A growing number of companies are replacing traditional company cards with a more secure, more personalised, more traceable and more manageable way of spending money online. Hailed as the future of financial spending, virtual cards are the forefront of a revolution in business expenses management.
Put simply, virtual cards provide businesses with a new means of controlling company finances, handling employee business expenses, managing foreign currency payments and so much more. But what exactly is a virtual card? And why are companies adopting this type of payment method over conventional methods of managing employee expenses.
Here, we look at how this banking as a service feature is changing the way companies monitor, manage and increase security through virtual cards.
What are virtual cards?
Virtual cards are essentially prepaid expenses cards that allow employees to securely make purchases online and over the phone. The cards only exist online, yet still hold all the same information as a traditional bank card. Logistically speaking, virtual card transactions are no different to any other card transaction, however neither the employee or merchant has any access to bank information. This provides virtual card transactions with a layer of security that their counterparts lack.
How do virtual cards work?
A payment management team assigns funds to teams or individuals within the company to use for employee business expenses. Each time an employee makes a payment, a unique 16-digit number is randomly generated to facilitate the online transaction. This enables employees to handle expenses without using a physical card, and an entire transaction can take place with just a few clicks. As the funds are assigned by a payment management team, employees can not spend more than has been allocated to them.
What can a virtual card be used for?
Virtual cards can be used for any type of employee business expense. They act as an online alternative to expense cards and can accordingly be used to pay for any company incurred costs. This includes but is not limited to; travel expenses, business meals, single payments, recurring payments and foreign currency payments.
Benefits of using a virtual card
Perhaps the biggest reason why virtual cards are increasing in popularity is because they offer more robust security measures. Traditional cards invariably hold the same information; card number, account number, CVV code and expiry date. This physical data doesn’t change, which means it is subject to misuse from hackers and fraudsters.
Virtual cards assign a unique card number each time an employee spends. Companies can therefore avoid data breach issues and fraud, as well as the risks and problems that occur when a physical card is lost or stolen. The unique numbers are easily generated and easily withdrawn, meaning cancellation of payments is simple and fraud exposure is greatly reduced.
Besides security, convenience is arguably one of the most attractive benefits of switching to virtual cards. Virtual cards can be accessed from anywhere with an internet connection and can be used to pay for goods or services in any country, making foreign currency payments a lot easier to manage.
Manual processes associated with physical cards swiftly become a thing of the past as virtual cards cannot be lost, stolen, forgotten or broken. If a hacker were to gain access to a unique card number, that specific card number can simply be cancelled without having to close the whole account.
Virtual cards reinvent the way companies handle employee business expenses. Every employee has their own unique number, which means anyone can easily see who is spending what. Funds can also be assigned to team budgets and purchases can even be limited so that nobody spends more than what’s allocated to them. This element of transparency comes without compromising security, provides a much clearer overview of company finances and in turn makes finances much more manageable.
Assigning team budgets and limiting purchasing power means that all spending is pre-approved and businesses know exactly which manager signed off on what payments. Ongoing payments can be easily tracked and an overview of weekly, monthly or annual spending is also available.
In short, virtual cards make it easier for finance departments to track and control all employee business expenses, foreign currency payments, and more.
As virtual cards exist entirely online, their use eliminates all the manual processes associated with managing finances which occur with traditional company cards. The amount of unnecessary time spent writing cheques and handling money, and the risk of human error that comes with it, is completely eliminated. Using virtual cards therefore reduces workload, saves time and resources and greatly improves company efficiency from within.
Is a virtual card right for your company?
The benefits of using virtual cards for companies greatly outweigh the benefits of a traditional company card. Managing money is simpler, making payments is easier and the risk of fraud is reduced whereas company efficiency is increased.
Since its inception, virtual card use has already reached $251 billion, a marked improvement from $136 billion in 2017. These numbers highlight the fact that virtual card use is massively on the rise as more companies are transitioning away from physical cards.
Virtual cards ultimately provide a more secure and streamlined method of managing company finances. If you have ever searched for an alternative means of managing company spending, virtual cards might just be exactly what you have been looking for, and by signing up for an Intergiro business account today, you can be among the first to access our smart cards that give you complete control over you and your employees’ expenses.
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