Virtual cards are one of the hottest areas in payments and fintech, growing at 2-3x underlying industry growth rates and Navan Expense is on the cutting edge of leveraging them to upend the process of T&E and spend management.
The technology has come a long way since consumers started generating virtual account numbers online to make one-time transactions. Now, virtual cards are now key in automating B2B payments, as the technology puts an end to the cumbersome and error-prone accounting processes associated with traditional payment methods.
Modern virtual cards have a host of benefits which are especially relevant for spot purchasing and travel and expense (T&E). In fact, Credit Suisse estimates that “roughly ~20%-40%+ of an AP file can be addressed via virtual cards.”
Many benefits come with virtual cards, but four specific values often surface when considering the modern payment landscape:
Virtual cards allow companies to improve control over business spend. Companies can carefully limit the cards by spend amounts, purposes, dates, merchants, frequency, and more.
Companies can issue subscription (for recurring) or burner (for single-use) cards that can be issued to a specific vendor or supplier for a specific dollar amount. This essentially eliminates overpayment, as the cards close themselves automatically when the account funds have been depleted, the expiration date has been reached, or after the first transaction is made. Admins can customize these controls precisely to prevent oversepend and alleviate risk.
Intelligent card limits lead to tighter control over business spend, whether that’s from T&E to spot purchasing and light procurement.
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Online fraud is a growing phenomenon that can expose companies to great risks. To alleviate some of this risk, virtual cards can vastly improve security compared to traditional, physical cards. This benefit usually manifests in a few tacit ways.
On the operational level, one major benefit to virtual cards is that the generated account numbers can be canceled or frozen instantly. Since the card is virtual, there is no need to re-order a physical card and wait for it to arrive. Companies can easily generate a new card in just a few clicks.
Additionally, single-use cards can be issued to a specific vendor for a specific dollar amount. This prevents overcharges and ensures that hackers can’t use the card for anything outside of its limits.
There’s also the issue of storing user or purchaser information. Traditionally vendors using physical cards can store the information received when a user swipes the plastic. This opens the possibility for the information to be exposed to hackers. Virtual cards do not store any of this data.
Another advantage to virtual cards is the visibility and reconciliation facilitated through the technology.
Using virtual cards and the right technology stack, settlement can happen immediately and teams don’t need to wait for employees to submit expense reports. The immediate settlement obviously helps the relationship between companies and vendors, but it also allows accounting and finance teams to have real-time visibility into business spend. This saves time for accounting teams and leads to more data-driven spend planning and budgeting.
Virtual cards can also provide a unique number for each transaction and enhanced transaction data. The technology can then provide automatic categorization and receipt-matching which allows for automatic reconciliation, a huge burden removed from AP teams.
Virtual cards can turn accounts payable from a cost center to a revenue generator.
Beyond cost savings generated from tighter controls, virtual card usage at the corporate scale can lead to greater savings through rebates. If a company is paying by check or ACH where it could be paying by virtual card, it is potentially missing out on free money that often comes back through card rebates. Using virtual cards from a company like Navan means a cash rebate for every dollar paid through the card.
Tying these benefits together presents the unique suite of technologies that Navan Expense delivers. Navan expense allows companies to issue unlimited virtual cards for T&E, light procurement, and other spend. Surgical policies can be carefully built into each card, and Navan provides a competitive rebate on each dollar spent.
In addition, travel, payments, and spend management are all deeply integrated into the Navan stack, and no company can replicate the experience that creates. Some tools have created convenient ways to capture receipts; others have added basic virtual cards to their solution. But no other modern expense solution has interleaved everything together and filed the patents to eliminate the process of expenses.
With Navan, finance and accounting teams can rely on automated reconciliation for all virtual card payments on everything from a travel booking to a software subscription. Navan also provides many other benefits, including the complete elimination of expense management and a real-time, centralized view into all business spend.
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