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Why Companies Are Switching To Virtual Cards

Why Companies Are Switching To Virtual Cards

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Alex Roha

10 May 2022
4 minute read

Decades of evolution gave companies what is considered the modern-day credit card. Today, credit cards come with smart chips, encryptions, and copious rewards–and the latest iteration of the cards, virtual credit cards, are now spreading in popularity across corporations looking to securely and rapidly control business expenses.

A Juniper Research report estimates that businesses' annual value of virtual cards will exceed $1 trillion by the end of 2022. That’s a lot of corporate spending, but why are so many companies switching to a digital option?

Virtual Card: Defined

Though it may look like a typical credit card on a mobile device, a virtual credit card is a unique 16-digit virtual card number generated digitally. This card number can be used for online checkouts and downloaded to a mobile wallet for in-store purchases where virtual cards are accepted. And, like a physical card, transactions made via virtual cards appear on bank statements. 

Keep in mind that a virtual card is different than a “digital card.” A digital card is simply a copy of a physical bank card stored on a personal device. But a virtual card will have a unique expiration date and CVC separate from personal credit or debit cards.

Are Virtual Cards Safe?

According to data gathered by Trading Platforms, 25.7% of all point of sale payments were made using mobile wallets in 2020. By 2024, this figure is expected to jump to 33.4%. That’s a lot of transactions to be recorded in providers and card-issuers systems.

However, virtual cards offer heightened security against fraudsters because the virtual credit card number cannot be traced unless there is access to a cardholder’s identity or computer system.

On an operational level, companies that offer virtual cards with generated account numbers can instantly cancel or freeze these cards if a card is lost or stolen. Because of its virtual nature, there is no need to re-order a physical card and wait for it to arrive. 

Admins can use previous card information to generate a new card in a few simple clicks. Additionally, single-use cards can be issued to a specific vendor for a particular dollar amount; This prevents overcharges and ensures that hackers can’t use the card details for anything outside its limits.

Real-Time Benefits Of Virtual Cards

Aside from a higher level of security, virtual cards offer a myriad of benefits aimed at easing typical pains in controlling employee spending and expenses. Below are just a few ways Navan virtual cards are the future of a company’s payment solutions:

  • Smart Controls With Card Intelligence - Companies can set limits that will oversee employee spend amounts, purposes, frequency, dates, and even just for specific merchants, etc. —leaving the card to maintain policy controls. Businesses can issue recurring or prepaid single-use subscriptions to particular vendors or suppliers and eliminate the risk of overpayment.
  • Automated Reconciliation - With built-in controls and approvals based on policy, virtual cards can help make reconciliation occur instantly. Automatic categorization and receipt matching enable an automated reconciliation scheme from online purchases to mobile checkouts at the counter. This data stream eliminates the need for timely expense reports and offers finance and accounting teams peace of mind.
  • Streamline Payments and Boost Vendor Relations - Because virtual cards are universally accepted and don’t require time-consuming processes, vendors may be paid immediately with virtual cards. These cards obscure traditional payment methods that can lead to delays when users must submit an invoice via procurement systems or paper checks need to be mailed and received.
  • Data Analytics Advance Performance - While virtual cards protect against fraudsters in terms of limiting data reach, the data collected by the company’s on what teams are spending their budgets on offer tactile insights into everyday operations. Finance teams can measure the worth of trips, ROI, and even favorable markets by matching contracts to travel expenses.
  • Reduce Unnecessary Purchasing - Virtual cards offer higher controls for businesses with spending limits when giving employees access to company funds. Employees can receive notifications if they have spent outside their agreed limits or if they are set to be declined based on the controls put in place. Virtual cards enforce the parameters, whether an online payment or at the register.
  • Transaction Rebates and Benefits - Similar to current credit card programs, virtual cards can turn accounts payable from a cost center to a revenue generator. 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.

How To Get A Virtual Card

Companies can gain immediate access to these benefits through Navan Expense virtual cards. Navan Expense allows companies to issue unlimited virtual cards for travel and entertainment, light procurement, and other spending.

Once employees submit a request through the Navan Expense mobile or web app, approvers can review requests, edit card limits, and issue cards in the same tool, leading to a seamless experience bracketed with spend control. If a company chooses, Navan can also provide physical cards alongside the virtual card product to enable preference.

The hassle of expense reports doesn’t have to be a hassle. The tech stack configured by Navan Expense is unlike any other, as it is the only stack to combine travel, payments, and spend management under one roof for reconciliation and peace of mind.

Interested in streamlining company spending—and eliminating expense reports? Schedule a demo or get up and running with Navan in just 5 mins.

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