Virtual Expense Cards are digital payment tools that streamline and enhance B2B transactions. Unlike physical credit or debit cards, these virtual cards operate online, making them ideal for card-not-present purchases. Incorporating them into your financial toolkit can improve expense management, control spending, and streamline payment processes.
In this article, we will delve into Virtual Expense Cards and explore how they empower businesses with enhanced security, improved expense tracking, and simplified payments.
What Are Virtual Expense Cards?
Virtual expense cards are prepaid cards that employees can use securely for online and phone-based purchases. These cards function like physical cards, enabling businesses to issue 16-digit numbers with ease. From the merchant's perspective, there is no distinction from any other form of payment. However, neither employees nor merchants can access the bank information, providing an added layer of security to the transaction.
Virtual expense cards provide finance teams with better control and visibility over company spending. For Accounts Payable teams, processes become simpler and more efficient, offering protection to all parties involved in a transaction against fraud.
How Do Virtual Expense Cards Work?
Virtual expense cards allow businesses to generate unique 16-digit virtual account numbers (VANs). These numbers act as temporary aliases for bank accounts. On the processing side, they are treated like standard credit cards during transactions, but the actual payment information is protected behind a randomised token, rendering these credentials unreadable to fraudsters. This is one of the most effective methods for protecting personally identifiable information.
For employees to initiate purchases, they must first receive access to funds. Hence why one of the core use cases of virtual expense cards is in expense management.
When Are Virtual Expense Cards Used?
Virtual expense cards are appealing because they simplify the process of making purchases while reducing the friction of expense approval. Corporate credit cards typically require employees to make upfront payments and then submit expense reports for reimbursement. This exposes them to the risk of paying the charge if the expense is not approved.
With virtual cards, businesses can transition to a request-based process that issues cards to employees when spending is necessary. This shifts the control, ensuring that the business has visibility into expenditure before it occurs, thereby reducing erroneous spending and the backend work required for tracking and reporting expenses.
Other common use cases for virtual expense cards include:
- Paying vendor or contractor invoices
- Reducing transaction fees associated with credit cards
- Protecting sensitive payment information
- Simplifying the time spent on expense reporting
What Are the Benefits of Virtual Expense Cards?
- Enhanced security: Virtual card numbers mitigate the risk of data breaches and fraud, as a unique number is generated each time a card is created. If a fraudster obtains your virtual card information, you can cancel that specific card without the need to close your entire account and start anew, eliminating any trail to a bank account.
- Greater control: Virtual expense cards offer numerous tools and features that allow businesses to create cost centers, giving teams and departments control over their allocated budget. Customizing expense categories makes expense reports easily comprehensible and linked to specific items, enhancing financial management.
- Improved efficiency: Replacing outdated payment methods like cash or paper checks eliminates the associated manual-process inefficiencies. This streamlined accounts payable process through single-issued virtual cards saves time and reduces the risks of human error.
- Fewer chargebacks: Unlike "single-use" virtual credit card alternatives, prepaid expense cards simplify the refund process, as funds can be reloaded into the account.
- Reduced workload: Replacing outdated payment methods like cash or paper cheques with virtual cards eliminates manual-process inefficiencies, saving time and reducing human error by automating the transfer of remittance information to the ERP system.
- Reduced exception processing: Tying virtual cards to a specific monetary value and setting expiration dates prevents payments above the pre-set limit, making overpayment impossible and reducing time-consuming and costly exception processing.
- No credit check required: As prepaid cards, no credit check is necessary for cardholders, making them suitable for team members with "single-use" expense needs.
How to Choose a Virtual Expense Card for Your Company?
Virtual expense cards offer numerous benefits for employees and businesses, making payments easier, reducing the risk of fraud, and simplifying expense management. They also bring automation and efficiency to business operations, eliminating inefficient accounts payable processes and reducing manual data entry.
If you're seeking an automated expense management solution for your business, the Caxton Business Expense Card offers a flexible way to manage, optimise, and automate your expense management process.
Book a demo today, or explore the full Caxton Business platform.
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