eggs in one basket or another. Some will insist you leave ACH in the dust and others that you need to understand why ACH is a superior option, and a few others will still tell you checks are a good option. In an environment where you have so many choices, many accounts payable automation software providers are all too eager to insist that you pick just one.

Here is a little secret, though: the best payment program is one that combines ACH and virtual card (and yes, maybe that last little bit of your check stack) in a way that makes your business more efficient and secure while keeping suppliers happy. When you think of virtual credit card and ACH, you need to think of how they can be better together.

The advantages of virtual cards

Compared to checks, virtual credit cards are cheaper, faster and better for your cash flow. The reality is that digitization is in demand, which means that offering a secure way to pay your vendors that’s light on touches for their accounts receivable team and your accounts payable team is hugely helpful.

Virtual credit card payments are especially beneficial for your suppliers, even if they need those benefits explained if they’re used to checks or ACH. That’s because virtual card payments are extremely difficult to intercept, arrive much faster than check or ACH payments, and the remittance data is rich and customizable.

The benefits of ACH

Stressing the benefits above and acknowledging that ACH security will depend partially on the strength of your fintech partner, and that supplier acceptance might be an easier nut to crack at the start. Compared to check, though, you’re obviously realizing huge efficiency gains.

That vendor acceptance is no small item, either, given that switching to a digital payments program only works if you are actually able to digitally pay the businesses you buy from in the first place. In addition, those providers that tell you managing and storing vendor payment details for ACH transactions is an obstacle, are probably not equipped to do so for you.

The key to unlocking the full potential of ACH is to avoid going with just any program. Vanilla ACH payments will give you efficiency gains, but for better security and real rebate potential, it’s best to look at a premium program from a provider you trust.

Why combining ACH and virtual card is an easy decision

It’s clear that both virtual credit card and ACH payments streamline core processes, provide better protection against payment fraud and can still offer plenty of benefits for your most critical vendors. When the question comes down to “Which one do we choose?”, the answer ends up being surprisingly nuanced.

The reality is that you’ll want to pay via the method that is best for both you and your suppliers, because keeping your vendors happy is a huge plus. You’ll want to put cash back rebates in your organization’s pocket and realize the huge efficiency gains that come with taking tedious manual processes out of your back office and securing against fraud. That could be ACH, or it could be virtual credit card, and the actual answer depends on each individual supplier.

It also depends on who you choose as a partner. Not every accounts payable automation partner is willing to go the extra mile, but the reality is many of them aren’t even willing to go one mile. If you are being sold on either virtual credit card or ACH as a single solution, you may want to look elsewhere. Because if you go that route, you risk the potential of alienating suppliers who prefer the method you don’t choose.

What really matters is that you digitize AP payments and processes so your accounts payable team can realize its full potential. Remember, it’s not card or ACH, but card and ACH that will deliver the most value to your business and accounts payable team.

Paul McMeekin

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Paul McMeekin

As Managing Director, Global Business Solutions, Paul leads customers, partners and teams to stay ahead, stay protected and find more value across the global landscape of banking, payments and financial crime as it evolves. Whether that’s helping customers activate the shift from software to cloud, interpret changing international regulations, simplify cross-border complexity or win the fight on fraud, Paul champions the charge for customers across international markets. He is a strong advocate for the development and growth of team members in delivering customer delight on the journey. Paul has over 25 years of experience in payments, financial technology and international go-to-market strategy.

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