Virtual life is colliding with real life more and more nowadays—and B2B payments are no exception. That’s where virtual credit cards come in. As the name suggests, virtual cards don’t exist in a plastic format. Rather, they represent a randomly-generated card number that is associated with your real credit card number. They’re a complimentary service that card issuers provide to customers so that those customers can pay their suppliers without using their plastic card numbers.
At WEX, we are big believers in the power of virtual cards. In fact, we’ve been delivering virtual card solutions for nearly 20 years.
But why? Because as a payment method that can’t be traced back to the original credit card account, virtual cards help protect your financial data. They are the perfect way to keep a user’s identity information safe and their card information secure. They also simplify the supplier payment process, reducing accounts payable workload and boosting productivity and savings.
Not just limited to internet transactions, they can also be used for phone transactions or in other situations where a card doesn’t have to be physically present.
Types of virtual payments
Through single-use virtual cards, lodge cards and authorization-only virtual cards, businesses can take advantage of premium security (as well as control and efficiency) for their payment needs.
Here are details about each of the types of virtual cards offered by WEX:
- Single-use virtual card: A virtual card number that’s only valid once. After a payment has been processed, the virtual card number becomes invalid. The controls associated with these cards can be tight—including expiration dates, merchants and amounts. In fact, these types of virtual cards can be used with one specific amount only, or for multiple transactions that result in that amount. For example, a virtual card can be used for $200 exactly, or it can be used for five $40 transactions—it depends on how the card is set up. These cards are also paid faster, which means that reconciliation can happen more quickly.
- Lodge card: A lodge card has an established credit limit for goods/services and/or invoice payments, and is provided to a vendor with this credit limit. Transactions from this type of card can never exceed their authorized credit limits, but their numbers can be used multiple times. With lodge cards, it’s possible to set controls for expiration dates and other factors. But since it’s possible for lodge cards to make transactions with the same virtual number repeatedly, it’s best to use them with trusted vendors only—and as sparingly as possible.
- Authorization-only virtual card (aka pseudo virtual card or third-party virtual card): The account number for this type of virtual card is given to a third party other than the issuing processor. Transactions don’t post to these types of cards—they can only be used for authorizations. But tight controls can be set around their use, including expiration date, amount limit, merchant and more.
As you’re shopping for virtual cards, be sure to choose a provider that offers the flexibility and security you need. Ask yourself if your virtual card platform allows you to configure credit, spending controls and authorization to each transaction—if so, you’ll gain a higher level of control and security.