In the past year, virtual payments have grown like never before. And that growth is expected to continue multiplying. According to research from First Annapolis, virtual card payments will double from $83 billion in 2015 to $160 billion in 2018, and explode to over half a trillion by 2024.
One of the most common types of virtual payments is a single-use account. At its core, a virtual payment is essentially a digitally tokenized card number. With a single-use virtual payment, a unique number is generated to be charged for one use only, and that unique number ultimately ties back to a commercial card account.
So why are single-use virtual payments booming now? Here are 7 key reasons.
- Tight controls that minimize errors and reconciliation issues. Buying organizations can set controls on single-use virtual payments that limit the amount, date, merchant, and even MCC codes, among other parameters. For example, if you send a single-use virtual payment to your office supply store, you can specify the exact amount that the merchant must process to receive payment (down to the penny), and you can limit the date range during which that virtual payment is valid.
- Reduced fraud risk through single-use virtual card numbers. Single-use virtual card numbers mean just that — they are designed for one use only. After the virtual payment is made, the single-use number is invalid and cannot be reused.
- Improved payment and remittance data. With virtual payments, you can choose to include additional information with the payment, such as project codes or cost center info. Plus, this added data can be more robust than with other payment types (for example, ACH limits any added data to 80 characters).
- Enhanced data capture. In addition to the added data mentioned above, virtual payments also provide the ability to included customized data capture fields. For example, if you’re paying for a hotel expense, you can include a customized data capture field for the booking ID number.
- Streamlined and simplified reconciliation. Virtual payments include a full audit trail with real-time data analytics.
- Faster payments for suppliers. Who doesn’t want to get paid faster? Suppliers can reduce days sales outstanding and increase working capital with the speed of virtual payments.
- Lower costs when compared to plastic cards. Since virtual cards are digital, there are no costs associated with issuing, mailing and maintaining plastic cards.
If you haven’t yet explored virtual payments for your business, now may be the right time to move forward. Talk with one of our consultative experts to learn about how to pay your vendors with single-use virtual card payments.