Virtual cards have been around for twenty years and are a natural evolution of typical physical payment vehicles like credit, debit, or charge cards. The pandemic-induced preference for contactless payment methods has only boosted their popularity. On the B2B side, vendors accelerating payment digitization use virtual cards as a simple but secure way to pay for goods and services.
Instead of using a physical and static credit cards, companies can issue virtual cards to employees, vendors, and contractors for one-time or recurring usage. Virtual cards mask credit card information with a randomly generated credit card number. Paired with modern card platforms, they can also add spend controls for greater flexibility.
In 2021, virtual card transactions reached $1.9 trillion. By 2026, forecasts project this value to increase to $6.8 trillion; 71% will be for B2B payments.
Here are six benefits of working with virtual cards for B2B payments:
1. Increase Security & Minimize Fraud
Economic uncertainty often encourages payment scams like credit card fraud. In 2020, credit card fraud resulted in estimated losses of about $11 billion.
Virtual credit cards naturally combat fraud, making them ideal for remote purchases. Using a payment method called tokenization, virtual cards replace sensitive information. Account details are less likely to be compromised if the card gets hacked.
The ability to set expiration dates or limit cards to a specific number of transactions provides additional security. Virtual cards can be easily replaced, turned off, and re-issued instantly if necessary.
2. Streamline Payments & Improve Vendor Relationships
A key benefit of virtual cards is the ability to pay vendors immediately. Virtual cards are universally accepted and don’t require long onboarding workflows. Traditional payment methods often lead to delays when an invoice needs to be submitted via procurement systems, paper checks cut and mailed, and then physically received and deposited.
Getting payments stuck in an administrative workflow can damage a company’s reputation and relationship with suppliers. In one survey, 39% of respondents revealed that making late payments reduced or stopped discounts.
Payments that are simpler and faster to reconcile help accounts payable teams save time and resources. Not only do processing costs decrease, but both vendors and customers can better optimize cash flows and working capital.
3. Reduce Unnecessary Purchases
Unlike physical credit cards, companies have more power to control spending with virtual cards. With more companies working with a remote workforce, employees require easy access to funds for home-based equipment and subscription purchases.
In the U.S., companies were already wasting an average of $259 per desktop on unused software pre-pandemic. Company spending for computer peripherals and equipment is up, which creates an environment susceptible to abuse and unnecessary purchases. Having spending controls in place with virtual credit cards discourages overspending.
4. Improve Spend Visibility
Virtual corporate cards, combined with spend management software, support end-to-end spend management. Every expense charged to the card, receipt uploaded, and detail entered can be automatically shared with the finance team and third-party software. Eliminating manual processes reduces reconciliation and reporting errors.
Virtual cards can also be used for categorizing expenses. For example, using one virtual card to pay for expenses related to a specific trip or project identifies the relevant costs, making it easier to calculate return on investment.
Real-time visibility of expenses also provides finance teams with the clarity to churn out accurate financial statements and make better-informed decisions.
5. Use Data Analytics to Boost Business Performance
Each payment made through virtual payment cards generates robust data for data analytics. With integrations, finance teams can gain significant insights into business operations.
Finance teams can match contracts secured with travel expenses related to the deal. If an employee negotiates a contract worth $100,000 successfully and spends $5,000 to accommodate clients, the finance team can determine whether the trip was worth the spend.
And spend data can do more than compute ROI. Data analytics can also help find markets where businesses are most likely to close a successful deal. Using data, sales teams can find the most profitable locations, industries, and demographics to prioritize spending for customers with the highest ROI while reducing costs.
6. Accelerate B2B digitization: Go Virtual with Payments
Legacy processes often reduce efficiency, make businesses vulnerable to security risks, and obscure the true financial condition of a company. Making the shift to automate B2B payments through virtual cards is a win-win-win for businesses, employees, and customers.
With virtual cards linked to the Navan Expense spend management platform, your business can delegate the authority to spend, even while having an effective means of monitoring and controlling spend.
Navan Expense combines spend management software with built-in automation to eliminate manual expense reports and approvals, easing the administrative load of travel. Schedule a demo today.