Virtual card solutions are in demand. Now more than ever, virtual cards are a powerful way to pay your suppliers electronically instead of using paper checks or plastic cards. And virtual card numbers have the capabilities and core processes of a physical card, but with additional security, controls and features that allow payments to be made without a physical card being present. While more and more financial institutions are offering virtual cards these days, this isn’t new technology. WEX has been offering virtual card solutions for over 15 years.
What Are Virtual Cards?
Virtual cards are, in essence, commercial card numbers that aren’t tied to a plastic card. These cards offer the ease and convenience of a traditional commercial card (such as a P-card or T&E card) but without the risks and control issues associated with using a physical card. A popular virtual card solution is a single-use virtual card, which includes a 16-digit electronic account number (typically through MasterCard or Visa) that’s valid for one transaction only. Single-use virtual cards offer some of the most secure technology and robust controls available in the world of corporate payments today.
Security and Control
- Tight controls: As the buying organization, you control when, how much and where the virtual card number is used, placing strict rules around the amount of the transaction, date, supplier, etc. This type of control typically eliminates misuse or fraud.
- Increased security: In addition to the tight controls described above, your supplier does not need to store any account data on their system, which also increases security and reduces fraud. Plus, any Payment Card Industry (PCI) compliance requirements are reduced.
- Pairs with Straight-Through-Processing (STP): To enhance controls and security even further, virtual cards can be paired with STP to push funds directly into a supplier’s deposit account (DDA). Under this process, your supplier never sees the card data.
One-Time vs. Recurring Use
To make virtual cards even more appealing, they can be used for recurring payments as well. While a single-use virtual card is traditionally an account number that is used just once and then closed, other types of virtual card numbers can be set up for recurring payments. Under this model, a pool of account numbers is used and assigned to individual transactions, often by a key identifier like a purchase order or an invoice number. The choice is yours.
When shopping for virtual card solutions, make sure you choose a provider that offers the flexibility you need. For example, does the virtual card platform allow you to configure credit, authorization and spending controls to each transaction? This configuration provides you with a higher level of security and control.
Also, you may want to ask if the virtual card program offers a prefunded model, which allows you to provide money upfront — before the payment is made to the supplier — and eliminates the need for a line of credit.
In addition, make sure your provider supports both real-time and batch virtual card processing capabilities and can support both up-front procurement payments as well as post-invoice accounts payable payments — enabling your organization to use cards for most of your corporate payments and take better advantage of associated rebates and cost-saving benefits that result from electronic virtual card payments.
To learn more about virtual card options at WEX, visit our Virtual Payments Solutions page. We’re a global leader in virtual payments technology, with virtual cards accepted in 210 countries and 21 currencies. Contact us if you have any questions. We’re here to help you simplify your payments processes.