Cash might have once been king, but the days of cash payments are slowly fading into obscurity. Indeed, a 2017 survey found that only 12% of consumers preferred paying with cash, whilst more than 50% chose credit or debt as their preferred method.

However, when it comes to business purchasing and expenses, credit cards are often liable to lead to overspending and are more open to security risks. That’s why the recent rise in popularity of virtual cards has proven so fortuitous.

What is a virtual card?

As the name suggests, a virtual card is not something you can physically touch. It’s essentially a credit card number, generated automatically that can only be used once for one specific purpose. Virtual cards are remarkably easy to use and incredibly effective, particularly for expenses.

Indeed, perhaps the most effective and safe modern method for processing employee expenses is to use single-use-accounts to generate 16-digit numbers that are only ever used once for one specific purpose. This obviously means they lend themselves incredibly well to automated purchasing.

The benefits

Security - With so many companies and individuals targeted with payment fraud in recent years, virtual cards offer a significant advantage when it comes to security, as numbers are randomly generated for each transaction and your bank information is never actually being exposed.

Every transaction is locked into a time period and amount, so even if a thief was able to steal a card, it would be useless to them.

Detail - Whereas wire transfers are limited to 140 characters when it comes to providing remittance information, virtual cards have no limitations. This means information can be customised more easily and manual reconciliation can be simplified and even eliminated entirely.

Reimbursements - Because you’re using a prepaid financial services virtual card instead of asking employees to use their own cards, you completely cut out the need for employee reimbursements.

Processing - A virtual card can only be used once and are tied to a date, which means there is virtually no possibility of under or overpayment. This also means a reduction in exception processing, which can be costly and time consuming for businesses.

Fees - For smaller businesses, credit cards often entail exorbitant fees, whereas virtual cards are tied to a bank account and are that much cheaper to set up and use.

Popularity

According to the Wall Street Journal, the virtual card is the fastest-growing category in the payment industry and are predicted to overtake conventional purchasing cards by 2021.

With the security and convenience of virtual cards and their increasing acceptance in a number of sectors, the future of virtual cards and virtual prepaid cards seems very bright indeed.